Change through Innovation and Customer-Orientation

Nature Of Innovation And Its Process

The ways innovation has been defined and addressed are varied. Rogers and Schoemaker (1971) simply define an innovation as an idea, practice or object perceived as new by an individual. The OECD (1978, p. 1) states that “…innovation may be regarded as any new product favourably received by the market.” Besides as a product, Rickards (1985) views innovation as any thought or behavior that is new. He further describes innovation as not a single nor an instantaneous act but a whole sequence of events that occurs over time and which involves all the activities of bringing a new product or process to the market. According to his argument, innovation consists of two sub-systems. The first relates to the firm and its capacity to deal with innovation, and the second comprises technological, economic, social, and institutional factors, which form the external environment. In some fields, the argument by von Hippel (1988, 2005) is that innovation users develop most innovations or, in other words, the innovators are most often users. In that context, he defines users as firms or individual consumers that expect to benefit from using a product or a service while, in contrast, manufacturers expect to benefit from selling it. He explains there can be several factors that drive users to innovate rather than buy and they involve agency costs which play a major role, as well as enjoyment of the innovation process which can be important. He further explains that when a user hires the manufacturer to develop a custom product, the user is then a principal that has hired the custom manufacturer to act as its agent, and if the interests of the principal and the agent are not the same, there will be agency costs incurred. On emphasizing the importance of the process of innovation, Tidd, Bessant, and Pavitt (2001) claim that failing to gain an understanding of its complexity and involvement of many different variables, functions and actors can result in a simplistic analysis of innovation based solely on one of the many contributing aspects of the whole process. Ashworth and Hogg (2000) stress that innovation must deliver high added value, especially in changes of customary practices, and developing a strategy to involve people, practices, processes and technology is part of undertaking innovation.

The causes of innovation can be explained by the factors that are involved in each of the four main models to be described, as well as the progression from the first to the fourth (Jones and Saad, 2003). First, in the linear model, innovation is described as a sequence of stages which starts either from scientific research and known as ‘Technology-Push’ or some perception of a demand known as ‘Need-Pull’. For ‘Technology-Push’, innovation is based on a science-based technological change and is the outcome of professional R&D activities. On the other hand, for the ‘Need-Pull’ model, innovation arises in response to a perceived market need that is recognized in order to trigger the whole process. In essence, the focus is on the user or customer as the starting point of the process of innovation instead of R&D activities. Second, the coupling model acknowledges there is a link between ‘Technology-Push’ and ‘Need-Pull’ and so the two are combined. The adopted view of this model is that major innovations take place as a result of the interaction of technology, science and market, rather than caused by a single factor only. Third, the integrated model includes the interactions between an organization’s natural trajectory and the selection environment, in addition to the interaction of ‘Technology-Push’ and ‘Need-Pull’. The ability of an organization to innovate is determined by market environments which are viewed as the basis of natural selection. Therefore, the interaction is not limited merely to technology and market but also affects the economic, social and institutional context in order to determine the best practice pattern for innovation. Fourth, the systems integration and networking model is built upon the concept that innovation is significantly and increasingly being influenced by the formation of networks, collaboration and alliances leading to a variety of external relationships. Hence, innovation is brought about by having established the strong integration, networks and intra- and inter-organizational relationships which it is dependent upon, as explained.