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Innovation is the practical implementation of
ideas In common usage and in philosophy, ideas are the results of thought. Also in philosophy, ideas can also be mental representational images of some object. Many philosophers have considered ideas to be a fundamental ontological category of being. ...
that result in the introduction of new
goods In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not t ...
or
services Service may refer to: Activities * Administrative service, a required part of the workload of university faculty * Civil service, the body of employees of a government * Community service, volunteer service for the benefit of a community or a p ...
or improvement in offering goods or services.
ISO TC 279 ISO/TC 279 is a technical committee of the International Organization for Standardization (ISO). Its purpose is to develop, maintain and promote standards in the fields of innovation management. The first plenary meeting of ISO/TC 279 was held ...
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
product Product may refer to: Business * Product (business), an item that serves as a solution to a specific consumer problem. * Product (project management), a deliverable or set of deliverables that contribute to a business solution Mathematics * Produ ...
s, processes, services,
technologies Technology is the application of knowledge to reach practical goals in a specifiable and reproducible way. The word ''technology'' may also mean the product of such an endeavor. The use of technology is widely prevalent in medicine, science, ...
,
art work A work of art, artwork, art piece, piece of art or art object is an artistic creation of aesthetic value. Except for "work of art", which may be used of any work regarded as art in its widest sense, including works from literature ...
s or
business model A business model describes how an organization creates, delivers, and captures value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-published, 2010 in economic, soci ...
s that innovators make available to
market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an ...
s,
government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is ...
s and
society A society is a group of individuals involved in persistent social interaction, or a large social group sharing the same spatial or social territory, typically subject to the same political authority and dominant cultural expectations. Soci ...
. 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, and not all innovations require a new invention. Technical innovation often manifests itself via the
engineering Engineering is the use of scientific principles to design and build machines, structures, and other items, including bridges, tunnels, roads, vehicles, and buildings. The discipline of engineering encompasses a broad range of more speciali ...
process when the problem being solved is of a technical or scientific nature. The opposite of innovation is
exnovation In commerce and management, exnovation, an opposite of innovation, can occur when products and processes that have been tested and confirmed to be best-in-class are standardized to ensure that they are not innovated further. Companies that have fo ...
.


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 define a multidisciplinary definition and arrived at the following definition:
"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 an industrial survey of how the
software industry The software industry includes businesses for development, maintenance and publication of software that are using different business models, mainly either "license/maintenance based" (on-premises) or "Cloud based" (such as SaaS, PaaS, IaaS, MBa ...
defined innovation, the following definition given by Crossan and Apaydin was considered to be the most complete, which builds on the Organisation for Economic Co-operation and Development (OECD) manual's definition: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 Everett M. "Ev" Rogers (March 6, 1931 – October 21, 2004) was an American communication theorist and sociologist, who originated the ''diffusion of innovations'' theory and introduced the term '' early adopter''. He was distinguished professor e ...
, 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 and defines innovation as a generation, admission and realization of new ideas, products, services and processes. Two main dimensions of innovation are degree of
novelty Novelty (derived from Latin word ''novus'' for "new") is the quality of being new, or following from that, of being striking, original or unusual. Novelty may be the shared experience of a new cultural phenomenon or the subjective perception of an ...
(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 Product-service systems (PSS) are business models that provide for cohesive delivery of products and services. PSS models are emerging as a means to enable collaborative consumption of both products and services, with the aim of pro-environmental ...
innovation). In organizational scholarship, researchers have also distinguished innovation to be separate from creativity, by providing an updated definition of these two related constructs:
Peter Drucker Peter Ferdinand Drucker (; ; November 19, 1909 – November 11, 2005) was an Austrian-American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business co ...
wrote:


Creativity and innovation

In general, innovation is distinguished from
creativity Creativity is a phenomenon whereby something new and valuable is formed. The created item may be intangible (such as an idea, a scientific theory, a musical composition, or a joke) or a physical object (such as an invention, a printed Literature ...
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").


Types

Several frameworks have been proposed for defining types of innovation.


Sustaining vs disruptive innovation

One framework proposed by
Clayton Christensen Clayton Magleby Christensen (April 6, 1952January 23, 2020) was an American academic and business consultant who developed the theory of "disruptive innovation", which has been called the most influential business idea of the early 21st century. ...
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 model An operating model is both an abstract and visual representation (model) of how an organization delivers value to its customers or beneficiaries as well as how an organization actually runs itself. Definition There are different ways of defining t ...
s as entirely new business models emerge over many years, with gradual and steady adoption of the innovation leading to waves of
technological Technology is the application of knowledge to reach practical goals in a specifiable and reproducible way. The word ''technology'' may also mean the product of such an endeavor. The use of technology is widely prevalent in medicine, science, ...
and institutional change that gain momentum more slowly. The advent of the packet-switched communication protocol
TCP/IP The Internet protocol suite, commonly known as TCP/IP, is a framework for organizing the set of communication protocols used in the Internet and similar computer networks according to functional criteria. The foundational protocols in the suit ...
—originally introduced in 1972 to support a single
use case In software and systems engineering, the phrase use case is a polyseme with two senses: # A usage scenario for a piece of software; often used in the plural to suggest situations where a piece of software may be useful. # A potential scenario ...
for
United States Department of Defense The United States Department of Defense (DoD, USDOD or DOD) is an executive branch department of the federal government charged with coordinating and supervising all agencies and functions of the government directly related to national sec ...
electronic communication (email), and which gained widespread adoption only in the mid-1990s with the advent of the
World Wide Web The World Wide Web (WWW), commonly known as the Web, is an information system enabling documents and other web resources to be accessed over the Internet. Documents and downloadable media are made available to the network through web ...
—is a foundational technology.


Four types 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
he core design concepts He or HE may refer to: Language * He (pronoun), an English pronoun * He (kana), the romanization of the Japanese kana へ * He (letter), the fifth letter of many Semitic alphabets * He (Cyrillic), a letter of the Cyrillic script called ''He'' ...
(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

The classical definition of innovation being limited to the primary goal of generating profit for a firm, has led others to define other types of innovation such as:
social innovation Social innovations are new social practices that aim to meet social needs in a better way than the existing solutions,Howaldt, J./ Schwarz, M"Social Innovation: Concepts, research fields and international trends" IMO international monitoring, 201 ...
, sustainable innovation (or green innovation), and responsible innovation.


History

The word "innovation" once had a quite different meaning. The first full-length discussion about innovation is the account by the Greek philosopher and historian
Xenophon Xenophon of Athens (; grc, Ξενοφῶν ; – probably 355 or 354 BC) was a Greek military leader, philosopher, and historian, born in Athens. At the age of 30, Xenophon was elected commander of one of the biggest Greek mercenary armies o ...
(430–355 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 Aristophanes (; grc, Ἀριστοφάνης, ; c. 446 – c. 386 BC), son of Philippus, of the deme Kydathenaion ( la, Cydathenaeum), was a comic playwright or comedy-writer of ancient Athens and a poet of Old Attic Comedy. Eleven of his for ...
( – BCE).
Plato Plato ( ; grc-gre, Πλάτων ; 428/427 or 424/423 – 348/347 BC) was a Greek philosopher born in Athens during the Classical period in Ancient Greece. He founded the Platonist school of thought and the Academy, the first institution ...
(died 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 Aristotle (; grc-gre, Ἀριστοτέλης ''Aristotélēs'', ; 384–322 BC) was a Greek philosopher and polymath during the Classical period in Ancient Greece. Taught by Plato, he was the founder of the Peripatetic school of ph ...
(384–322 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 The Vulgate (; also called (Bible in common tongue), ) is a late-4th-century Latin translation of the Bible. The Vulgate is largely the work of Jerome who, in 382, had been commissioned by Pope Damasus I to revise the Gospels u ...
'' 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 ''The Prince'' ( it, Il Principe ; la, De Principatibus) is a 16th-century political treatise written by Italian diplomat and political theorist Niccolò Machiavelli as an instruction guide for new princes and royals. The general theme of ''The ...
'' (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 Heresy is any belief or theory that is strongly at variance with established beliefs or customs, in particular the accepted beliefs of a church or religious organization. The term is usually used in reference to violations of important religi ...
". In the 1800s people promoting
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, priva ...
saw
socialism Socialism is a left-wing Economic ideology, economic philosophy and Political movement, movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to Private prop ...
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.
Joseph Schumpeter Joseph Alois Schumpeter (; February 8, 1883 – January 8, 1950) was an Austrian-born political economist. He served briefly as Finance Minister of German-Austria in 1919. In 1932, he emigrated to the United States to become a professor at H ...
(1883–1950) is often credited as the one who made the term popular - he contributed greatly to the study of
innovation economics Innovation economics is new and growing field of economic theory and applied and experimental economics that emphasizes innovation and entrepreneurship. It comprises both the application of any type of innovations, especially technological, but ...
, In business and in
economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...
, innovation can provide a catalyst for growth in an enterprise or even in an industry. With rapid advances in
transportation Transport (in British English), or transportation (in American English), is the intentional movement of humans, animals, and goods from one location to another. Modes of transport include air, land (rail and road), water, cable, pipeline, ...
and
communications Communication (from la, communicare, meaning "to share" or "to be in relation with") is usually defined as the transmission of information. The term may also refer to the message communicated through such transmissions or the field of inquir ...
over the past few decades, the old concepts of
factor endowment A factor endowment, in economics, is commonly understood to be the amount of land, labor, capital, and entrepreneurship that a country possesses and can exploit for manufacturing. Countries with a large endowment of resources tend to be more prospe ...
s and
comparative advantage In an economic model, agents have a comparative advantage over others in producing a particular good if they can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade. Comp ...
which focused on an area's unique inputs are outmoded in today's global economy. 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 Creative destruction (German: ''schöpferische Zerstörung'') is a concept in economics which since the 1950s is the most readily identified with the Austrian-born economist Joseph Schumpeter who derived it from the work of Karl Marx and pop ...
is the essential fact about
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, priva ...
".
Entrepreneur Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values t ...
s 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. A prime example of innovation involved the boom of
Silicon Valley Silicon Valley is a region in Northern California that serves as a global center for high technology and innovation. Located in the southern part of the San Francisco Bay Area, it corresponds roughly to the geographical areas San Mateo Coun ...
start-ups out of the Stanford Industrial Park. In 1957, dissatisfied employees of Shockley Semiconductor, the company of Nobel laureate and co-inventor of the
transistor upright=1.4, gate (G), body (B), source (S) and drain (D) terminals. The gate is separated from the body by an insulating layer (pink). A transistor is a semiconductor device used to Electronic amplifier, amplify or electronic switch, switch ...
William Shockley William Bradford Shockley Jr. (February 13, 1910 – August 12, 1989) was an American physicist and inventor. He was the manager of a research group at Bell Labs that included John Bardeen and Walter Brattain. The three scientists were jointl ...
, 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. Another example involves
business incubator Business incubator is an organization that helps startup companies and individual entrepreneurs to develop their businesses by providing a fullscale range of services starting with management training and office space and ending with venture c ...
s – a phenomenon 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 the 21st century the
Islamic State An Islamic state is a state that has a form of government based on Islamic law (sharia). As a term, it has been used to describe various historical polities and theories of governance in the Islamic world. As a translation of the Arabic term ...
(IS) movement, while decrying religious innovations, has innovated in military tactics, recruitment, ideology and geopolitical activity.


Process of innovation

An early model included only three phases of innovation. According to Utterback (1971), these phases were: 1) idea generation, 2) problem solving, and 3) implementation. By the time one completed phase 2, one had an invention, but until one got it to the point of having an economic impact, one didn't have an innovation. Diffusion wasn't considered a phase of innovation. Focus at this point in time was on manufacturing. 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. 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. For instance, former Mayor
Martin O’Malley Martin Joseph O'Malley (born January 18, 1963) is an American lawyer and former politician who served as the 61st Governor of Maryland from 2007 to 2015. A member of the Democratic Party, he was Mayor of Baltimore from 1999 to 2007. O'Malle ...
pushed the
City of Baltimore Baltimore ( , locally: or ) is the most populous city in the U.S. state of Maryland, fourth most populous city in the Mid-Atlantic, and the 30th most populous city in the United States with a population of 585,708 in 2020. Baltimore was ...
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 potholes. 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. Even mass transit systems have innovated with
hybrid Hybrid may refer to: Science * Hybrid (biology), an offspring resulting from cross-breeding ** Hybrid grape, grape varieties produced by cross-breeding two ''Vitis'' species ** Hybridity, the property of a hybrid plant which is a union of two dif ...
bus fleets to real-time tracking at bus stands. In addition, the growing use of
mobile data terminal A mobile data terminal (MDT) or mobile digital computer (MDC) is a computerized device used in emergency services, public transport, taxicabs, package delivery, roadside assistance, and logistics, among other fields, to communicate with a cent ...
s 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. Still other innovative strategies include hospitals digitizing medical information in
electronic medical records An electronic health record (EHR) is the systematized collection of patient and population electronically stored health information in a digital format. These records can be shared across different health care settings. Records are shared throu ...
. For example, the
U.S. Department of Housing and Urban Development The United States Department of Housing and Urban Development (HUD) is one of the executive departments of the U.S. federal government. It administers federal housing and urban development laws. It is headed by the Secretary of Housing and Urb ...
's
HOPE VI HOPE VI is a program of the United States Department of Housing and Urban Development. It is intended to revitalize the worst public housing projects in the United States into mixed-income developments. Its philosophy is largely based on New Urban ...
initiatives turned severely distressed
public housing Public housing is a form of housing tenure in which the property is usually owned by a government authority, either central or local. Although the common goal of public housing is to provide affordable housing, the details, terminology, def ...
in urban areas into revitalized, mixed-income environments; the
Harlem Children’s Zone The Harlem Children's Zone (HCZ) is a nonprofit organization for poverty-stricken children and families living in Harlem, providing free support in the form of parenting workshops, a preschool program, three charter schools, and child-oriented ...
used a community-based approach to educate local area children; and the Environmental Protection Agency's brownfield grants facilitates turning over
brownfield In urban planning, brownfield land is any previously developed land that is not currently in use. It may be potentially contaminated, but this is not required for the area to be considered brownfield. The term is also used to describe land prev ...
s for
environmental protection Environmental protection is the practice of protecting the natural environment by individuals, organizations and governments. Its objectives are to conserve natural resources and the existing natural environment and, where possible, to repair dam ...
, green spaces,
community A community is a social unit (a group of living things) with commonality such as place, norms, religion, values, customs, or identity. Communities may share a sense of place situated in a given geographical area (e.g. a country, village, ...
and commercial development.


Sources of innovation

Innovation may occur due to effort from a range of different agents, by chance, or as a result of a major system failure. According to
Peter F. Drucker Peter Ferdinand Drucker (; ; November 19, 1909 – November 11, 2005) was an Austrian-American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business co ...
, the general sources of innovations are changes in industry structure, in market structure, in local and global demographics, in human perception, in the amount of available scientific knowledge, etc. In the simplest
linear model of innovation The Linear Model of Innovation was an early model designed to understand the relationship of science and technology that begins with basic research that flows into applied research, development and diffusion It posits scientific research as the ...
the traditionally recognized source is ''manufacturer innovation''. This is where an agent (person or business) innovates in order to sell the innovation. Specifically, R&D measurement is the commonly used input for innovation, in particular in the business sector, named Business Expenditure on R&D (BERD) that grew over the years on the expenses of the declining R&D invested by the public sector. 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.
MIT The Massachusetts Institute of Technology (MIT) is a private land-grant research university in Cambridge, Massachusetts. Established in 1861, MIT has played a key role in the development of modern technology and science, and is one of the m ...
economist
Eric von Hippel Eric von Hippel (born August 27, 1941) is an American economist and a professor at the MIT Sloan School of Management, specializing in the nature and economics of distributed and open innovation. He is best known for his work in developing the ...
has identified end-user innovation as, by far, the most important and critical in his classic book on the subject, ''"The Sources of Innovation"''. The robotics engineer
Joseph F. Engelberger Joseph Frederick Engelberger (July 26, 1925 – December 1, 2015) was an American physicist, engineer and entrepreneur. Licensing the original patent awarded to inventor George Devol, Engelberger developed the first industrial robot in the Uni ...
asserts that innovations require only three things: # a recognized need # competent people with relevant technology # financial support The Kline
chain-linked model The chain-linked model or Kline model of innovation was introduced by mechanical engineer Stephen J. Kline in 1985, and further described by Kline and economist Nathan Rosenberg in 1986. The chain-linked model is an attempt to describe complexitie ...
of innovation 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.


Facilitating innovation

Innovation by businesses is achieved in many ways, with much attention now given to formal research and development (R&D) for "breakthrough innovations". R&D help spur on patents and other scientific innovations that leads to productive growth in such areas as industry, medicine, engineering, and government.Mark, M., Katz, B., Rahman, S., and Warren, D. (2008
''MetroPolicy: Shaping A New Federal Partnership for a Metropolitan Nation''
Brookings Institution: Metropolitan Policy Program Report. pp. 4–103.
Yet, innovations can be developed by less formal on-the-job modifications of practice, through exchange and combination of professional experience and by many other routes. Investigation of relationship between the concepts of innovation and technology transfer revealed overlap. 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.
Information technology Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of Data (computing), data . and information. IT forms part of information and communications technology (ICT). An information te ...
and changing business processes and management style can produce a work climate favorable to innovation. For example, the software tool company
Atlassian Atlassian Corporation () is an Australian software company that develops products for software developers, project managers and other software development teams. The company is domiciled in Delaware, with global headquarters in Sydney, Austra ...
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
focus group A focus group is a group interview involving a small number of demographically similar people or participants who have other common traits/experiences. Their reactions to specific researcher/evaluator-posed questions are studied. Focus groups are ...
s (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 Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a subcontinent of Eurasia and it is located entirel ...
's surface
transportation Transport (in British English), or transportation (in American English), is the intentional movement of humans, animals, and goods from one location to another. Modes of transport include air, land (rail and road), water, cable, pipeline, ...
system, employs such workshops. Regarding this
user innovation __NOTOC__ User innovation refers to innovation by intermediate users (e.g. user firms) or consumer users (individual end-users or user communities), rather than by suppliers (producers or manufacturers). This is a concept closely aligned to co-des ...
, 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
entrepreneur Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values t ...
s, 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. One technique for innovating a solution to an identified problem is to actually attempt an experiment with many possible solutions. This technique was famously used by Thomas Edison's laboratory to find a version of the
incandescent light bulb An incandescent light bulb, incandescent lamp or incandescent light globe is an electric light with a wire filament heated until it glows. The filament is enclosed in a glass bulb with a vacuum or inert gas to protect the filament from oxid ...
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 High-throughput screening (HTS) is a method for scientific experimentation especially used in drug discovery and relevant to the fields of biology, materials science and chemistry. Using robotics, data processing/control software, liquid handling ...
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 A/B testing (also known as bucket testing, split-run testing, or split testing) is a user experience research methodology. A/B tests consist of a randomized experiment that usually involves two variants (A and B), although the concept can be al ...
is often used to help optimize the design of
web site A website (also written as a web site) is a collection of web pages and related content that is identified by a common domain name and published on at least one web server. Examples of notable websites are Google, Facebook, Amazon, and Wikip ...
s and
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Facebook Facebook is an online social media and social networking service owned by American company Meta Platforms. Founded in 2004 by Mark Zuckerberg with fellow Harvard College students and roommates Eduardo Saverin, Andrew McCollum, Dustin Mosk ...
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Google Google LLC () is an American Multinational corporation, multinational technology company focusing on Search Engine, search engine technology, online advertising, cloud computing, software, computer software, quantum computing, e-commerce, ar ...
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Netflix Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fi ...
.Why These Tech Companies Keep Running Thousands Of Failed Experiments
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Procter & Gamble The Procter & Gamble Company (P&G) is an American multinational consumer goods corporation headquartered in Cincinnati, Ohio, founded in 1837 by William Procter and James Gamble. It specializes in a wide range of personal health/consumer he ...
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.
Capital One Capital One Financial Corporation is an American bank holding company specializing in credit cards, auto loans, banking, and savings accounts, headquartered in McLean, Virginia with operations primarily in the United States. It is on the li ...
uses this technique to drive credit card marketing offers.


Goals and failures

Programs of organizational innovation are typically tightly linked to organizational goals and growth objectives, to the
business plan A business plan is a formal written document containing the goals of a business, the methods for attaining those goals, and the time-frame for the achievement of the goals. It also describes the nature of the business, background information on ...
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market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an ...
competitive positioning. Davila et al. (2006) note, "Companies cannot grow through cost reduction and reengineering alone... Innovation is the key element in providing aggressive top-line growth, and for increasing bottom-line results".Davila, T., Epstein, M. J., and Shelton, R. (2006). "Making Innovation Work: How to Manage It, Measure It, and Profit from It." Upper Saddle River: Wharton School Publishing. One survey across a large number of manufacturing and services organizations found that systematic programs of organizational innovation are most frequently driven by: improved
quality Quality may refer to: Concepts *Quality (business), the ''non-inferiority'' or ''superiority'' of something *Quality (philosophy), an attribute or a property *Quality (physics), in response theory * Energy quality, used in various science discipl ...
, creation of new
market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an ...
s, extension of the
product Product may refer to: Business * Product (business), an item that serves as a solution to a specific consumer problem. * Product (project management), a deliverable or set of deliverables that contribute to a business solution Mathematics * Produ ...
range, reduced
labor cost Direct labor cost is a part of wage-bill or payroll that can be specifically and consistently assigned to or associated with the manufacture of a product, a particular work order, or provision of a service. Also, we can say it is the cost of the wor ...
s, improved
production process Industrial processes are procedures involving chemical, physical, electrical or mechanical steps to aid in the manufacturing of an item or items, usually carried out on a very large scale. Industrial processes are the key components of heavy in ...
es, reduced materials cost, reduced
environmental damage Environmental degradation is the deterioration of the environment through depletion of resources such as quality of air, water and soil; the destruction of ecosystems; habitat destruction; the extinction of wildlife; and pollution. It is defin ...
, replacement of
product Product may refer to: Business * Product (business), an item that serves as a solution to a specific consumer problem. * Product (project management), a deliverable or set of deliverables that contribute to a business solution Mathematics * Produ ...
s/
services Service may refer to: Activities * Administrative service, a required part of the workload of university faculty * Civil service, the body of employees of a government * Community service, volunteer service for the benefit of a community or a p ...
, reduced
energy In physics, energy (from Ancient Greek: ἐνέργεια, ''enérgeia'', “activity”) is the quantitative property that is transferred to a body or to a physical system, recognizable in the performance of work and in the form of hea ...
consumption, and conformance to regulations. 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. Failure of organizational innovation programs has been widely researched and the causes vary considerably. Some causes are external to the organization and outside its influence of control. Others are 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. David O'Sullivan wrote that 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, and poor communication and access to information.


Diffusion

Diffusion of innovation research was first started in 1903 by seminal researcher Gabriel Tarde, who first plotted the S-shaped diffusion curve. Tarde defined the innovation-decision process as a series of steps that include: # knowledge # forming an attitude # a decision to adopt or reject # implementation and use # confirmation of the decision 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, s-curve' or Diffusion of innovations, 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 technologies, 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.


Measures

Measuring innovation is inherently difficult as it implies commensurability so that comparisons can be made in quantitative terms. Innovation, however, is by definition novelty. Comparisons are thus often meaningless across products or service. Nevertheless, Edison et al. in their review of literature on innovation management found 232 innovation metrics. They categorized these measures along five dimensions; i.e. inputs to the innovation process, output from the innovation process, effect of the innovation output, measures to access the activities in an innovation process and availability of factors that facilitate such a process. There are two different types of measures for innovation: the organizational level and the political level.


Organizational-level

:The measure of innovation at the organizational level relates to individuals, team-level assessments, and private companies from the smallest to the largest company. Measure of innovation for organizations can be conducted by surveys, workshops, consultants, or internal benchmarking. There is today no established general way to measure organizational innovation. Corporate measurements are generally structured around balanced scorecards which cover several aspects of innovation such as business measures related to finances, innovation process efficiency, employees' contribution and motivation, as well benefits for customers. Measured values will vary widely between businesses, covering for example new product revenue, spending in R&D, time to market, customer and employee perception & satisfaction, number of patents, additional sales resulting from past innovations.


Political-level

:For the political level, measures of innovation are more focused on a country or region competitive advantage through innovation. In this context, organizational capabilities can be evaluated through various evaluation frameworks, such as those of the European Foundation for Quality Management. The OECD Oslo Manual (1992) 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 2018 takes a wider perspective to innovation, and includes marketing and organizational innovation. These standards are used for example in the European Community Innovation Surveys. 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.


Indicators

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 ignored and measurements and research about it rarely done. For example, an institution may be high tech with the latest equipment, but lacks crucial doing, using and interacting tasks important for innovation. A common industry view (unsupported by empirical evidence) is that comparative cost-effectiveness research is a form of price controls, price control 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, Australia-United States Free Trade Agreement.


Indices

Several indices attempt to measure innovation and rank entities based on these measures, such as: *Bloomberg Innovation Index *"Bogota Manual" similar to the Oslo Manual, is focused on Latin America and the Caribbean countries. *"Creative Class" developed by Richard Florida *EIU Innovation Ranking *Global Competitiveness Report *Global Innovation Index (GII), by INSEAD *Information Technology and Innovation Foundation, Information Technology and Innovation Foundation (ITIF) Index
Innovation 360
– From the World Bank. Aggregates innovation indicators (and more) from a number of different public sources *Innovation Capacity Index (ICI) published by a large number of international professors working in a collaborative fashion. The top scorers of ICI 2009–2010 were: 1. Sweden 82.2; 2. Finland 77.8; and 3. United States 77.5 * Innovation Index, developed by the Indiana Business Research Center, to measure innovation capacity at the county or regional level in the United States *Innovation Union Scoreboard *innovationsindikator for Germany, developed by the :de:Bundesverband der Deutschen Industrie, Federation of German Industries (Bundesverband der Deutschen Industrie) in 2005 *INSEAD Innovation Efficacy Index *International Innovation Index, produced jointly by The Boston Consulting Group, the National Association of Manufacturers (NAM) and its nonpartisan research affiliate The Manufacturing Institute, is a worldwide index measuring the level of innovation in a country; NAM describes it as the "largest and most comprehensive global index of its kind" *Management Innovation Index – Model for Managing Intangibility of Organizational Creativity: Management Innovation Index * NYCEDC Innovation Index, by the New York City Economic Development Corporation, tracks New York City's "transformation into a center for high-tech innovation. It measures innovation in the City's growing science and technology industries and is designed to capture the effect of innovation on the City's economy" * OECD Oslo Manual is focused on North America, Europe, and other rich economies * State Technology and Science Index, developed by the Milken Institute, is a U.S.-wide benchmark to measure the science and technology capabilities that furnish high paying jobs based around key components *World Competitiveness Scoreboard


Rankings

Common areas of focus include: high-tech companies, manufacturing, patents, post secondary education, research and development, and research personnel. The left ranking of the top 10 countries below is based on the 2020 Bloomberg Innovation Index. However, studies may vary widely; for example the Global Innovation Index 2016 ranks Switzerland as number one wherein countries like South Korea, Japan, and China do not even make the top ten.


Rate of innovation

In 2005 Jonathan Huebner, a physicist working at the Pentagon Building, Pentagon's Naval Air Weapons Station China Lake, Naval Air Warfare Center, argued on the basis of both U.S. patents and world technological breakthroughs, per capita, that the rate of human technological innovation peaked in 1873 and has been slowing ever since. In his article, he asked "Will the level of technology reach a maximum and then decline as in the Dark Ages?" In later comments to ''New Scientist'' magazine, Huebner clarified that while he believed that we will reach a rate of innovation in 2024 equivalent to that of the Dark Ages (historiography), Dark Ages, he was not predicting the reoccurrence of the Dark Ages themselves. 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.


Innovation and development

The theme of innovation as a tool to disrupting patterns of poverty has gained momentum since the mid-2000s among major international development actors such as DFID, Gates Foundation's use of the Grand Challenge funding model, and USAID's Global Development Lab. Networks have been established to support innovation in development, such as D-Lab at MIT. Investment funds have been established to identify and catalyze innovations in developing countries, such as DFID's Global Innovation Fund, Human Development Innovation Fund, and (in partnership with USAID) the Global Development Innovation Ventures. 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".


Government policies

Given its effects on efficiency, quality of life, and productivity, productive growth, innovation is a key driver in improving society and economy. Consequently, policymakers have worked to develop environments that will foster innovation, from funding research and development to establishing regulations that do not inhibit innovation, funding the development of innovation clusters, and using public purchasing and standardisation to 'pull' innovation through. 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 measurement, performance metrics, strengthen industry-university partnerships, and support innovation economic development initiatives, especially to strengthen business cluster, regional clusters. 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 of the People's Republic of China, 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 regions have taken a proactive role in supporting innovation. Many regional governments are setting up innovation agencies to strengthen regional capabilities. In 2009, the municipality of Medellin, Colombia created Ruta N to transform the city into a knowledge city.


See also

* Communities of innovation * Creative problem solving * Diffusion (anthropology) * Ecoinnovation * Hype cycle * Induced innovation * Information revolution * Innovation leadership * Innovation system * International Association of Innovation Professionals * ISO 56000 * Knowledge economy * Obsolescence * Open Innovation * Open Innovations (Forum and Technology Show) * Outcome-Driven Innovation * Participatory design * Product innovation * Pro-innovation bias * Sustainable Development Goals#Description and agenda, Sustainable Development Goals (Agenda 9) * Technology Life Cycle * Technological innovation system * Theories of technology * Timeline of historic inventions * Toolkits for User Innovation * UNDP Innovation Facility * User Innovation * Virtual product development


References


Further reading

* Bloom, Nicholas, Charles I. Jones, John Van Reenen, and Michael Webb. 2020.
Are Ideas Getting Harder to Find?
, ''American Economic Review'', 110 (4): 1104–44. * * {{Authority control Design Innovation economics Product management Science and technology studies