TERM PAPER INNOVATIVE PRODUCT/SERVICE IDEAS
Name:- DhirajMeena
Subject:- NE&IM (M-208)
Supervisor:- Dr. Meenal Lodha
Abstract
Innovation is considered as one of the success features in the economic companies, it’s
regarded as the basic element to reach customer satisfaction and to realize their desires.
It means finding a new idea which will be implemented for realizing the competitive
advantage to the companies, at a time when they have had similar opportunities to present
their products with low costs.
We will try through this paper to highlight the innovation in products field through the
following:
Definition of innovation and creativity in the economic companies;
Products innovation: types, stages and features:
The role of the products innovation in realizing competitive advantage.
Keywords: innovation, creativity, competitive advantage, PME
Introduction
The world economic environment is characterized by rapid changes in all frameworks,
especially the technological sides which become the most important discussion axe that
affects the economic company’s strategies.
Under this new atmosphere that features the external and internal company’s
environment, it becomes necessary for company to fit itself in these changes in order to
maintain its market place, and to face the aggressive competition in such an open world
market. Under such a situation, companies are imposed (compiled) to carry out research and
development in all fields through innovation and creativity regarding their methods that
include: management process, product, marketing…etc, in order to find out new innovation
ideas which distinguish the company from others and give it an efficient competitiveness.
Indeed, there are many types of innovation such as: Product innovation, Process
innovation, Marketing innovation, Organizational innovation, Paradigm innovation…etc. All
these types and others allow companies to realize a competitive advantage and economic
benefits. We focus through this paper on product innovation for the reason that the product
(whether goods or services) is the basic of a company establishment and the direct link with
consumers who are considered as the most important objective of the companies.
Innovation and creativity in the economic companies:
Distinguishing from innovation and other concepts:
As we mentioned above, creativity and innovation become one of the features of this
decade, within which companies are working to improve and develop their external and
internal environment.
There are many sorts of innovation applied in the economic companies related to their
different activities. And before discussing them, we try to give some definitions concerning
innovation and creativity whatever the type.
Indeed, the meaning of innovation varies. It can range from the first commercial use of
an invention to the introduction of a new or improved product or process.
There is a link between the two terms innovation and creativity, in other words they are two
faces to one coin, while creativity means the creation of new ideas which does not exist before
in order to solve problems (that doesn’t relate to the technical side only which includes
products development and process, but also the machines, production methods, management
process. that lead to increase productivity) (2), innovation is the implementation of these new
ideas. We find also the term “invention” which nearly has the same meaning of creativity as
Fargerberg (2004) distinguished between invention and innovation. He argues that “invention
is the first occurrence of an idea for a new product or process, while innovation is the first
attempt to carry it out into practice”(3).
The table below indicates the different definitions of the innovation term:
there are various definitions of the term “innovation” which derives from the Latin ” innovation” which
means the creation of something new.(4)
Innovation refers to the economic application of new ideas that will be transformed to the commerce(5)
Innovation is the commercial or industrial of something new: a new product, process or method of
production, a new market or source of supply, a new form of commercial business or financial
organization(6)
Innovation means making new products and offering new services, or adding new value to existing
ones (7). It’s based on the results of new technological developments, new combinations of existing
technology or the utilization of other knowledge acquired by the company(8)
Innovation is the implementation and the application of a new idea related to a new product or service,
a new marketing method, a new organizational methods in business practices, workplace organization
or external relations(9)
Innovation is the degree to which value is created for customers through enterprise that transform new
knowledge and technologies into profitable products and services for national and global markets. It
covers a wide range of activities to improve firm performance, including the implementation of a new
or significantly improved product, service, distribution process, manufacturing process, marketing or
organizational method(10)
2- Types of innovation:
These definitions indicate that there are many types of innovation. According to
Schumpeter, there are five areas in which companies can introduce innovation (11)
Generation of new or improved products;
Introduction of new production process;
Development of new sales market;
Development of new supply market;
Reorganization and/ or restructing of the company.
The above definition clearly distinguishes innovation from minor changes in the make
up and/ or delivering of products in forms of extension of product lines, adding service
components or product differentiation. Innovation is not related to production fields only, but
there are other fields and activities which can be innovated as the following:
Process innovation: is the adoption of new or significantly improved production
methods. These methods may involve changes in equipment or production organization or
both. The methods may be intended to produce new or improved products which cannot be
produced using conventional plants or production methods, or essentially to increase the
production efficiency of existing products (12).
Marketing innovation: is an innovation that satisfies customer needs and develops a
competitive advantage through differentiation along one or more of the following (13):
Desired Product Features and Design, Size, Usability, Quality, Time, Price ,Cost
savings/ Incremental Revenues… in other words is the implementation of new marketing
method involving significant changes in product design or packaging, product placement,
product promotion or pricing.(14)
Organizational innovation: is the implementation of a new organizational method in
the firm’s business practices, workplace organization or external relations. It can be intended
to increase a firm’s performance by reducing administrative costs or transaction costs,
improving workplace satisfaction…etc(15)
Moreover, there are other sorts of innovation adopted by companies which can be
illustrated in the figure below:
Source : Joe Tidd. Managing Innovation for Global Competitiveness.Renaissance Project Symposium. Tokyo.16
March 2006.P :09
The paradigm above indicates that in every type of innovation there is a created value
weather from costs, quality or performance. This classification of innovation’s types according
to Joe Tidd is conformed with the global value of innovation, for example, the paradigm
innovation leads to the opening of new frameworks and developing the company’s activities,
however; the created value from the organizational innovation is restricted on the current
company’s activities through the introduction of new leadership models and new management
methods. At the lowest level, Tidd suggested the Process improvement as a kind of innovation
which means the introduction of new modifications to the existing activities and operations
without complete changes, and the result is the reduction of costs and quality improvement.
Despite the differences between the created values of each type of innovation, the main and
essential objective is to increase the global benefit of the company.
What we can remark from the different kinds of innovation is that there is a common
idea which is the improvement and the development which indicates the main role of the
technological knowledge. And because any company aims to cover the largest market part or
at least to protect and maintain its market position, the innovation plays a big role in that, so it
can be( market) considered as an important factor to determine the type of innovation, as the
following diagram denotes:
Figure 02:Innovation Typology
Technological Knowledge
Improving existing knowledge Creating new knowledge
Creating new
markets/segments
Retaining
existing markets
Source : Jens Froslev. Christensen , Innovation-concepts, process and strategies .PHD course, Hillerod
Copenhagen Business School.March 2007
It’s clear that there is an interface between the used technology and the market, we
differentiate between 4 types of innovation whish are formed as a combination of market and
technologies:
❖ Market innovation: in this type new markets have been created used the same
existing knowledge with some modifications and improvements. The main goal here is
to discover new markets:
❖ Basic innovation: depends on creating new markets using new knowledge, in this
type there is an interaction and combination between the different types of innovation
(product, market, organizational, and process innovation):
❖ Incremental innovation: In this type companies retain the existing markets and at the
same time use and creat new technologies and knowledge;
❖ Technological substitution: here companies focus on using new technologies.
Market Innovation
Incremental Innovation
Figure 03: Other Different types of Innovation
Source: Jalager, A.–M. (2002). “Repairing innovation defectiveness in tourism”, Tourism Management, 23, pp.
465–474
Whatever the kind of innovation, the basic axe of innovation remains the creation and
the implementation of new ideas under some conditions that should be provided such as:(16)