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“There is something much more serious than not having succeeded; It’s not having tried.” – Franklin Roosevelt.

Introduction

Etymologically, the term innovation comes from the Latin Novus meaning “ new “. The concept appeared in 1927 and that is to say it is introduced in an established environment 1 . But, a confusion remains on the notion of “novelty”. For several reasons2 :

  • The confusion with notions of invention, discovery, development…
  • The same innovation term because it refers to both a process and a result

The consensus will be obtained on an “economic” definition of the term innovation identified by J. Schumpeter. He distinguishes the notion of invention and innovation, in that the latter has an impact on a market to ensure profitability and growth to a company3.

For example, Xerox is known for these inventions but not for these innovations. A saying in Silicon Valley refers to it : Xerox invents, and Apple or IBM market »4.

As a result, maintaining an innovative product flow for a company is a strategic priority: “lack of innovation is the number one cause of organizational decline »5.

The birth of this ‘nnovation wave‘ is due to globalization, and was formed around the 1980s 6 . Companies must strive to be attentive and responsive. The consequence of this competition is leading many authors to recommend accelerating the pace of innovation. To survive, companies depend on their ability to identify customer expectations and develop new products7.

The characteristics of innovation

Using this definition allows us to highlight the 3 key points of an innovation : « Novelty », « Environment » and « Profit ».

Novelty

« Without new, no innovation »8. Etymologically, an innovation is new. Behind this first characteristic is all the issues related to creativity :

    • The generation of ideas.
    • The organization to realize an idea.
    • Risks related to the novelty – “If the company tries to minimize this risk, it loses precisely its innovative side.” Laurence BLOCH, director of the Plaza Athénée

Environment

An intrinsic feature of an innovation is that it is valid in an identified environment: “innovation only makes sense in a given context »9. An innovation is defined by its domain, place, time…

Impact on the market

This involves measuring the degree of diffusion of innovation in a market. An innovation can remain marginal, creating only a niche market (For example, Nordic Walking, a new sporting practice in Finland, is a breakthrough innovation but marginal), or become an international standard and essential, such as internet or mobile phones.

The concept of creative destruction

Creative destruction refers to the process of disappearing business sectors in conjunction with the creation of new economic activities. The expression was popularized by Schumpeter in his book “ Capitalism, Socialism and Democracy ” published in 1942. The idea goes back to the philosopher Friedrich Nietzsche, but the wording itself was first proposed by the economist Werner Sombart. Although conservative, Schumpeter drew much of his understanding of the creative destruction of Karl Marx’s works.

In Schumpeter’s vision of capitalism, innovation driven by entrepreneurs is the driving force of long-term economic growth. Even if it implies a value destruction (or “perpetual hurricane” according to Schumpeter) for established firms that enjoyed a dominant position

Companies that have revolutionized and dominated their market in the past, such as Xerox for photocopiers or Polaroid for instant cameras, have seen their margins shrink and their dominance disappear with the arrival of rivals with better design or manufacturing costs. very inferior. Creative destruction can sometimes be monopolies rather than destroying them. This is the case with Wal-Mart, a company in the United States that is progressively dominating the retail trade using new inventory management, marketing and human resource management techniques, and making many businesses disappear. old or smaller.  We talk about “Walmartization” to evoke this dominance.

Creative destruction is a very powerful concept because it explains the dynamics of industrial change and the transition from a competitive system to a monopoly and vice versa. Unfortunately for some, creative destruction is painful. Businesses that do not follow the new trend become obsolete and eventually disappear. This has disastrous consequences for a local economy. Only companies that know how to regenerate, such as IBM, 3M, Siemens, Apple, Sony and others have been able to adapt to new market conditions to survive and create growth. On the other hand, companies like Digital or Ilford have not been able to follow emerging technologies and have disappeared despite an important position on the market.

Classification of innovations

One of the areas of research in innovation is to classify innovations in order to break down the problem of innovation and to identify managerial tools facilitating innovation. A reference book (Prize “Business Book of the Year 2005” Business Book of the Year 2005  » awarded by the Financial Times) dealing with innovation10 identifies 4 classes of innovation.

 

 

Source : C. C. Markides, P. A. Geroski (2005) – Fast Second

Effect of innovation on consumer habits and behaviors

On the impact of innovation on consumers. I’m talking about the impact of changes in habits and behaviors.

Business

The authors identify this axis as the impact of innovation on the skills and assets of competing companies, in other words on the strategic value of novelty.

Definition of innovation classes

Major

A major innovation is a product or service whose impact on consumer habits is very important.

Supermarkets are an example: With the creation of the first Leclerc, the sale of food products that already existed, but whose mode of sale has evolved has radically changed the habits of consumers. This without revolutionizing the know-how of the company.

Breaking

A breakthrough innovation is more complex than the others. The break is an innovation whose impact on the market and the company is so great as to call into question the existing one. The invention of the digital camera is an example. In addition to the significant change in the use of cameras by consumers, this innovation has required a strong evolution of companies to the point of destroying the existing know-how.

incremental

An incremental innovation brings little novelty in terms of product and little novelty on the market. In particular, we find all “ range animation” projects, such as the evolution of car ranges every 1, 2 or 3 years….

This type of innovation does not revolutionize the uses that are made by the products or services, but simply an update of it in relation to the natural evolution of the market. At the level of the company, it is the same, without questioning the current skills and knowledge, this type of innovation simply to improve the existing.

Strategic

This type of innovation is usually due to a desire of the company to integrate a new market or to get back to the taste of the day vis-à-vis a market that has evolved.

This type of innovation requires a strong transformation of the company by integrating new skills and knowledge, often destroying the current ones.

Manage innovation

There are many surveys and surveys on inputs, wishes, brakes … on innovation. We will find 3 facets in the management of innovation. 

The objectives of an innovation strategy

Innovation is a necessity. It allows the company at least to survive and at best to generate growth. But not only :

Quality

Cost

Delay

Improve the quality of new products / services (function, use, reliability …). 

Reposition the company (range extension …). 

Invent a new product / create the need. 

Monitor / anticipate market developments.

Master the competition. 

Get a competitive advantage.

Develop new products faster (Time To Market).

Increase the number of new products to introduce on the market. 

Integrate a marketing culture.

Put the new product on the market on time.

Reduce investment costs for developing new products.

Reduce the payback period for new products. 

Improve the productivity of the costs of business expenses. 

Decrease manufacturing costs.

In terms of product development strategy, we will find 2 possible typologies11 :

  • Red Ocean: simple product improvement, which we can relate to an incremental innovation strategic. 
  • Blue Ocean : design a new product, which we can relate to an innovation major Breakthrough.

 

The differentiation of strategies is done on the market. The red, when we attack an existing market, and the blue, when we create the market. These authors note that the blue ocean strategy helps to generate the most profile.

Source : W. C. Kim, R. Mauborgne (2005) – Blue Ocean strategy

Organize innovation

Ideally, the challenge for a company is to set up an organization that systematically generates innovative products. One might think that “ is sufficient ” to implement clear and structured processes following the precepts of the TQM, du 6 Sigma or also ISO 9000.

Yet, many studies show the disadvantages of applying these methods12 : Relying on the number and type of patents of ISO 9000 companies, these researchers have established that they have generated fewer radical innovations than the others, but more incremental innovations.

The managerial conclusions are clear :

  • If you are in a sector where radical innovation is not predominant, then the methods will be implemented. DFSS, ISO 9000… and systematically generate incremental innovations.
  • On the other hand, if we are in a sector where radical innovation is paramount, then we will have little or no use of these methods and give pride of place to good practices to facilitate creativity.

“Google” Management

Factor promoting innovation

To enable the emergence of innovation in the company, managers must set up a culture based on a few recommendations13, 14 :

  •  Clear specifications (output product, standard, strategy …)
  • Organizational support (resources, priorities, roles, culture …)
  • Personal consequences (personal benefit, recognition …)
  • Feedback from the system (learning)
  • Behavioral factors of the individual (physical, mental, emotional)
  • Competence and knowledge of the individual
  • Externality capacity (partnership, merger …)

The brakes on innovation

  • In the same way, within an organization, the brakes on innovation are legion. The paradigms and others15 :
  • Excessive economic risk
  • Lack of appropriate funding
  • Lack of qualified personnel
  • Lack of information about the technology
  • Insufficient flexibility of standards or regulations
  • Customer indifference
  • Organizational rigidity
  • Lack of market information

Source

1 – F. Durieux (2000) – Management de l’innovation

2 – J. Perrin (2001) – Concevoir l’innovation industrielle, méthodologie de conception de l’innovation

3 – J. Schumpeter (1935) – Théorie de l’évolution économique

4 – J. Y. Prax (2005) – Objectif : innovation

5 – P. F. Drucker (2001) –  Management challenges for the 21st century

6 – A. Hatchuel, P. Le Masson (2001) – From R&D to RID : Design strategies and the management of innovation fields

7 – X. X. Shen, K. C. Tan, M. Xie (2000) – An integrated approach to innovative product development using Kano’s model and QFD

8 – F. Cros (1999) – L’innovation en éducation et en formation dans tous ses sens

9 – M. L. Gomez, I. Bouty (2006) – Dans les marmites de l’innovation

10 – C. C. Markides, P. A. Geroski (2005) – Fast Second

11 – W. C. Kim, R. Mauborgne (2005) – Blue ocean strategy

12 – M. J. Benner, M. L. Tushman (2001) – Exploitation, exploration, and process management : the productivity dilemma revisited

13 – N. Nohria, W. Joyce, B. Roberson (2003) – What really works

14 – J. C. Collins (2001) – Good to great : why some companies make the leap… and others don’t

15 – Eurostat (2004) – CIS3 (Community Innovation Survey 1998-2000) OCDE (2005) – Manuel d’Oslo : principes diecteurs pour le recueil et l’interprétations des données sur l’innovation N. Soken, B. K. Barnes (2008) – Managing innovation

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