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In recent times there has been much talk about innovation, and the need for businesses to be innovative. This raises the question what is innovation? How can it be achieved? Why should businesses be innovative? This article will seek to answer these questions.

Before I define innovation, let me take a look at another term, which although it can be related, it is not the same as innovation, but is often mistaken as such. That term is invention. Invention can be described as, the discovery of a product or process through the use of imagination, ingenious thinking, and experimentation and is, the first proof that it works. Invention is a process, and the result of the process is also called an invention. The prototypes (basic working model) of the cell-phone, bicycle and television are inventions. Invention is usually based on scientific knowledge.


Innovation however, can be defined as the first successful commercial introduction of a new product, the first use of a new method, or the creation of a new form of business enterprise. Successful commercial introduction does not mean that the product or process has been a financial success for the innovator. What it means is that the product or process is available in the marketplace.

An innovation can result from an invention. This occurs when the invention is first successfully brought to the market. As an example when the first cell-phone was brought to the market, that was an innovation. This scenario represents the type of innovation that is referred to as radical. In most other cases the innovations are incremental improvements.

Innovation is a process, which normally takes place at three levels.

1. Local improvements are made by adopting available technologies to satisfy basic needs or to upgrade products or services

2. Competitive industries develop through adaptation of technologies initially produced in or by developed countries

3. Ultimately, new innovations of global significance are developed

Innovation is of two types: product innovation, which refers to new and improved products or services; and process innovation, which refers to new and improved methods of production or distribution.

Unlike inventions, innovations cannot be patented. There are however other forms of Intellectual Property that can be applied to them, for example trademarks and industrial designs.

Innovations can provide firms with a major competitive advantage. Innovations can render competing firms’ products and processes obsolete. For example, personal computers, coupled with software for word processing pushed some major typewriter manufacturers into obscurity. Innovations in hardware retailing (large warehouses stores such as Lowes and Home Depot have threatened the existence of smaller, more traditional hardware stores. To site a local example of innovation, we have seen where the trend of having convenience stores at petrol stations has also threatened the existence of smaller corner and variety shops.

The fact that innovation can make your product or service obsolete is an important incentive for firms to look for new and improved ways of operating and producing new and improve products or services.

Most innovations involve hard focused work, which comes through creative thinking; that is, the generation of new ideas. Therefore in a business environment, there must be a system to encourage the generation and capture of these new ideas. This system must also have a mechanism for evaluating these ideas, so that those with the potential for greatest benefits can be developed.

No aspect of business activities should be excluded from improvements; and hence from the application of creative thought to affect improvement. Innovation must go beyond just products and services to include all aspects of business activities, such as: internal processes, customer relationship management, finance and cost management, marketing, use of technology, organisation structure, and others.

Ingredients for Innovation within the organisation

Characteristics of Creative People

People are at the heart of innovation, whether as individuals or as teams. Therefore one may ask. What are the characteristics of creative people? While it is recognised that everyone can be creative. It is also true that some people are more creative than others. The literature therefore has identified four characteristics of highly creative individuals: intellectual abilities, relevant knowledge and experience, a strong motivation and persistence, and an inventive thinking style.

Intellectual abilities

This refers to the individual’s ability to synthesize information, analyse ideas, and apply their ideas. Creative people have the ability to recognise the significance of small bits of information. They can see how ideas can be applied in the real world.

Relevant knowledge and experience

This should be obvious. However, it has been shown that people are more creative in any sphere of endeavour, when they possess solid fundamental knowledge and experience in the area. Experts suggest that discovering new ideas requires knowledge of the fundamentals that is the prepared mind.

Motivation and Persistence

Innovation requires hard focused work. Many examples abound with respect to innovators, who after many years of work and toil brought their innovations to the fore. This would not have been possible without motivation and persistence. Creative people, therefore have a high need for achievement and at least a moderate degree of self-confidence. These qualities combine to give them the motivation and persistence necessary to continue to work towards their goal even after setbacks and in the face of uncertainty.

Inventive thinking style

This refers to the fact that creative people think in novel ways rather than follow set patterns. They engage in what is called lateral or divergent thinking. They take a broad view of problems, and do not confine themselves to rules or status. They are risk takers, who are willing to take chances; not allowing the fear of failure to inhibit their initiatives.

Supportive Environment

Having the right people is not a sufficient condition for innovation. In order for innovation to flourish within the organisation there must be a supportive environment. There must be a climate conducive to the generation of new ideas. Climate in this context refers to the recurring patters of behaviour, attitudes, and feelings that characterize life within the organisation. It must be a place where people work at their best and feel a commitment to contribute to the success of their organisation.

This environment must also possess certain characteristics for stimulating innovation

Characteristics of Supportive Environment

There are several dimensions that determine the organisation’s climate. However nine dimensions have been identified as conducive to a climate for the generation of creativity within an organisation

· Trust and openness

· Idea support

· Playfulness and Humour

· Freedom

· Idea time

· Challenge and Involvement

· Conflict

· Debate

· Risk taking

Trust and openness, this refers to the level of emotional safety within relationships that exits within the organization.

Idea support, this relates to the way in which new ideas are treated.

Playfulness and humour, this refers to spontaneity and ease displayed within work situations. An example of how this dimension plays out can be found in how South West Airlines. A globally recognised innovator operates, South West Airlines, employees usually use humour and playfulness in their interactions with customers, and this is a deliberate policy of the company.

Freedom, this refers to the way in which independence in behaviour is tolerated within the organisation.

Idea Time, this is a mechanism used by organisations to encourage creativity by giving employees time out to think about problems and possible solutions. The idea has been made famous by the 3m company, a globally recognised innovator, which allows its employees to spend up-to 15% of their time on pursuing any area of personal interest for improvement.

Challenge and Involvement, this refers to the extent to which individuals are involved in daily operations, long term goals and the vision of the organisation.

Conflict, this refers to the extent to which personal and emotional tensions exist with an organisation. High levels of conflict reduce creative thinking possibilities; whereas low levels of conflict will boost the climate for increase creative thinking.

Debate, this refers to discussion based on differences of viewpoints on issues. This is healthy and is not to be confused with conflict, which is more of a destructive nature.

Risk taking, this refers to tolerance of uncertainty.

Research has shown that innovative firms score high in the above stated nine dimensions, excluding conflict which by definition has to be low.

It is the responsibility of the leadership of the organisation to set the organisation’s climate. Therefore the leadership of organisations is an integral component of the innovation process. In organisations where the leadership puts systems in place to generate and evaluate new ideas and set the appropriate climate as described above; together with the right people, innovation is likely to take place. Where the leadership is lacking and these systems are not in place low levels of innovation are likely to exist.

Sources for Innovation

The question may be asked. Where should a business look for new ideas? The possible sources are many. However, some of the most common would be customers, employees, suppliers and competitors.

There should be a formal system for generating ideas from customers; a survey is the most obvious medium. I have also described how the organisation will be able to generate ideas from its employees; having the appropriate climate and necessary system.

Competitors’ information can be obtained from industry knowledge and observation.


It is clear that innovation is important to all businesses. All businesses must find ways to improve all aspects of their business, including of course their source of revenue the product or service they deliver. The need to be innovative is even more compelling when you consider that innovation by a competitor or competitors can make your product or service obsolete. The leadership and organisational climate must be present to ensure that ideas are generated, nurtured and reach their logical conclusion. This will require knowledgeable, intelligent and experienced individuals as well as teams whose behaviour exhibits the characteristics of motivation, persistence and divergent thinking.

Further Reading

McConnell, B. (2001) Economics – Principles, Problems and Policies

McShane-Von, G (2002) Organizational Behavior