Four Key Sources Of Innovation For Your Business

Innovation works, I don’t have to tell you that, everyone knows it, I mean look at Apple Inc, innovation has changed it from $2 billion company (1997) to $624 billion company in 2012. So what they have been doing all this time, summing up in one word! “Innovation”  iphone, ipad, ipod etc.

Now this article is not just going to give you the key sources of innovation available to any business dealing in tangible items but is also going to explain how you can coordinate those sources to get the right kind of innovation, after all around 50% of all new physical products are total failures and around 70% do not attain their sales goals ⁽¹⁾.

Similarly even stronger case for innovation can be made for businesses that deals in intangible value or services, how come ?!

Well as we all know services are intangible in nature, hence the competitive advantage achieved by a particular service can’t be guarded by patents, intellectual property rights etc therefore to maintain that particular competitive advantage it is imperative for the service provider to innovate continuously so to deliver better service quality compared to their competitors ⁽²⁾.

Now let's move to our next part of this article, that is what are the key sources of innovation and how can we utilize, coordinate these sources to attain right or effective innovation that would effectively deliver in terms of customer satisfaction, target market share, high profits, competitive advantage so on and so forth.

Four Key Sources of innovation:

1.      Market intelligence (MI)
2.      Technological Orientation (TechO)
3.      Relevant & Reasonable Relations (RRR)
4.      Innovative Routine (IR)

Let’s first discuss these key sources of innovation and after that we will talk about how to utilize and coordinate these sources to achieve right kind of innovation (effective innovation).

Market Intelligence (MI)

In short it means having competitors orientation and customers orientation, the better your business is in these two key areas, the better position your business will have when it comes to achieving right kind of innovation. 

The importance of market intelligence (Competitors orientation & Customer Orientation) has been greatly emphasized by many studies and it is being pointed out as the key source of innovation, new product development and improving business performance ⁽³⁾.

Competitors orientation means to have full knowledge, right information, data available on the current and anticipated strengths, weaknesses, parities etc of your competitors while customers orientation means to have full knowledge, right information, thoroughly researched data available on current and anticipated needs, wants, likes/dislikes etc of your customers.

Remember that effective knowledge management (capturing, developing, sharing and effectively utilizing knowledge) or making the best use of knowledge (in our case MI) is a source of competitive advantage. ⁽⁴⁾

Technological Orientation (TechO)

Means having full expertise, experience, know-how of current business relevant technologies and likewise having right knowledge, information on anticipated relevant technologies.

Relevant & Reasonable Relations (RRR)

RRR means having alliances, partnerships, knowledge sharing, information sharing relationships with business relevant firms, other businesses, organizations for instance having a knowledge sharing and information sharing relationship with your suppliers would help your business to cut raw material costs, to develop new products faster by utilizing their skills, resources, capabilities, to make your business dealings more efficient & effective etc.

Similarly for instance having information and knowledge sharing relationship with various universities would provide your business with new ideas for new products/services ⁽⁵⁾ as most often universities are involved in developing new things, are working on new ideas etc all of which can prove to be useful sources of new ideas for new products/services.

In a nutshell always look for relationships but relationships that are reasonable and relevant to your business.

You may like (How to) Building an Effective Organization Relationship Management Framework

Remember!: We are still discussing different sources of innovation, after discussing the last one that is Innovative Routine (IR), we will move to the next part that is How can we utilize and coordinate these sources to attain right innovation so bear with me ;p ! and yeah it is really easy to grasp! It’s just a simple diagram!

Innovative Routine (IR)

IR means having business capabilities routine that encourages, promotes, foster innovation internally wherever and whenever possible. Having such routine would result in developing a business culture, business model that would pursue innovation on both small and large scales.

And such IR would also put your business in better position to work effectively on other sources of innovation that we already discussed (MI, TechO, RRR), all of this would greatly help your business in developing distinctive capabilities (Competitive Advantage) ⁽⁶⁾ in terms of innovation thus helping your business competing effectively along with reaping the great benefits of innovation.

In case you didn’t get it, in simple words it means when your business carry out a set of tasks, process on routine basis (which in our case is looking for set of tasks that can deliver innovation whenever and wherever possible), over time your business will get efficient and effective at conducting those tasks thus resulting in cutting costs, resource wastage, becoming efficient at doing innovation etc which makes innovation far more easy and sustainable in the longer run (which is indeed a competitive advantage).

Okay now let’s get to the final part, that is How can we utilize and coordinate these sources to attain right innovation.

Utilization & Coordination of the Sources

Well I won’t write long paragraphs on this one, rather I will try to make it as simple as possible through a diagram. Consider the following figure.

Simple right ?! Support innovative routine (whenever and wherever possible) through your marketing like target market research, marketing strategy, through your human resources, capabilities, skills, policies & practices and through financial resources, capacities etc (and through any other available means). 

Once effective support is provided, your business would then be in better position to work on the sources of innovation consequently delivering effective innovation.

Related Post

 Why Innovation is Essential Even After a Successful Product/Service (A must read!)

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References:

1.      Delre, S.A., Jager, W., Bijmolt, T.H.A. and Janssen, M.A. (2007), “Targeting and timing promotional activities: an agent-based model for the takeoff of new products”, Journal of Business Research, Vol. 60 No. 8, pp. 826-835.

2.      Agarwal S, Erramilli KM, Dev CS (2003) Market orientation and performance in service firms: role of innovation. J Serv Mark 17(1):68–82

3.   Grinstein, A. (2007), “The effect of market orientation and its components on innovation consequences: a meta-analysis”, Journal of the Academy of Marketing Science, Vol. 36 No. 2, pp. 166-173.

4.      Grant R (1996) Toward a knowledge-based theory of the firm. Strateg Manag J 17(Winter Special Issue):109–122.

5.        Mosad Zineldin, (2000),"Beyond relationship marketing: technologicalship marketing", Marketing Intelligence & Planning, Vol. 18 Iss: 1 pp. 9 – 23

6.      Barney, J.B. (1991) Firm Resources and Sustained Competitive Advantage. Journal of Management, 17, 99–120.