Product Code Database
Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed entity, realizing or redistributing value". Others have different definitions; a common element in the definitions is a focus on newness, improvement, and spread of ideas or technologies.
Innovation often takes place through the development of more-effective products, processes, services, technologies, or that innovators make available to markets, and society.
Literature 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, and not all innovations require a new invention.
Technical innovation often manifests itself via the engineering process when the problem being solved is of a technical or scientific nature. The opposite of innovation is exnovation.
"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:Edison, H., Ali, N.B., & Torkar, R. (2014). Towards innovation measurement in the software industry. Journal of Systems and Software 86(5), 1390–407. 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:
Peter Drucker wrote:
The concept of innovation emerged after the Second World War, mostly thanks to the works of Joseph Schumpeter (1883–1950) who described the economic effects of innovation processes as Constructive 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 ), the widespread practice of Planned obsolescence (incl. lack of Repairability), and the Jevons paradox, that describes negative consequences of eco-efficiency as energy-reducing effects tend to trigger mechanisms leading to energy-increasing effects.
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 as entirely new business models emergence over many years, with gradual and steady adoption of the innovation leading to waves of technological and change that gain momentum more slowly. The advent of the packet-switched communication protocol TCP/IP—originally 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 Web—is a foundational technology.
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.
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.
Machiavelli's The Prince (1513) discusses innovation in a political setting. Machiavelli portrays it as a strategy a Prince may employ in order to cope with a constantly changing world as well as the corruption within it. Here innovation is described as introducing change in government (new laws and institutions); 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. 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 through the 1600s, the concept of innovation was pejorative – the term was an early-modern synonym for "rebellion", "revolt" and "heresy". In the 1800s 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.
In the 20th century, the concept of innovation did not become popular until after the Second World War of 1939–1945. This is the point in time when people started to talk about technological product innovation and tie it to the idea of economic growth and competitive advantage. (2025). 9781789903348, Edward Elgar Publishing. ISBN 9781789903348 Joseph Schumpeter (1883–1950), 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 commerce and in economics, innovation can provide a catalyst for growth when continuously search for better ways to satisfy their Consumer demand with improved quality, durability, service and price - searches which may come to fruition in innovation with advanced technologies and organizational strategies.Heyne, P., Boettke, P. J., and Prychitko, D. L. (2010). The Economic Way of Thinking. Prentice Hall, 12th ed. pp. 163, 317–18. 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 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.
A prime example of innovation involved the boom of Silicon Valley start-ups out of the Stanford Industrial Park. In 1957, dissatisfied employees of Shockley Semiconductor, the company of Nobel laureate William Shockley, co-inventor of the transistor, left to form an independent firm, Fairchild Semiconductor. After several years, Fairchild developed into a formidable presence in the sector. Eventually, these founders left to start their own companies based on their own unique ideas, and then leading employees started their own firms. Over the next 20 years this process resulted in the momentous startup company explosion of information-technology firms. Silicon Valley began as 65 new enterprises born out of Shockley's eight former employees.
All organizations can innovate, including for example hospitals, universities, and local governments. The organization requires a proper structure in order to retain competitive advantage. Organizations can also improve profits and performance by providing work groups opportunities and resources to innovate, in addition to employee's core job tasks. Executives and managers have been advised to break away from traditional ways of thinking and use change to their advantage. MIT Sloan Management Review Spring 2002. "How to identify and build New Businesses" The world of work is changing with the increased use of technology and companies are becoming increasingly competitive. Companies will have to downsize or reengineer their operations to remain competitive. This will affect employment as businesses will be forced to reduce the number of people employed while accomplishing the same amount of work if not more.Anthony, Scott D.; Johnson, Mark W.; Sinfield, Joseph V.; Altman, Elizabeth J. (2008). Innovator's Guide to Growth. "Putting Disruptive Innovation to Work". Harvard Business School Press. .
For instance, former Mayor Martin O'Malley pushed the City of Baltimore to use CitiStat, a performance-measurement data and management system that allows city officials to maintain statistics on several areas from crime trends to the conditions of . This system aided in better evaluation of policies and procedures with accountability and efficiency in terms of time and money. In its first year, CitiStat saved the city $13.2 million.Perez, T. and Rushing R. (2007). "The CitiStat Model: How Data-Driven Government Can Increase Efficiency and Effectiveness". Center for American Progress Report. pp. 1–18. Even mass transit systems have innovated with hybrid vehicle bus fleets to real-time tracking at bus stands. In addition, the growing use of mobile data terminals in vehicles, that serve as communication hubs between vehicles and a control center, automatically send data on location, passenger counts, engine performance, mileage and other information. This tool helps to deliver and manage transportation systems.Transportation Research Board (2007). "Transit Cooperative Research Program (TCRP) Synthesis 70: Mobile Data Terminals". pp. 1–5. TCRP (PDF).
Still other innovative strategies include digitizing medical information in electronic medical records. For example, the U.S. Department of Housing and Urban Development's HOPE VI initiatives turned severely distressed public housing in urban areas into Urban renewal, mixed-income environments; the Harlem Children's Zone used a community-based approach to educate local area children; and the Environmental Protection Agency's brownfield grants facilitates turning over for environmental protection, green spaces, community and Commerce.
In the simplest linear model of innovation the traditionally recognized source is manufacturer innovation. This is where a person or business innovates in order to sell the innovation.
Another source of innovation is end-user innovation. This is where a person or company develops an innovation for their own (personal or in-house) use because existing products do not meet their needs. MIT economist Eric von Hippel identified end-user innovation as the most important source in his classic book on the subject, "The Sources of Innovation".
The robotics engineer Joseph F. Engelberger asserts that innovations require only three things:
The Kline chain-linked model of innovationKline (1985). Research, Invention, Innovation and Production: Models and Reality, Report INN-1, March 1985, Mechanical Engineering Department, Stanford University. places emphasis on potential market needs as drivers of the innovation process, and describes the complex and often iterative feedback loops between marketing, design, manufacturing, and R&D.
In the 21st century the Islamic State (IS) movement, while decrying religious innovations, has innovated in military tactics, recruitment, ideology and geopolitical activity. (2025). 9781849046435, Oxford University Press. ISBN 9781849046435
(2017). 9780190695323, Oxford University Press. ISBN 9780190695323
Information technology and changing business processes and management style can produce a work climate favorable to innovation. For example, the software tool company Atlassian conducts quarterly "ShipIt Days" in which employees may work on anything related to the company's products. Google employees work on self-directed projects for 20% of their time (known as Innovation Time Off). Both companies cite these bottom-up processes as major sources for new products and features.
An important innovation factor includes customers buying products or using services. As a result, organizations may incorporate users in (user centered approach), work closely with so-called lead users (lead user approach), or users might adapt their products themselves. The lead user method focuses on idea generation based on leading users to develop breakthrough innovations. U-STIR, a project to innovate Europe's surface transportation system, employs such workshops. Regarding this user innovation, a great deal of innovation is done by those actually implementing and using technologies and products as part of their normal activities. Sometimes user-innovators may become , selling their product, they may choose to trade their innovation in exchange for other innovations, or they may be adopted by their suppliers. Nowadays, they may also choose to freely reveal their innovations, using methods like open source. In such networks of innovation the users or communities of users can further develop technologies and reinvent their social meaning.Tuomi, I. (2002). Networks of Innovation. Oxford University Press. Networks of Innovation Siltala, R. (2010). Innovativity and cooperative learning in business life and teaching. PhD thesis. University of Turku.
One technique for innovating a solution to an identified problem is to actually attempt an experiment with many possible solutions. Forget The 10,000-Hour Rule; Edison, Bezos, & Zuckerberg Follow The 10,000-Experiment Rule. Medium.com (26 October 2017). Retrieved 16 October 2018. This technique was famously used by Thomas Edison laboratory to find a version of the incandescent light bulb economically viable for home use, which involved searching through thousands of possible filament designs before settling on carbonized bamboo.
This technique is sometimes used in pharmaceutical drug discovery. Thousands of chemical compounds are subjected to high-throughput screening to see if they have any activity against a target molecule which has been identified as biologically significant to a disease. Promising compounds can then be studied; modified to improve efficacy and reduce side effects, evaluated for cost of manufacture; and if successful turned into treatments.
The related technique of A/B testing is often used to help optimize the design of and . This is used by major sites such as amazon.com, Facebook, Google, and Netflix. Why These Tech Companies Keep Running Thousands Of Failed Experiments. Fast Company.com (21 September 2016). Retrieved 16 October 2018. Procter & Gamble uses computer-simulated products and online user panels to conduct larger numbers of experiments to guide the design, packaging, and shelf placement of consumer products. Simulation Advantage. Bcgperspectives.com (4 August 2010). Retrieved 16 October 2018. Capital One uses this technique to drive credit card marketing offers.
Different goals are appropriate for different products, processes, and services. According to Andrea Vaona and Mario Pianta, some example goals of innovation could stem from two different types of technological strategies: technological competitiveness and active price competitiveness. Technological competitiveness may have a tendency to be pursued by smaller firms and can be characterized as "efforts for market-oriented innovation, such as a strategy of market expansion and patenting activity." On the other hand, active price competitiveness is geared toward process innovations that lead to efficiency and flexibility, which tend to be pursued by large, established firms as they seek to expand their market foothold. Whether innovation goals are successfully achieved or otherwise depends greatly on the environment prevailing in the organization.
Once innovation occurs, innovations may be spread from the innovator to other individuals and groups. This process has been proposed that the lifecycle of innovations can be described using the 'Sigmoid function' 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 lifecycle, 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 derives from 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 currently 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.Rogers, E. M. (1962). Diffusion of Innovation. New York, NY: Free Press.
There are two different types of measures for innovation: the organizational level and the political level.
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. 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 GDP.
A common industry view (unsupported by empirical evidence) is that comparative cost-effectiveness research is a form of price controls which reduces returns to industry, and thus limits R&D expenditure, stifles future innovation and compromises new products access to markets. Some academics claim cost-effectiveness research is a valuable value-based measure of innovation which accords "truly significant" therapeutic advances (i.e. providing "health gain") higher prices than free market mechanisms. Such value-based pricing has been viewed as a means of indicating to industry the type of innovation that should be rewarded from the public purse.
An Australian academic developed the case that national comparative cost-effectiveness analysis systems should be viewed as measuring "health innovation" as an evidence-based policy concept for valuing innovation distinct from valuing through competitive markets, a method which requires strong anti-trust laws to be effective, on the basis that both methods of assessing pharmaceutical innovations are mentioned in annex 2C.1 of the AUSFTA.
| +Bloomberg Innovation Index 2021 ! Rank !! Country/Territory !Index | |
| 90.49 | |
| 87.76 | |
| 87.60 | |
| 86.45 | |
| 86.39 | |
| 86.12 | |
| 85.50 | |
| 84.86 | |
| 84.29 | |
| 83.93 |
| +Global Innovation Index 2020 ! Rank !! Country/Territory !Index | |
| 66.08 | |
| 62.47 | |
| 60.56 | |
| 59.78 | |
| 58.76 | |
| 57.53 | |
| 57.02 | |
| 56.61 | |
| 56.55 | |
| 56.11 |
| +Innovation Indicator 2020 ! Rank !! Country/Territory !Index | |
| 74 | |
| 70 | |
| 60 | |
| 54 | |
| 54 | |
| 52 | |
| 52 | |
| 52 | |
| 50 | |
| 50 |
John Smart criticized the claim and asserted that technological singularity researcher Ray Kurzweil and others showed a "clear trend of acceleration, not deceleration" when it came to innovations. The foundation replied to Huebner the journal his article was published in, citing Second Life and eHarmony as proof of accelerating innovation; to which Huebner replied. However, Huebner's findings were confirmed in 2010 with U.S. Patent Office data. and in a 2012 paper.
The United States has to continue to play on the same level of playing field as its competitors in federal research. This can be achieved being strategically innovative through investment in basic research and science".
For instance, experts are advocating that the U.S. federal government launch a National Infrastructure Foundation, a nimble, collaborative strategic intervention organization that will house innovations programs from fragmented silos under one entity, inform federal officials on innovation performance metrics, strengthen industry-university partnerships, and support innovation economic development initiatives, especially to strengthen business cluster. Because clusters are the geographic incubators of innovative products and processes, a cluster development grant program would also be targeted for implementation. By focusing on innovating in such areas as precision manufacturing, information technology, and clean energy, other areas of national concern would be tackled including government debt, carbon footprint, and oil dependence. The U.S. Economic Development Administration understand this reality in their continued Regional Innovation Clusters initiative. The United States also has to integrate her supply-chain and improve her applies research capability and downstream process innovation.
Many countries recognize the importance of innovation including Japan's Ministry of Education, Culture, Sports, Science and Technology (MEXT); Germany's Federal Ministry of Education and Research; and the Ministry of Science and Technology in the People's Republic of China. Russia's innovation programme is the Medvedev modernisation programme which aims to create a diversified economy based on high technology and innovation. The Government of Western Australia has established a number of innovation incentives for government departments. Landgate was the first Western Australian government agency to establish its Innovation Program.
Some
/ref> Business incubators were first introduced in 1959 and subsequently nurtured by governments around the world. Such "incubators", located close to knowledge clusters (mostly research-based) like universities or other government excellence centres – aim primarily to channel generated knowledge to applied innovation outcomes in order to stimulate regional or national economic growth.
In 2009, the municipality of Medellin, Colombia created Ruta N to transform the city into a knowledge city.
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