INNOVATION AND ENTREPRENEURSHIP : TYPES AND

SOURCES OF INNOVATION

INTRODUCTION

Innovation and Managing innovation is a key strategic issue in

any organization. Innovation is defined as creating better or more
effective or more efficient processes and services or generating
the ideas or culture that will breed this creativity. This is coupled
with the willingness to implement changes to existing methods or
techniques in order to gain the benefits of greater efficiency.
Innovation can take different directions as it impacts products
and processes. This includes changing the method that a process
takes in, how it is delivered to the end-user, changing what
services are offered and this might include discontinuing outdated
services or support. Friends, this session will give you an idea
about the innovation as a concept and its importance in any
organization. It will also explain you different methods and
sources of doing innovation. There are certain conditions which
leads effective innovation. Also protecting innovation in
organization is very important task. The session will give
emphasis on those conditions and methods of protecting
innovation and creativity.

OBJECTIVES :
The objectives of the session are to make you understand:
1. The concept of innovation
2. Approaches to innovation
3. Importance of innovation in an organization
4. Types of innovation
5. Sources of innovation

INNOVATION

Innovation is “The multistage process whereby organizations

transform ideas into new/improved products/services or
processes, in order to advance, compete and differentiate
themselves successfully in their marketplace.”
Innovations vary considerably in their nature. Innovation is
conceived as a means of changing an organization, either as a
response to changes in the external environment or as a pre-
emptive action to influence the environment. Hence, innovation is
here broadly defined to encompass a range of types, including
new product or service, new process technology, new
organization structure or administrative systems, or new plans or
program pertaining to organization members.

INNOVATION AS A PROCESS IS INVOLVES STAGES, SOCIAL,

MEANS, NATURE , TYPE , AIM. IF YOU LOOK INTO THIS
MODEL,
TYPES OF INNOVATION

Two of the main approaches to the classification of innovations

are :
 on the basis of the nature or degree of innovation
 on basis of the type of innovation, respectively.
The nature or degree of innovation refers to the newness or
degree of novelty involved, and leads to a classification of
innovations into radical or incremental (Bessant and Tidd, 2007).
Many classifications of innovation types have been proposed over
the years. One of the earliest models (Knight, 1967) proposes the
following types of innovation: organizational structure, production
process, people, and product/service.

Binary models proposed Bantel and Jackson, Daft, Evan in the

1970’s and 1980’s discuss, variously, administrative, technical,
incremental, radical, product, and process, as types of innovation
More recently a number of integrative models have been
proposed all of which identify a number of different types of
innovation. For example, Oke et al. (2007) gave types of
innovation which includes: product (including radical and
incremental), service, and process (including administrative,
service and production). The types of innovation includes :

(1) Product or service innovation, concerned with the

organization’s new product or service offerings.
(2) Production-process innovation, referring to the changes to
organizational operations and production; this is also usually
initiated by technological advancements.
(3) Organizational structure innovation, concerned with the
organization’s authority relations, communication systems, or
formal reward systems.
(4) People innovation, relating to changes to the people (staff)
within an organization, including changes in staffing levels,
personnel, job roles, cultures, and behaviours.
Friends any change in the product or service range an
organization takes to market. This is most clearly understood
form of innovation and involves the creation of new products and
services usually via Research and Development Departments.

Also, any change in the application of a product or service away

from its original purpose, for ex. Using personal computers as a
vehicle for communication rather than stand alone items and
eventually internet as a vehicle for commerce as well as more
general communication.

Any change in the market to which a product or service is applied

away from the originally identified market, for ex. Medical drugs
developed for one population becoming a successful intervention
for another population. The story of Viagra within Pfizer is clear
example of a product developed for one population having
significant value for another population.

Any change in the way a product or service is developed and

delivered away from the original, operational and logistical design
, For ex. Major developments are taking place in the field of
online learning, a significant move away from traditional
approaches to education, training and development.
At present many organizations are simply putting face to face
teaching materials online without appreciating the need for
fundamental innovation in the design, development and delivery
of online education.

There is also a special category of innovation that focuses upon

an organization’s development of its core business model away
from its current or previous business model. The financial
services are witnessing significant developments in business
innovation. The range of organizations that now seek to generate
significant revenue from offering financial services is much
broader than what was formerly restricted number of providers.

Food sector SMEs offered a wide range of examples of innovation.

They were able to classify their innovations into product, process,
position or paradigm innovations. Further, there is evidence that
food sector SMEs are engaged in a range of innovation types,
although a greater number of examples were offered for product
innovation than for other types of innovation.

We can say that an innovation is a far deeper process than simply

improvement and the change it brings is also far long lasting and
full of impact.

SOURCES OF INNOVATION
According to Peter F Drucker, there are seven sources of
innovation.

1. The unexpected: Innovations can take place unexpectedly.

They can happen by chance. Someone might just stumble
upon a new idea or product. There is a long list of
unexpected innovations in human history. Even fire is
considered an unexpected innovation that humans stumbled
upon. Another example is the dynamite. However, an
interesting thing to note is that several important
innovations in our history have happened unexpectedly.
Many times while scientists are looking for something, they
stumble upon something else.
2. Incongruities: When the need is incongruent with the
supply, innovation might be born. In an attempt to resolve
the existing incongruities people might innovate. For
example as the population of cars grew there was a
shortage of parking area. In an attempt to solve the
incongruity between parking area and parking shortage, the
smart car was born. Smart car is a small car that can fit in
small spaces. Incongruities can be an important source of
innovation. It is basically in the human nature to try to fill
the incongruities he sees around him.
3. Market structure: An existing market structure can also
give rise to chances for innovation. This is how Google was
born. Google shaped the search engine market. Before
 Google the search engines were not as perfect and Google
brought all of it in order. There was so much information
scattered over the World Wide Web. Google made this
information searchable. Thus, the World Wide Web gave rise
to a market structure where a search engine like Google
could flourish. the world wide web paved way for
interconnection. Google created a search engine that was
linked to all the searchable data.
4. Necessity: Necessity is the mother of invention but it is also
the mother of innovation. Let us say Microscope. It was born
out of the need to delve deeper into the microbial world.
Needs always set us thinking. Innovation is based upon
bright ideas. the human mind thinks of new things that can
better fulfill an existing need. In this process he thinks of
filling his needs in new ways and by devising new products
and mechanisms.
5. Demographics: Our lifestyles can also be a source of
innovation. We all have our lifestyle needs. For example we
feel the need to smoke. However, since smoking is
dangerous, we made e-cigarettes to satisfy the urge.
Lifestyle needs are not small needs and their fulfillment and
important requirement for us. This is where innovators
sometimes find major opportunities.
6. Changing perception: Changing perception regarding
things can also give birth to innovation. Earlier, the
 overweight people were seen as healthier than the leaner
ones. However, the social perception of healthy has
undergone a big change where fat people are seen as obese
and unhealthy. People feel the need to remain leaner and
healthier. Based upon this changed perception, a flood of
healthy and low calorie foods came to the market.
7. New knowledge: New knowledge can also be a source of
innovation. Whether it is nano-technology, biotechnology or
even artificial intelligence, new knowledge in any area is a
source of innovation. the science keeps progressing. Every
year new areas are discovered and much gets added to the
existing base of human knowledge. This new knowledge
paves way for innovations that can sometimes be life
changing. Healthcare is an area that has overtime been
heavily affected by such innovations whether they emerge
from the fields of biotechnology or
nanotechnology. However, one can find many more such
examples in his daily life. There can be some other sources
of innovation also apart from the ones Drucker discussed.
Innovation can be born out of passion or adventure or even
of a hobby.

CONCLUSION
Friends, Let me conclude what we have seen in this
session. Innovation is defined as creating better or more
effective or more efficient processes and services or generating
the ideas or culture that will breed this creativity. The types of
innovation Product or service innovation, concerned with the
organization’s new product or service offerings. Production-
process innovation, referring to the changes to organizational
operations and production. Organizational structure innovation,
concerned with the organization’s authority relations. People
innovation, relating to changes to the people. There are different
approaches and sources of innovation. We can say considering
above all points that Better Innovation creates better
organization. I hope you liked the session. Thank you.

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