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Internal Sources of Innovation

Entrepreneurship - Innovation

  • The unexpected

The unexpected success offers the best opportunities for successful innovation but is generally rejected or goes un-noticed by the management of the organization. It requires careful analysis by the ablest minds to understand and exploit these opportunities and extensive support from the management.

The unexpected failure cannot be rejected and rarely goes unnoticed. A failure resulting from incompetence in design or execution or improper planning does not provide any innovative opportunity. However, failures that occur in spite of careful planning, design and execution speak of the required underlying change and bring new opportunities.

The unexpected outside event provides the greatest opportunity to apply an existing expertise to create a new offering well within the scope of the current business with least risk.

  • The incongruity (lack of harmony)

An incongruity is a discrepancy between the actual outcome and the expected one. It may be difficult to understand the reason for the same but it indicates some fault which can serve as an opportunity for innovation. Incongruities are generally qualitative rather than quantitative. The different kinds of incongruities are:

  • An incongruity between the economic realities of an industry

There is a steady increase in demand for a product or service but still the profitability of the industry is not promising.

  • An incongruity between the realities of an industry and the preconceived notions about it

Serious, concentrated efforts do not improve upon the things and processes, rather they deteriorate them - the efforts are channeled in the wrong direction.

  • An incongruity between the efforts of an industry and the values and expectations of its customers

To succeed in any work requires that the producer believes in the work that he is doing. What may be of value to the producer may also hold value for the customer. However, no customer ever perceives himself as buying what the producer delivers.

  • An internal congruity within the rhythm or the logic of a process

The users are aware of such incongruities. However, these must be addressed and utilized as an opportunity for innovation.

  • Process need

‘Opportunity is the source of innovation’ but at the same time ‘Necessity is the mother of innovation’. The ‘process need’ exists within the process of a business, an organization, an industry or a service. It focuses on a specific task and starts with the job that is to be done. It aims at improving upon an existing process by redesigning it based on the new knowledge acquired or strengthening its weak links. However, there are some important issues associated with successful innovations based on process need:

  • Good and clear understanding of the need.
  • Adequate knowledge to cater to the need.
  • A solution that is capable of satisfying the need and fits well in the current working style of the people.
  • Structural changes in the market or industry

A change in industry structure requires creative and innovative thinking on part of all the people associated with the industry. The rapid growth in industry, change in the business process of the industry call for structural changes in the industry and thus offer exceptional opportunities that must not be viewed as threats by the insiders but as a means to emerge as innovative market leaders.

External Sources of Innovation

  • Demographical changes

Demographics are defined as the characteristics of human populations and population segments, especially when used to identify consumer markets. It signifies changes in population, its size, age structure, composition, employment, educational status and income. They are unambiguous and showcase the most predictable consequences. Demographics have a major impact on what will be bought, by whom and in what quantities. Most businesses neglect the demographic factors during the decision making process. However, entrepreneurs seek demographic changes as an innovative, dependable and rewarding opportunity.

  • Perceptional and mood changes

Unexpected success/ failure generally symbolize a change in perception and meaning. A change in perception does not alter the facts but the meaning conveyed by those facts. The meaning changes from ‘The glass is half full’ to ‘The glass is half empty’ and this change can come very fast. If the perception changes from seeing the ‘glass half full’ to seeing the ’glass half empty’, then there are major innovative opportunities.

  • Emergence of new knowledge

Knowledge-based innovations may not be necessarily technical or scientific. Social innovations driven by knowledge can have an equal impact. Knowledge-based innovations differ from other innovations in terms of time span, casualty rate, and predictability and in the challenges for the entrepreneur.

Characteristics of Knowledge-based innovations:

  • Longest lead time of all innovations

The time span between the emergence of new knowledge and its application to technology and further application of this technology to create new products is long.

  • Convergences

These innovations are based on multiple factors and convergence of different types of knowledge that may or may not be technological or scientific.

Requirements of Knowledge-based innovation:

  • Careful analysis of all the important factors that may be scientific, social, economic or perceptual to find out the missing ones.
  • Clear focus on strategic position because the innovator has to do things right in the first time itself.

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