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Innovation deals more with a revolutionary new product or service than an evolutionary one, such as a line extension or an improvement to an existing item. Often an innovation has the potential to disrupt a market by changing the status quo and replacing what already exists with something totally unique.  Innovations are dynamic processes which focus on the creation and implementation of new or improved products and services, processes, positions and paradigms. Successful innovations are those that result in improvements in efficiency, effectiveness, quality or social outcomes/impacts.

Innovation is a core activity. It is important for its survival and can help the business remain competitive in changing markets. Innovation can take many forms. It does not simply cover new product development. Innovation can be applied to product renewal or the design of new processing technologies. It is important to understand the difference between invention and innovation. Invention involves creating something new, but it only becomes an innovation if it is a practical and marketable application. There are different challenges facing the nuclear industry. Nuclear power is increasingly seen as one solution to meet future energy demand. This will create opportunities for UK businesses with expertise in nuclear engineering and associated technologies. SFIL has identified the nuclear power sector as a key market opportunity. As such, it is placing R&D effort in this area. This is looking at innovative ways to manufacture the large components required in civil nuclear reactors.

Difference between Innovation and Invention

Invention refers to the creation of a brand new product or device. Conversely, innovation is an act of making changes to the existing product or the process by introducing new ways or ideas. The term ‘invention’, is defined as the act of creating, designing or discovering a device, method, process, that has not existed before. In finer terms, it is a novel scientific idea conceived through research and experimentation that turns into a tangible object. It can be a new process of producing a product or may be an improvement upon a product or a new product. The word ‘innovation’ itself signifies its meaning, as the transformation of an idea into reality. In the purest sense, innovation can be described as a change that adds value to the products or services; that fulfills the needs of the customers. It is when something new and effective is introduced to the market that fulfills the needs of the customers by delivering better products and services.

Innovation is the process of taking an idea from a state of conception to a state of commercialization. But irrespective of any definition, there are four core characteristics associated with any successful innovation and those are - Idea, Execution, Uniqueness and Value Creation. In other words, the value of an invention is only perceived or recognized by its inventor while the value of an innovation is recognized or perceived by a relatively large customer segment.

Invention is creating something original and advanced typically a process or a device. It can also loosely be called innovation. Steam engine was a product of invention. So was battery, radio etc. Innovation is similar to invention but it mainly refers to ideas, and new way of thinking that may lead to new inventions. Inventions can be patented, as it provides security to the inventor, for intellectual property rights, and also identifies it as an actual invention. Further, different countries have different rules for obtaining the patent and the process is also costly. To be patented, the invention must be novel, have value and non-obvious. Innovation can be an introduction or development of new product, process, technology, service or improving/redesigning the existing ones that provide solutions to the current market requirements. All the process that helps in the generation of the new idea and translating it into the products demanded by the customers are covered under innovation.


Innovation in organizations is conceived both as process and outcome. Outcome and process research are denoted as studies of innovativeness and innovating, respectively. The studies of innovativeness are primarily large-sample studies of multiple innovations in organizations. The studies of innovating are mainly case studies of one or few innovations in organizations.

Studies of innovations in organizations are multidimensional, multilevel, and context-dependent. They investigate what external and internal conditions induce innovation, how organizations manage innovation process, and in what ways innovation changes organizational conduct and outcome. Indiscreet application of findings from one discipline or context to another, lack of distinction between generating (creating) and adopting (using) innovations, and likening organizational innovation with technological innovation have clouded the understanding of this important concept, hampering its advancement. This article organizes studies of organizational innovation to make them more accessible to interested scholars and combines insights from various strands of innovation research to help them design and conduct new studies to advance the field.

While 63% of companies are hiring chief innovation officers (CIOs) and more than 90% are using new technologies to support the innovation process, many still struggle to create and encourage a truly innovative culture across the board. Whether it’s by engaging your entire organization, learning how to celebrate failure, or looking for inspiration in other industries, there are multiple ways your business can become more innovative and change the way employees work together.

Innovation in Business and Economic

The successful exploitation of new ideas is crucial to a business being able to improve its processes, bring new and improved products and services to market, increase its efficiency and, most importantly, improve its profitability. Marketplaces - whether local, regional, national or global - are becoming highly competitive. Competition has increased as a result of wider access to new technologies and the increased trading and knowledge-sharing opportunities offered by the Internet. Conduct an analysis of the trends in the market environment, your customers’ wants and needs and your competitors. Consult with customers and employees for ideas on improving processes, products and services both internally and externally. Find out more about connecting with customers for ideas. Seek advice. Use available resources such as business advisors, grants and assistance to drive innovation in your business. This may include seeking Intellectual Property (IP) protection to commercialize your ideas. Learn more about local collaboration and international collaboration with researchers. Develop a strategic, responsive plan, which promotes innovation as a key business process across the entire business. Learn about creating an innovative business culture and developing a strategy for innovation. Train and empower your employees to think innovatively from the top down.

Fundamentally, innovation means introducing something new into your business. This could be:

Improving or replacing business processes to increase efficiency and productivity, or to enable the business to extend the range or quality of existing products and/or services.

Developing entirely new and improved products and services - often to meet rapidly changing customer or consumer demands or needs. 
Adding value to existing products, services or markets to differentiate the business from its competitors and increase the perceived value to the customers and markets. 

Innovation economists believe that what primarily drives economic growth in today’s knowledge-based economy is not capital accumulation, as claimed by neoclassicists, but innovation. The major changes in the U.S. economy of the last 15 years have occurred not because the economy accumulated more capital to invest in even bigger steel mills or car factories; rather they have occurred because of innovation. The U.S. economy developed a wide array of new technologies, particularly information technologies, and used them widely. Although capital was needed for these technologies, capital was not the driver; nor was capital a commodity in short supply. The major drivers of economic growth are productive efficiency and adaptive efficiency.

Innovation Business Cycle

The purpose of the business innovation process is to create value for the organization. That value can come from creating new revenue opportunities or driving more revenue through existing channels; from creating efficiencies that save time, money or both; or from improvements to productivity or performance. In short, innovation should lead to higher profits. Additionally, the results of an organization's innovation process should yield a competitive advantage; it should help the organization to grow and reach -- or, better still, exceed -- strategic objectives. Although there's no one-size-fits-all formula for business innovation, organizations that are continually successful at business innovation have a repeatable process to generate, test and develop ideas that can lead to innovations. The cycle is often broken down into four parts. It starts with articulating ideas around key areas (business models, marketing, process, products and service). The cycle moves through discovery then onto development and delivery. The first phase focuses on the creation and recording of ideas as well as the preliminary evaluation of whether those ideas could produce value.

Innovation Goals and Failures


Making things faster, or potentially slower if that has value. For example, a manufacturer of high speed trains with a goal to make trains faster than flying for major domestic routes including the time to get to an airport.

Getting more output for an hour worked. For example, a team of 5 software developers who want to optimize their architecture, designs, work processes and toolset to out-code a competitor with 1000+ developers.


Getting more output for a unit of input. 


Making things easier for customers. For example, a nation aims to produce a simplified tax code that is fair, progressive and simulative that requires less than 2 hours a year of administrative work from the average small business owner.


Transforming quality such as inline skate wheels that last 30x longer than current products on the market.

Customer Needs

Solving an unsolved problem such as curing a disease.

Customer Experience

Customer experiences that represent a leap forward such as an amusement park attraction that provides a new level of realism.


Dramatically reducing a risk. For example, a mode of transport that is an order of magnitude safer than alternatives.


Performance targets such as the speed of an algorithm.


A competitive advantage such as an automation that reduces the cycle time of an order fulfillment process by 90%.


Developing superior know-how and valuable intellectual property.


Transforming a process that isn't likely to end well to one that has a bright future. For example, an energy source that has a very small environmental footprint that can be scaled to meet global needs.

Quality of Life

Innovation objectives that aim to make life better such as an urban design that transforms a neighborhood.


A moonshot is a significant innovation that takes an extended period of time to achieve.

Innovation Measure

Identification of goals and exploration activities defines the course of action and establishes the motivational inspiration for the entire innovation process.  Setting forth a vision for the innovation goal and providing opportunities to explore various solutions enables innovator buy-in to the goal.   Once the goal has been identified, the steps that need to be accomplished for success can be prioritized, assigned to stage 2 or stage 3, and executed accordingly.  It is important to realize that stage 2 and stage 3 are not static, and should be routinely reviewed and updated.  As goals in stage 2 are completed, some of those in stage 3 move into stage 2 to provide the basis for a new set of measurable results and outcomes. It is management’s responsibility to assess performance to goals in each stage and to determine when a goal has been completed or moved into a different stage.There are many key performance indicators (KPIs) that are talked about for measuring innovation performance. One that is used by many companies is the “Innovation Sales Rate” (ISR). The ISR can be variously defined, but usually is a measure of the percentage of sales that is sales of “new” products. No doubt, this leaves room for a variety of interpretations, but still is a good measure.

This is a particularly challenging question. Inherent in innovation is exploring the unknown and that brings with it a higher rate of failure than many are accustomed to. Accordingly, it’s important to measure things as a whole, with a portfolio mentality.  Each individual effort cannot and should not be measured at the innovation state. To do so will stifle innovation. Portfolio thinking comes in two flavors: across many projects during a single period, and over time.  So the performance of an individual or group can be measured, but only by looking at their portfolio. If you’re evaluating a manager with many projects, that’s straightforward.  For individual contributors working on one project at a time, you need to look at their efforts over a period of time across many projects.

Political Development

IRI’s Political Party Scorecard: From 2012-2015, IRI maintained a scorecard of Tunisia’s political parties. In three assessment trips, IRI’s staff established a baseline, midline and end line measuring the development of these parties by conducting interviews with party beneficiaries to measure the increase of their ability to function as sustainable, representative, responsive and effective organizations. In order to determine what constituted critical elements of party institutional capacity, IRI identified 10 key elements on which, based on IRI’s assistance, parties should improve upon over the course of this grant. Parties were given a score at each assessment of the grant. The researchers also tracked trends within the organization to determine if it was trending positively or negatively and to identify external factors that may influence party development.

Party improvement in their “Internal Party Function” was defined by five specific goals:

  1. The party demonstrates an effective managerial hierarchy between the national and local level    
  2. The party has a well-functioning system for internal communication
  3. Parties have a well-functioning nationwide system for campaign management (a key part of a well-functioning nationwide system is having a database in place and used)                     
  4. Parties have well-functioning local branch offices across the country
  5. Party leadership is selected through internal party democratic processes
  6. Parties have functioning and effective women's wings
  7. Parties have a functioning and effective youth wing
  8. Women gain leadership positions within party structures
  9. Youth gain leadership positions within party structures
  10. Youth Wings network with other party youth.

This provided IRI an opportunity to track party progress and compare the development of parties over time. Through this process, IRI produced a replicable tool for assessing political party beneficiaries that has been used in IRI programs in Morocco, Lebanon, Pakistan and Indonesia among others. Upcoming NED Social Network Analysis: Under a National Endowment for Democracy grant IRI is supporting Tunisian regional and local political party branches to implement campaign strategies in advance of municipal elections. To better understand how to best support these party branches, IRI will conduct an assessment of Tunisian political parties, focused on the interactions between local and national party branches. Using social network analysis techniques, IRI will map relationships and gather data about the levels of trust, confidence and nature of engagement between local and national-level political party leaders and members. Being able to assess the system in which our beneficiaries operate, the change agents in those systems and how to best support our beneficiaries is an innovative process to complement and improve our existing support to them. IRI continues the search for ways to improve supporting its beneficiaries and assessing that support through innovative and iterative processes. The abovementioned methods demonstrate IRI’s expertise in understanding party programs. Because IRI has been doing this work for so long, we know there are often more questions than answers with party programs. These tools help IRI better navigate some turbulent waters, as staying agile and continuing to question are key to providing quality party support.

Innovation and Development

Innovation is important at all stages of development; specifically, the creation and diffusion of technologies are important for economic growth and welfare across all economies. Different types of innovation play a role at various stages (e.g. in earlier stages, incremental innovation is often associated with the adoption of foreign technology). Opportunities for successful innovation experiments and a potentially different framework for development are emerging. Notably, these opportunities result from the rise of information and communication technologies, the development of global value chains, the increased importance of some emerging countries in the global innovation system, the growth of service-based economies and a greater openness to trade and foreign direct investment. Today a key challenge for innovation policy in emerging countries is to encourage inclusive growth and support research addressing major social challenges.

Figueiredo (2006), in a recent survey, points out that our knowledge about innovation in  developing  country  firms has  been  constrained  by the  fact that  the  available  evidence  has  been  overwhelmingly  qualitative  in character, creating problems for comparison and generalization. However, from  the  early  1990s  onwards  efforts  were  made  to  collect  more information on innovation activities of firms through surveys based on the so-called Oslo Manual (Smith, 2004). In the beginning these surveys were mostly confined to member states of the European Community, hence the label ‚Community Innovation Surveys? (CIS), but more recently a number of other countries, including some developing ones, have started to collect the same type  of information (Jaramillo  et al., 2001;  UNU-INTECH, 2004; Blankley  et  al.,  2006).

Types of Innovation 

Radical innovations are new products, services or processes and involve significant change and innovation. Accordingly, the impact is also greater, for example, new markets can be created as a result. In this typology of open innovation, is the function or goal. It’s what you aim to achieve with open innovation, or better, what area of your business you aim to improve. This dimension can be broken down into four clear segments: R&D, insight, marketing, and talent. Research and development entails using it to develop ideas and products that are accurately tuned to match customer requirements. 

Disruptive stands for detachment and disruption and describes innovations that shape a new market. Disruptive innovations mostly originate in the low-end segment, in less attractive segments. However, as the maturity of technology and products increases, they are gradually attacking the mass market and thus replacing existing services. “Insight” is the term we use here for the process of figuring out what those requirements actually are, based on market and customer intelligence. Marketing entails ways of gaining a strategic competitive advantage by finding new ways to boost your brand and make your products “sell themselves”. Talent scouting means finding ways to connect with unique talent that is usually hard to reach and evoking their interest in working with you. The second dimension is the target audience, which is here arranged by the level of transparency. It is the group of people you aim to address with open innovation and can vary drastically depending on shared information sensitivity and the required level of knowledge to supply valuable information. This dimension can be broken down into four segments: intercompany, intercompany, and publicly open and for professionals. Intercompany means that information and collaboration is shared only internally between the employees of one company. Strictly speaking, this might not count as open innovation, but we’d still like to include it here as it behaves very much like open innovation in the case of most large organizations. An example of this could be a hackathon: intensive engagement of joint multi-disciplinary effort to solve acute business challenges. Intercompany means that information is shared between several collaborative partner companies, often working on a common field of operation. The point is to form symbiotic relationships where all participants can reap the benefits of united strength without “stepping on each other’s toes.” This usually works well when the companies specialize on delivering value in different parts of the supply chain. Publicly open is the most common form of open innovation, as the name would suggest. It means using every individual, who is willing to contribute, to get input on what aspects of the product consumers find important. You can utilize almost any channel available to reach out to the masses, be it to help improve your products, or finding new talent to work with you.

In some cases, it is important to target a very specific group of professionals. Although targeting the entire public may spark a wider range of ideas, in some cases, the participants must have an advanced understanding of the field to be able to really contribute. For example, a company developing cutting edge drugs would usually need the help of individuals educated in medicine. For this reason, universities are often a common target audience when seeking for fresh ideas of professional quality.

Organizational innovation

Organizational innovations affect the process and organizational structure. These can be organizational process innovations or management innovations, e. g. new tools for measuring customer satisfaction or optimizing delivery processes to reduce costs.

Social innovation

Social innovations are innovations where the benefit lies with society and the purpose is not primarily profit. Examples include innovation in education, poverty reduction, equal opportunities and health.

Environmental innovation

All innovations that contribute to improving the environment are environmental innovations. For example, environmentally friendly products, contributions to environmental protection or the avoidance of emissions.

Government Policies

Nonetheless, there are some features common to innovation in different industries. Considerable costs beyond R & D are often necessary before the innovations reach commercial use. And the following managerial characteristics are in general associated with successful innovation: a deliberate policy of seeking innovations; close and careful attention to customer requirements; good personal communications both within the firm and with outside sources of relevant knowledge; a style of management that is ‘organic’ and ‘participatory’ rather than ‘hierarchical’ and ‘authoritarian’; strong project leadership; and a strong engineering capability. R & D managers are still unable to predict the outcome of R & D projects to a useful degree of accuracy and, in the literature on methods of project selection, very little attention is paid to market uncertainties. Furthermore, a greater use of conventional investment appraisal criteria in deciding on R & D projects may re-in force the already observed tendency in industry towards short-term, low-risk projects, to the neglect of longer-term, high-risk projects. The clearest implication of our research is that to the extent that policymakers choose to subsidize innovative activity by firms, they should consider the full set of tax and regulatory policies that impact aggregate innovation through firm profitability. Taxing corporate profits or enacting regulations that make it more costly for firms to start up or operate has a significantly negative influence on innovation, undercutting the simulative impact of R&D subsidization. The net effect may be to depress, rather than encourage, innovation by firms.

Governments specifically finance R & D activities in industrial firms, although these expenditures are less than those for general industrial development. These R & D activities in industry are relatively more important in France and UK, than in F.R. Germany and the Netherlands. We’ve established a benchmark model of innovation that provides a straightforward procedure for estimating relative magnitudes of long-run macroeconomic impact of a range of innovation policy options. The procedure gauges approximate policy impact on macroeconomic outcomes quite simply, through computing the government’s fiscal expenditure on innovation policies.

The response of economic welfare and GDP over the long run to changes in innovation policy is highly sensitive to the size of innovation spillovers; welfare gains could vary between virtually no change and a 50 percent increase in equivalent consumption, depending on spillover size.

Unfortunately, we cannot accurately measure these long-run effects without accurate estimates as to the magnitude of innovation spillovers. Results from our model indicate, however, that even under ideal conditions, it should be very difficult to measure spillovers using data on medium-term response of the macro economy from changes in innovation policy. That is, evidence from the medium term is not likely to help differentiate long-run effectiveness because all policies have similar medium-term outcomes regardless of the size of spillovers.

In the four countries, more than 70% of all civilian government R & D activities related to industry are spent on aircraft, space, nuclear energy and electronics. In all these high technologies, governments attempted in the 1960's to implement ‘policies for innovation’, involving government procurement, industrial mergers and attempts at European co-operation, in addition to the financing of R & D. Government expenditures on civilian R & D related to other industrial sectors are very much smaller in all four countries.

Tax credits / capital investment allowances

  • Policies to encourage small business creation and entrepreneurship
  • Toughening up of competition policy to expose cartel behaviour, but to allow and promote joint ventures to fund research and development
  • Lower corporation taxes to encourage innovative foreign companies to establish in Britain
  • Increased funding for research in our universities
  • Lower corporation taxes on profits generated from the exploitation of patents – this is known as a Patent Box and is geared towards incentivizing research and development
  • Government spending might be geared towards smaller more innovative businesses – for example UK government announced plans in 2014 to switch from Microsoft Office to open source for the software bought by large government departments