Definition of Innovation
Innovation has been and continues to be an important topic of study for a number of different disciplines, including economics, business, engineer- ing, science, and sociology. Despite the fact that innovation has been stud- ied in a variety of disciplines, the term is often poorly understood and can be sometimes confused with related terms such as change, invention, design, and creativity. Most people can provide examples of innovative products such as the iPod or the PC, but few can clearly define the innovative aspects of these products. Among academics there is a difference of opin- ion about what the term innovation really means. One definition of inno- vation taken from the dictionary that fits the ideas and concepts used in this book is the following (The New Oxford Dictionary of English, 1998, p. 942):
Making changes to something established by introducing something new.
This definition does not suggest that innovation must be radical or that it occurs exclusively to products. Nor does it suggest that innovation is exclusively for large organizations or single entrepreneurs. Nor does it sug- gest that it is exclusively for profit-making businesses; innovation is as rel- evant for a hospital or local government as it is for a business. In the organizational context innovation can occur to products, processes, or ser- vices. It can be incremental or radical, and it can occur at various levels in an organization, from management groups and departments to project teams and even individuals.
This is the general concept of innovation as discussed in this book. We will see later that the fundamental concepts of innovation as they are derived from this definition are universally relevant for all organizations, from private companies such as Nokia down to public organizations such as hospitals. Innovation is a process that transforms ideas into outputs, which increase customer value. The process can be fed by both good and bad ideas. In management of the innovation process, destroying poor ideas often is as important as nurturing good ones; in this way, scarce resources can be released and good ideas spotlighted. Every good idea usually replaces an older established one. The goal of every organization is the successful development of good ideas. To express this development of good ideas in innovation, we need to add an addendum to our definition:
Innovation is the process of making changes to something established by introducing something new that adds value to customers.
This addendum is important. By describing an innovation as adding value to customers, we assume naturally that customers who experience the added value will continue to use the product, process, or service or at
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Chapter 1