What is Innovation? – Innovation may be defined as exploiting new ideas leading to the creation of a new product, process or service. It is not just the invention of a new idea that is important, but it is actually “bringing it to market”, putting into practice and exploiting it in a manner that leads to new products, services or systems that add value or improve quality. It possibly involves technological transformation and management restructuring. Innovation also means exploiting new technology and employing out-of-the-box thinking to generate new value and to bring about significant changes in society.
Innovation, the “creation of new knowledge that is applied to practical problems” (1), is the most important driver of competitive success. Market demands result in shorter product life cycles and rapid product obsolescence. Companies that are slow or inefficient to innovate lose market share and eventually move to the margin of the competition playing field. Management has a crucial role driving the innovation policies in a company.
Many innovation initiatives fail to succeed due to commercial or technical feasibility issues. Others end up triggering undesirable externalities (e.g., pollution). In order to curb these risks, management is required to establish proper planning and risk management, by understanding the dynamics of innovation, establishing an appropriate innovation strategy and adopting an efficient process for innovation implementation.