What is Management?
Management work is at the core of every organisation and typically involves:
- Aligning the contributions of the company’s staff;
- Setting and monitoring goals in the short and medium term;
- Allocating resources, both capital and other resources;
- Setting strategy;
- Defining and tracking key performance indicators.
You don’t have to be formally trained in management to have managerial functions. A number of professionals and entrepreneurs have trained in other subjects or learned on the job.
What is innovation?
Innovation is often seen as a theoretical, abstract concept. It is actually a very practical notion. A large number of companies innovate every day around the globe. The general definition of innovation in business is the creation of value through successful implementation of (new) ideas. Innovation involves bringing new ideas to the market, which will:
- Yield results that are better for company’s customers
- Contribute to simplify the lives of the company’s staff, or
- Reduce costs.
If a company is selling a product or service and things are going really well, there is still scope for innovation. This can be troubling. Why should anyone change a product or a process which works well? In order to gain efficiency gains, cut production times or better serve a market.
Innovation management: practical aspects
The management of innovation can involve:
- Defining strategic goals taking into account the role of innovation
- Managing projects in such a way that the results are innovative
- Compensating employees to reward innovative initiatives
- Assessing the risks associated with innovation. Understanding possible mitigating factors
- Communicating internally.
Why is innovation so important?
While many companies devote great rhetoric to innovation in their annual reports, mission statements and marketing materials, truly innovative companies are still rare. Yet, the only way to achieve growth and secure competitive advantages for any company is through innovation.
What are the main types of innovation?
Innovation is more than using the latest technology. Consider different strategic intents and you will have different types of innovation (e.g. creating a new product, a new platform for product development, changing the way an organisation works).
The following types of innovation are usually considered:
- Product (or service) innovation which relates to products or services offered by companies and consists in product improvements or increases in a product’s features
- Process innovation. Often overlooked, this is a type of innovation which consists in improvements in the production process. It includes improvements in machinery, increases in productivity, organisation and human resources changes.
Innovation should cover the successful adaptation of an innovative idea from elsewhere, as much as the invention of an entirely new project. The latter is often defined as disruptive innovation and is associated with a new product, process or technology. Sustained or incremental innovation however, covers the adaptation of something done elsewhere or a slight improvement to a product, service or process.
Are all entrepreneurs innovators?
The short answer is no. Consider the owner of a local restaurant. Is he or she an entrepreneur or an innovator? There is certainly a certain amount of risk involved. But opening a local restaurant has been done many times in the past. The owner of a local restaurant is not creating a new consumer need or stimulating a new type of demand and can hardly be called an entrepreneur or an innovator.
Can anyone become a tech innovator?
In some cases, an entrepreneur combines the knowledge of technology and of a particular market. The most renowned “high-tech” entrepreneur is probably Thomas Edison. Today the foundation that bears his name continues to promote his entrepreneurial spirit. His real ambition was to build businesses based on technology. Yet today, high-tech entrepreneurs are still inventors and not innovators, speculators and not entrepreneurs. Those who combine technology and the entrepreneurial spirit are still a relatively rare breed.
The good news is that you don’t need to have a technology degree to become a tech entrepreneur – although it helps.
How do I spot opportunities for innovation?
You need to go to the source: the customer that you are targeting.
If you break down this general rule (and assuming that you have products on the market):
- If you sell to the final consumer and you are seeking to improve your existing products, you should probably start by understanding the real reason customers are purchasing your products. Could other products do the same job in a better way?
- If you are selling to other companies, you can start by asking the same question but also you should probably understand why your customer’s final customers are buying the final product.
(updated April 2012 by Hugo Mendes Domingos)
Innovation Models 