1.3 Discovery, Invention, Innovation and Creativity

By now you'll have been through an in-class exercise about these topics, in which we'll have considered the following figure. This is referred to as an Innovation Value Chain because it represents the very general sequence of activities that create value in our society and economy. Simply put: discoveries result in new ideas in the form of knowledge and concepts, inventions result in new technologies and business models, and innovation exploits inventions to allow for the creation of value through commodities, goods, services and experiences. (Figure 1)

Figure 1

Figure 1. Innovation Value Chain

This is based very loosely on the concepts presented in Cooger et al. (1990).

Using this conceptualization we are able to land on the following definition of innovation:

“Innovation: A process of intentional change made to create value by meeting opportunity and seeking advantage”.

This short definition has several key elements that are worth considering:

• Process: Innovation is a process (implying, among other things, that it can be

learned and managed)

• Intentional: That process is carried out on purpose

• Change: It results in some kind of change

• Value: The whole point of the change is to create value in our economy, society

and/or individual lives

• Opportunity: Entrepreneurial individuals enable tomorrow's value creation by

exploring for it today: having ideas, turning ideas into marketable insights and seeking ways to meet opportunities

• Advantage: At the same time, they also create value by exploiting the opportunities

they have at hand

Innovation involves creating value by bringing together resources that are hard to come by. It applies to small businesses, existing businesses and a range of other types of entrepreneurial ventures such as non-profit ventures. It also applies to you as an individual.

1.4 Technological Vs. Venture Model Innovation

In a later topic we are going to look at ways of distinguishing between different types of innovations. Understanding what type of innovation you are dealing with is of critical strategic importance when it comes to you deciding how you will react to an innovation, whether someone else has introduced it or whether you plan to introduce it to the marketplace.

For now, let's just distinguish between two main types:

1. A technological innovation is a change made in response to a new or modified technology. Classic examples of technological innovation are the Internet, the digital camera and cell phones, to name but just a few. Whether you or someone else in your industry is responsible for a technological innovation, it can be a game-changer. And under the right circumstances it can provide remarkable opportunities for growth.

For those who wish to dig deeper (than required in this course), responding to this kind of innovation is dealt with in well-known works like Crossing the Chasm (Moore, 2002) and The Innovator's Dilemma (Christensen, 1997).

2. A venture model innovation is a change made in response to a new or modified venture model, or some component of a venture model (such as the value chain, the approach to distribution, the choice of mainstream customer and other such concepts that we will look at later).

Well-known examples of venture model innovation include Southwest Airlines, the Nintendo Wii and technologies like Apples' iTunes and iPhone.

While technological advances were required to enable the success of these examples, it was the unique changes to the venture models that made them successful.

For those who wish to dig deeper (than required in this course), this type of innovation is also known as strategic or value innovation. It is described in detail in Kim and Mauborgne (1997) and Kim and Mauborgne (2005).