Businesses that fail to innovate run the risk of losing ground to competitors, losing key staff, or simply operating inefficiently. Innovation can be a key differentiator between market leaders and their rivals.

1. What is innovation?
“Innovation is significant positive change”
Innovation is the process through which economic and social value is extracted from knowledge
through the generation, development, and implementation of ideas to produce new or improved
strategies, capabilities, products, services, or processes which benefits customer, organization
and the society”
Innovation is a new idea, device or process. Innovation can be viewed as the application of better
solutions that meet the new requirement, existing market needs. This is accomplished through more
effective products, process, services, technologies and ideas.
True innovation is an ever evolving process, the product of unfenced thinking and hard work.
Types of Innovation: Innovation can be broadly classified as follows
i. Incremental Innovation
ii. Radical Innovation
Incremental Innovation: Incremental innovation focuses on making modest improvements to
existing processes, products or services. This could be anything from tightening up an existing
workflow by automating some of the process, to improving our process in order to make self-
service easier, thus reducing the number of customers coming to us through more costly and
time-consuming channels.
Incremental innovation seeks to improve the systems that already exist, making them better,
faster cheaper.
It includes the improvements in functional characteristics, technical abilities or ease of use.
Radical Innovation: Radical innovation involves creating a completely new process or product in
response to a market need or opportunity.
Radical innovations tend to come about as a result of careful research and development into a
specific issue or problem, and frequently make use of new technology to solve them. These kinds
of innovations are often seen as 'breakthrough' innovations, some of which can change the entire
way an organization operates and, on occasion, can result in a new product or service that
impacts an entire market sector.

2. Radical innovations provide something new to the world that we live in by uprooting industry
conventions and by significantly changing customer expectations in a positive way. Ultimately,
they often end up replacing existing methods / technologies.
It is the complete process of bringing a new product or services to the market.
It includes the two parallel paths as follows.
• Idea generation, product design and detail engineering.
• Market research and market analysis
Disruptive Innovation: A disruptive innovation is an innovation that helps create a new market
and value network, and eventually goes on to disrupt an existing market and value network (over
a few years or decades), displacing an earlier technology.
The best approach can be to combine radical and incremental innovation. An example of this
would be to develop a totally new process to produce and manage an existing product or service.
Developing an idea to bundle several products together is also innovation.
This could involve anything from outsourcing part of your manufacturing process, which was
previously done in-house, to moving your IT system onto a more flexible platform, such as cloud
computing.
Need for Innovation
Businesses that fail to innovate run the risk of losing ground to competitors, losing key staff, or
simply operating inefficiently. Innovation can be a key differentiator between market leaders and
their rivals.
Make the most of what you already have:
Innovation is not only about designing a new product or service to sell, but can also focus on
existing business processes and practices to improve efficiency, find new customers, cut down
on waste and increase profits.
Constantly innovating and improving business practices is also likely to help us attract better
staff members and retain more of our existing staff - something which is crucial to the long-term
health and performance of our business.

3. Responding to trends and competition:
Innovation can help us to discover what opportunities exist now, or are likely to emerge in the
future. Successful businesses not only respond to their current customer or organisational needs,
but often anticipate future trends and develop an idea, product or service that allows us to meet
the future demand rapidly and effectively. Innovation will help us stay ahead of our competition
as markets, technologies or trends shift.
Developing a unique selling point:
Consumers often see innovation as something that adds value to a company or to its products.
Used properly, innovation can give us a commercial advantage - especially in saturated or
rapidly shifting markets. Our customers may even be willing to pay more for our well-designed,
novel and innovative product or service, rather than choosing a cheaper, but less exciting rival.
Increasing Global Trade, Opening the Door to More Competitors from Every Region
The Rapid Distribution of Information and Education
Reduced Cost of Entry into Markets and Industries
Nature of Innovation
Product or Service Innovation:
The development of new products/services, changes in design of established
products/services, or use of new materials or components in the manufacture of established
products.
Service Innovation can be defined as “a new or considerably changed service concept, client
interaction channel, service delivery system or technological concept that individually, but most
likely in combination, leads to one or more (re)new(ed) service functions that are new to the
firm.
The development and market introduction of a new, redesigned or substantially improved
product or service. Examples of product innovation by a business might include a new product's

4. invention, technical specification and quality improvements made to a product, or the inclusion
of new components, materials or desirable functions into an existing product.
Process Innovation:
A process innovation is the implementation of a new or significantly improved production or
delivery method. This includes significant changes in techniques, equipment and/or software.
Business Model Innovation: