THE CONCEPT OF INNOVATION

Meaning of Innovation

Innovation can be defined as the application of new ideas to the prod­ucts, processes, or other aspects of the activities of a firm that lead to increased value. This value is defined in a broad way to include higher value added for the firm and also benefits to consumers or other firms.

Forms of innovation         

i/ Product innovation

product inovation is the introduction of a new product, or a signif­icant qualitative change in an existing product.

Process innovation is the introduction of a new process for making or delivering goods and services. 

Some authors have emphasized a third category of innovation, that of organizational change within the firm, but we see this as being naturally included within the second category, as a type of process innovation.

ii/ Product innovations

This may include tangible manufactured goods, intangible services, or a combination of the two. Examples of recent tangible prod­uct innovations that have had a very significant impact on the way people live and work are personal computers, mobile phones, and microwave ovens. Intangible products that complement these types of physical equipment include the various pieces of computer software needed to control flows of information through these devices, leading to the deliv­ery of information, the supply of communication services, or the arrival of a correctly heated dinner. Equally,

iii/Process innovations,

Is the one in which are new ways of making and doing things, can arise from the use of new combi­nations of tangible and intangible inputs. A robotic machine to assem­ble cars can deliver welding services with even greater precision than a human welder, but is only as good as its computer control system.

Inherent in the above definitions of innovation is an element of novelty. The question then arises as to how much novelty is enough to identify any change as innovation. A key issue here is to distinguish innova­tion, the bringing to market of a truly novel item, from imitation, the adoption of a new technique or design that is already in the market. A product or process can be new to the firm new to the domestic market or new to the world market. Clearly, the last of these, global novelty, is sufficient to qualify the product or process as an innovation. For those goods and services that are not internationally traded whether due to the nature of the product prohibitive transport costs, or restrictions on trade the test of being new to the domestic market is sufficient to establish that there is an innovation within that economy. Being new to the firm  is an insufficient test for innovation, as the firm in question may simply be adopting a product design, or a production method, introduced by a competitor. In this book we call this the diffusion of innovation.

Conclusion, Definition of innovation as new to the firm and new to the relevant market whether this relevant market is local or global is dependent on the product or process in question and the degree to which it is traded in a competitive global or local environment in which the product exist.

By  Lyimo Joseph

BAPRM 42597