A good rule of thumb for inventive people, therefore, is to focus not exclusively on developing ideas but also on executing and implementing them.
Skip to content. Previous Previous post: Incremental and Radical Profits. Improvements are the easiest to create and get to market and carry a lot less risk. Changes in size, resolution, battery strength and apps are great examples of improvements to smartphones.
If your strategy is to grow both revenues and profit margins, you likely need to innovate. Your window of opportunity for both higher revenues and higher profit margins is generally about the first 3 years.
After that time you face downward pressure on your prices from competition who is seeking volume, not margins. You will then have to innovate again. Improvements give you a shorter window for both growth and margins, perhaps 1 year. Another kind of strategy, one driven by market needs, may lead you to invent.
Examples of creativity are all around us. They come in the forms of fine art and writing, or in graffiti and viral videos, or in new products, services, ideas, and processes. In practice, creativity is incredibly broad. It is all around us whenever or wherever people strive to solve a problem, large or small, practical or impractical.
We previously defined innovation as a change that adds value to an existing product or service. According to the management thinker and author Peter Drucker , the key point about innovation is that it is a response to both changes within markets and changes from outside markets. For Drucker, classical entrepreneurship psychology highlights the purposeful nature of innovation.
In other words, not all innovation is purely creative. If a firm wishes to innovate a current product, what will likely matter more to that firm is the success of the innovation rather than the level of creativity involved. Drucker summarized the sources of innovation into seven categories, as outlined in Table 4.
Firms and individuals can innovate by seeking out and developing changes within markets or by focusing on and cultivating creativity. Firms and individuals should be on the lookout for opportunities to innovate.
These kiosks address the need of younger generations to interact more with technology and gives customers faster service in most cases. Another leading expert on innovation, Tony Ulwick , focuses on understanding how the customer will judge or evaluate the quality and value of the product. Ulwick insists that focusing on the customer should begin early in the development process. Clay Christensen of Harvard University coined this term in the s to emphasize the process nature of innovation.
For Christensen, the innovative component is not the actual product or service, but the process that makes that product more available to a larger population of users. He has since published a good deal on the topic of disruptive innovation, focusing on small players in a market. Christensen theorizes that a disruptive innovation from a smaller company can threaten an existing larger business by offering the market new and improved solutions.
The smaller company causes the disruption when it captures some of the market share from the larger organization. One key to innovation within a given market space is to look for pain points, particularly in existing products that fail to work as well as users expect them to.
A pain point is a problem that people have with a product or service that might be addressed by creating a modified version that solves the problem more efficiently. Most retailers now have a feature on their websites that allows you to determine whether the product and often how many units is available at a specific store. This eliminates the need to go to the location only to find that they are out of your favorite product. This is one example of an incremental innovation , an innovation that modifies an existing product or service.
In his ninth-grade biology class, Benjamin Stern came up with an idea to change the personal care industry. He envisioned personal cleaning products soap, shampoo, etc.
He developed Nohbo Drops , single-use personal cleansing products with water-soluble packaging. Stern was able to borrow money from family and friends, and use some of his college fund to hire a chemist to develop the product.
He then appeared on Shark Tank with his innovation in and secured the backing of investor Mark Cuban. Stern assembled a research team to perfect the product and obtained a patent Figure 4. The products are now available via the company website.
Is a pioneering innovation an invention? A firm makes a pioneering innovation when it creates a product or service arising from what it has done before. Nintendo was struggling to keep pace with other gaming-related companies. The company, in keeping with its core business of video games, came up with a new direction for the gaming industry. Entrepreneurs in the process of developing an innovation usually examine the current products and services their firm offers, investigate new technologies and techniques being introduced in the marketplace or in related marketplaces, watch research and development in universities and in other companies, and pursue new developments that are likely to fit one of two conditions: an innovation that likely fits an existing market better than other products or services being offered; or an innovation that fits a market that so far has been underserved.
An example of an incremental innovation is the trash receptacle you find at fast-food restaurants. For many years, trash cans in fast-food locations were placed in boxes behind swinging doors. The trash cans did one job well: They hid the garbage from sight. But they created other problems: Often, the swinging doors would get ketchup and other waste on them, surely a pain point. Newer trash receptacles in fast-food restaurants have open fronts or open tops that enable people to dispose of their trash more neatly.
The downside for restaurants is that users can see and possibly smell the food waste, but if the restaurants change the trash bags frequently, as is a good practice anyway, this innovation works relatively well. You might not think twice about this everyday example of an innovation when you eat at a fast-food restaurant, but even small improvements can matter a lot, particularly if the market they serve is vast.
An invention is a leap in capability beyond innovation. Some inventions combine several innovations into something new. Invention certainly requires creativity, but it goes beyond coming up with new ideas, combinations of thought, or variations on a theme.
Inventors build. Developing something users and customers view as an invention could be important to some entrepreneurs, because when a new product or service is viewed as unique, it can create new markets. True inventiveness is often recognized in the marketplace, and it can help build a valuable reputation and help establish market position if the company can build a future-oriented corporate narrative around the invention.
Besides establishing a new market position, a true invention can have a social and cultural impact. At the social level, a new invention can influence the ways institutions work.
For example, the invention of desktop computing put accounting and word processing into the hands of nearly every office worker. The ripple effects spread to the school systems that educate and train the corporate workforce. Not long after the spread of desktop computing, workers were expected to draft reports, run financial projections, and make appealing presentations.
Specializations or aspects of specialized jobs—such as typist, bookkeeper, corporate copywriter—became necessary for almost everyone headed for corporate work. Colleges and eventually high schools saw software training as essential for students of almost all skill levels. These additional capabilities added profitability and efficiencies, but they also have increased job requirements for the average professional. Some of the most successful inventions contain a mix of familiarity and innovation that is difficult to achieve.
With this mix, the rate of adoption can be accelerated because of the familiarity with the concept or certain aspects of the product or service. However, the invention was not adopted because of a lack of familiarity with the idea of seeing someone on a screen and communicating back and forth. Other factors included societal norms, size of the machine, and cost.
An example is Febreeze, a chemical combination that binds molecules to eliminate odors. From a black box perspective, the chemical engineers did not intend to create this product, but as they were working on creating another product, someone noticed that the product they were working on removed odors, thus inadvertently creating a successful new product marketed as Febreeze. Very few products or procedures are actually brand-new ideas. Most new products are alterations or new applications of existing products, with some type of twist in design, function, portability, or use.
Henry Ford is usually credited with inventing the moving assembly line Figure 4. However, some years before Henry Ford, wooden ships were mass produced in the northern Italian city of Venice in a system that anticipated the modern assembly line. The parts were then delivered to specific assembly points Figure 4. After each stage of construction, the ships were floated down the canal to the next assembly area, where the next sets of workers and parts were waiting.
Moving the ships down the waterway and assembling them in stages increased speed and efficiency to the point that long before the Industrial Revolution, the Arsenal could produce one fully functional and completely equipped ship per day.
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