Did you know that, in the 17th century, being innovative was punished by cutting off your ears? You are right! Believe it or not, it was not until the nineteenth century that the term innovation – previously treated as an invention, was associated with the world of science and industry and, in 1939, Joseph Schumpeter – Austrian economist and professor at Harvard University, differentiates both terms indicating that the invention is related to the discovery or creation of new products, methods, materials, processes while, innovation – beyond creating new inventions from scratch, takes these elements and transforms them by applying new ideas, techniques , processes or knowledge, to improve them.
What is innovation in business?
Schumpeter, indicates that innovation is the result of the combination of 5 components:
• The production of a new product
• Introducing a new production method
• The development of a new market
• The acquisition of a new source of raw material
• The emergence of a new organization / industry.
What is the role of innovation in business?
This combination can bring us closer to different scenarios in which we can locate the situation of our company to know what areas it can or should improve to remain competitive in its environment. Once identified, we have endless skills, tools and ideas, which we can combine in practice to create a strategy that allows us to achieve new advances that escape the conventional revolutionizing the market and society.
“We need to start treating innovation like other business disciplines, as a set of tools designed to achieve specific goals… [and] create a portfolio of innovation strategies designed for specific tasks” notes Mapping Innovation author Greg Satell.
This need is increasing thanks to globalization, whose effect on society and market demand requires a great effort from us to stand out, solve day-to-day problems and improve our processes, in a creative and flexible way, allowing us to maintain our competitiveness and, in addition, we identify and explore new business opportunities.
For this reason, Sattel has created an Innovation Matrix that can guide companies to identify the best innovation strategy – to solve a problem or situation, depending on the landscape in which the company finds itself.
First, we must answer two questions:
• How well can we define the problem?
• How well can we define the skill domains needed to solve it?
What are 4 different types of innovation?
Once these questions have been answered, we will be able to know what situation we are in and what strategy to use:
Focuses on improving existing products, processes or capabilities of which we already know the problems they face and the tools or skills they require to solve them. Common strategies such as the roadmap, R&D labs, or design thinking can usually be used.
Here we are faced with problems that, although they are clearly defined, the same does not happen with their solutions. In this scenario, we must go beyond the conventional, approaching each problem from different skills and perspectives that may differ from the domain in which the problem originated.
in this context, the best and common practices of companies may not be the most effective in the face of a problem, to the extent that the rules of the game – competition, constantly change due to social or technological factors. In other words, continuing to innovate in products within an area that little by little the interest of the people, can result in catastrophe, so the most convenient thing is to innovate in the business model.
Not all the innovations that revolutionize the world arise from a stroke of luck. In most cases, companies invest resources well in experts, laboratories, materials and learning programs to carry out preliminary research that will later result in products, processes, models, etc., that will play an essential role in our business.
Do you already know what phase you are in? Remember that problems will always arise, but it is up to us to know how to identify which strategy is best for us and use our creativity to solve them.