Innovation in Business

In a highly competitive world, it has become important for firms to be innovative in order to differentiate itself from competition and to get a competitive edge.

Innovation in business can be a product, service, strategy, business model, or way of doing things that is novel as well as useful.

Also, innovations in business do not have to be drastic; they don’t have to be new business models or major breakthroughs in the use of technology.

Innovation can be incremental and as simple as upgrades to the features of an existing product or to the customer service, and so on.

Process of Diffusion

The diffusion process shows how an innovation spreads from its conception to its user.

Various stages in the diffusion of innovation:

Innovators – 2.5% of the buying population. Well-educated, young, confident and financially strong.

Early adopters – 13.5% of the market. Lots of opinion leaders. Young and above average in education, read publications and consult more salespeople.

Early majority – 34%. More risk averse, above average in terms of age, education, social status, and income.

Late majority – 34%. Sceptical of new ideas, below average in education, social status and income.

Laggards – 16% of the buying population. Suspicious of all new ideas and opinions hard to change. Lowest income, lowest social status and education.

(Baines, Fill and Rosengren, 2017, p.329 – 330)

Questions and Answers on Innovations

Question: In the popular press, innovation is often seen as built on chance discoveries. Critically discuss using examples and theory whether you agree with this view.

Question: New product development is a key activity for most firms and the traditional linear or stage-gate view has been joined in the past few decades by one termed simultaneous engineering. Critically assess the differences between both approaches and also examine the types of situations when each is most suitable.

Question: Critically assess how managers can use Christensen’s model of disruptive technology to develop sustainable business models.

Question: Critically examine, with examples, how Abernathy and Utterback’s model of the relationships between product and process innovation can be used by managers to develop robust strategies.

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