Thursday, February 26, 2015

Designing an Innovation Course: Part 2 Some Definitions

In Part 1 I looked at "Needs Assessment and Proposal Development" for a course in "Innovation, Commercialisation and Entrepreneurship in Technology". With a structure, now I need some content to teach. So I started an open access search for materials I could use for a course. The first requisition to answer is "What is Innovation?".

The first item to pop up was the Oslo Manual (OECD/Eurostat, 2005). This is for collecting statistics about firms. This at least provides a useful definition of:

"An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations." From OECD/Eurostat (2005, p. 46) emphasis added.

"Innovation activities are all scientific, technological, organisational, financial
and commercial steps which actually, or are intended to, lead to the implementation of innovations. Some innovation activities are themselves innovative, others are not novel activities but are necessary for the implementation of innovations. Innovation activities also include R&D that is not directly related to the development of a specific innovation." From OECD/Eurostat (2005, p. 47) emphasis added.
 OECD/Eurostat (2005, pp. 47-51) identify four types of innovations (emphasis added):
  1. A product innovation is the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses. This includes significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics.
  2. A process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques,
    equipment and/or software.
  3. A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement,
    product promotion or pricing.
  4. An organisational innovation is the implementation of a new organisational method in the firm’s business practices, workplace organisation or external relations.
While the OECD likes to collect statistics for these neat categories, in order to innovate iot is likely that you will need to undertake several. As an example an organizational innovation which gives more workplace autonomy for decision making might be implemented through software and an on-line forum, making it a product innovation as well.
One point of difference is that OECD/Eurostat (2005, p. 56) argues that "It is not an innovation to stop doing something, even if it improves a firm’s performance.". However, removing unnecessary work practices and processes can be a significant innovation.

Novelty versus diffusion

OECD/Eurostat (2005), points out that innovation requires some degree of novelty and distinguishes three categories:
  1. New to the firm: "A product, process, marketing method or organisational method may already have been implemented by other firms, but if it is new to the firm (or in case of products and processes: significantly improved), then it is an innovation for that firm." From OECD/Eurostat (2005, p. 57)
  2. New to the market: "Innovations are new to the market when the firm is the first to
    introduce the innovation on its market. The market is simply defined as the
    firm and its competitors and it can include a geographic region or product line." From OECD/Eurostat (2005, p. 58)
  3. New to the world.: "An innovation is new to the world when the firm is the first to introduce the innovation for all markets and industries, domestic and international. New to the world therefore implies a qualitatively greater degree of novelty than new to the market." From OECD/Eurostat (2005, p. 58).

 Disruptive innovation

Disruptive or Radical innovation is "an innovation that has a significant impact on a market and on the economic activity of firms in that market."  (OECD/Eurostat, 2005, p. 58). The impact of innovation may be great even where it is not very novel. As an example, the effect of the use of on-line social media tools have on the way organizations are managed is still being worked out today, even though such tools are not new. Schubert and Williams (2013) trace the use of social media in business over the last six years and comment that so far 'the most popular usage scenarios of the software are not very “social” but support
people in their daily joint work with a focus on getting the job done', so there is scope for further disruptive innovation.

The innovative firm

(OECD/Eurostat, 2005, p. 58) Define the innovative firm as one which "... has
implemented at least one innovation ...". They go on to characterize innovation activities for a period as being:

● "Successful in having resulted in the implementation of an innovation
(although the innovation need not have been commercially successful).
● Ongoing, for work in progress which has not yet resulted in the
implementation of an innovation.
● Abandoned before the implementation of an innovation., while a product or process innovator is defined as a firm that has implemented either a product or a process
innovation." From OECD/Eurostat (2005, p. 58)


OECD/Eurostat (2005), Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, 3rd Edition, The Measurement of Scientific and Technological Activities, OECD Publishing, Paris.
Schubert, P., & Williams, S. P. (2013). The Concept of Social Business: Oxymoron or Sign of a Changing Work Culture?. Proceedings of the 26th Bled eConference, 1-14. Retrieved from

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