Is a change in the thought process for doing something, or the useful application of new inventions or discoveries? It may refer to an incremental emergent or radical and revolutionary changes in thinking, products, processes, or organizations.

• Likely to be completely new product or service
• Could also be a small improvement in existing products or services
• Might be an improvement in internal processes too
• Today is likely to have a strong technological component, e.g. software, electronics
• Probably for existing market, but may also create new / niche

Importance of Innovation

• Increases opportunity market separation
• Good for the economy as a whole (as companies trade on a global basis)
• Usually leads to cost reductions – better margins
• Should give consumers greater satisfaction and wider choice
• Reduces dependency on old products / services and technological processes.

Stages of Innovation

• Creative idea, spark of genius.
• Creation of white papers, reports and reviews.
• Proof of Concept(s).
• The business plan, financial case and the MONEY.
• The commercialization process begins in earnest.

The four P’s that drives Innovation.

• Purpose.
• Promotion.
• Process.
• Pipeline.

Successful Innovation needs Purpose

• Must give the creator either a “build” and/or “deliver” opportunity
• Should generate revenues within a year (from Stage 0)
• Investment (through Proof of Concept) must within budget
• Revenues for first year should be “known” with set margins
• Revenues/margin projections and the R&D plans for first three years should be well documented
• Need to take account (amortize) of the process costs of Innovation over the life of the product
• Should pre-build features into the product – but not always release all of these in first version
• Understand the customer segmentation of the target markets from the outset.