Workplace creativity concerns the cognitive and behavioral processes applied when attempting to generate novel ideas. Workplace innovation concerns the processes applied when attempting to implement new ideas. In business and in economics , innovation can become a catalyst for growth. With rapid advancements in transportation and communications over the past few decades, the old-world concepts of factor endowments and comparative advantage which focused on an area's unique inputs are outmoded for today's global economy.
Economist Joseph Schumpeter — , who contributed greatly to the study of innovation economics , argued that industries must incessantly revolutionize the economic structure from within, that is innovate with better or more effective processes and products, as well as market distribution, such as the connection from the craft shop to factory.
He famously asserted that " creative destruction is the essential fact about capitalism ". A prime example of innovation involved the explosive boom of Silicon Valley startups out of the Stanford Industrial Park. In , dissatisfied employees of Shockley Semiconductor , the company of Nobel laureate and co-inventor of the transistor William Shockley , left to form an independent firm, Fairchild Semiconductor. After several years, Fairchild developed into a formidable presence in the sector.
Eventually, these founders left to start their own companies based on their own, unique, latest ideas, and then leading employees started their own firms. Over the next 20 years, this snowball process launched the momentous startup-company explosion of information-technology firms. Essentially, Silicon Valley began as 65 new enterprises born out of Shockley's eight former employees.
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Another example involves business incubators — a phenomenon nurtured by governments around the world, close to knowledge clusters mostly research-based like universities or other Government Excellence Centres — which aim primarily to channel generated knowledge to applied innovation outcomes in order to stimulate regional or national economic growth. In the organizational context, innovation may be linked to positive changes in efficiency , productivity , quality , competitiveness , and market share. However, recent research findings highlight the complementary role of organizational culture in enabling organizations to translate innovative activity into tangible performance improvements.
Innovation is the specific function of entrepreneurship, whether in an existing business, a public service institution, or a new venture started by a lone individual in the family kitchen. It is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth. According to Clayton Christensen, disruptive innovation is the key to future success in business.
It is necessary to create and nurture an environment of innovation. Executives and managers need to break away from traditional ways of thinking and use change to their advantage. It is a time of risk but even greater opportunity. Companies will have to downsize or reengineer their operations to remain competitive. This will affect employment as businesses will be forced to reduce the number of people employed while accomplishing the same amount of work if not more.
While disruptive innovation will typically "attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly,"  foundational innovation is slower, and typically has the potential to create new foundations for global technology systems over the longer term. Foundational innovation tends to transform business operating models as entirely new business models emerge over many years, with gradual and steady adoption of the innovation leading to waves of technological and institutional change that gain momentum more slowly.
All organizations can innovate, including for example hospitals, universities, and local governments. This system aids in better evaluation of policies and procedures with accountability and efficiency in terms of time and money. In addition, the growing use of mobile data terminals in vehicles, that serve as communication hubs between vehicles and a control center, automatically send data on location, passenger counts, engine performance, mileage and other information.
This tool helps to deliver and manage transportation systems. Still other innovative strategies include hospitals digitizing medical information in electronic medical records. For example, the U. There are several sources of innovation. It can occur as a result of a focus effort by a range of different agents, by chance, or as a result of a major system failure.
According to Peter F. Drucker , the general sources of innovations are different changes in industry structure, in market structure, in local and global demographics, in human perception, mood and meaning, in the amount of already available scientific knowledge, etc. In the simplest linear model of innovation the traditionally recognized source is manufacturer innovation.
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This is where an agent person or business innovates in order to sell the innovation. Another source of innovation, only now becoming widely recognized, is end-user innovation.
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This is where an agent person or company develops an innovation for their own personal or in-house use because existing products do not meet their needs. MIT economist Eric von Hippel has identified end-user innovation as, by far, the most important and critical in his classic book on the subject, "The Sources of Innovation". The robotics engineer Joseph F.
Engelberger asserts that innovations require only three things:.
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However, innovation processes usually involve: identifying customer needs, macro and meso trends, developing competences, and finding financial support. Investigation of relationship between the concepts of innovation and technology transfer revealed overlap. Information technology and changing business processes and management style can produce a work climate favorable to innovation. Both companies cite these bottom-up processes as major sources for new products and features.
An important innovation factor includes customers buying products or using services. As a result, organizations may incorporate users in focus groups user centred approach , work closely with so called lead users lead user approach or users might adapt their products themselves. The lead user method focuses on idea generation based on leading users to develop breakthrough innovations. Sometimes user-innovators may become entrepreneurs , selling their product, they may choose to trade their innovation in exchange for other innovations, or they may be adopted by their suppliers.
Nowadays, they may also choose to freely reveal their innovations, using methods like open source. In such networks of innovation the users or communities of users can further develop technologies and reinvent their social meaning. One technique for innovating a solution to an identified problem is to actually attempt an experiment with many possible solutions.
This technique is sometimes used in pharmaceutical drug discovery. Thousands of chemical compounds are subjected to high-throughput screening to see if they have any activity against a target molecule which has been identified as biologically significant to a disease. Promising compounds can then be studied; modified to improve efficacy, reduce side effects, and reduce cost of manufacture; and if successful turned into treatments. This is used by major sites such as amazon. Programs of organizational innovation are typically tightly linked to organizational goals and objectives, to the business plan , and to market competitive positioning.
One driver for innovation programs in corporations is to achieve growth objectives. As Davila et al. Innovation is the key element in providing aggressive top-line growth, and for increasing bottom-line results".
These goals vary between improvements to products, processes and services and dispel a popular myth that innovation deals mainly with new product development. Most of the goals could apply to any organization be it a manufacturing facility, marketing company, hospital or government.
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Whether innovation goals are successfully achieved or otherwise depends greatly on the environment prevailing in the organization. Conversely, failure can develop in programs of innovations. The causes of failure have been widely researched and can vary considerably. Some causes will be external to the organization and outside its influence of control.
Others will be internal and ultimately within the control of the organization. Internal causes of failure can be divided into causes associated with the cultural infrastructure and causes associated with the innovation process itself. Common causes of failure within the innovation process in most organizations can be distilled into five types: poor goal definition, poor alignment of actions to goals, poor participation in teams, poor monitoring of results, poor communication and access to information.
Diffusion of innovation research was first started in by seminal researcher Gabriel Tarde , who first plotted the S-shaped diffusion curve. Tarde defined the innovation-decision process as a series of steps that include: .
Absorptive capacity and innovation in low-tech companies in emerging economies
Once innovation occurs, innovations may be spread from the innovator to other individuals and groups. This process has been proposed that the lifecycle of innovations can be described using the ' s-curve ' or diffusion curve. The s-curve maps growth of revenue or productivity against time. In the early stage of a particular innovation, growth is relatively slow as the new product establishes itself. At some point, customers begin to demand and the product growth increases more rapidly.