Innovation isn’t just about thinking uniquely rather when an idea is implemented to create an impact. Idea constitutes thoughts capable of solving individual or societal problems. Innovation actually has three elements – idea, implementation and impact. Let’s explore these three essential elements of innovation with an example:
Suppose as an owner of aluminum fabrication business you would want to increase profits in next three coming months and let’s suppose the only way out in order to maximise your profits is through cost reduction. You brainstorm an idea that you believe will help you save costs. When you implement this idea, if it brings down costs, you earn more profits. This is called innovation – idea when implemented to create an impact.
Business-week publishes a list of innovative companies every year. As per this magazine, there are 4 main types of innovations described as follows:
1. Process Innovation
When Flipkart.com launched its operations in 2007, all of the work was carried out manually. There was no concept of using enterprise resource planning software. As the business grew up, the details of customers, warehouses, logistics etc was difficult to manage manually.
This problem was solved when it employed an ERP software which would maintain the updates of all departments thus eased up the process. Every department remains aware about the condition of product from warehouse to customer. This is called as process innovation.
2. Product Innovation
When TATA launched Nano vehicle for lower sections of society in India, it increased their sales and revenues. This is called as product innovation.
3. Customer Experience
Again let me take the example Flipkart.com. When it launched a Flyte application in 2013 probably, it enhanced the experience of book lovers. We know it no a days it is very difficult to carry a book along. This problem was removed out by the application which you need to install, sign up, purchase and read your favorite stuff on it. This increased the experience of customer and hence is an innovation.
4. Business model Innovation
The Indian Premier league introduced by Lalit Modi is the way of playing old cricket game in a new fashion. When an innovation redefines its offer, customer, distribution and money making technique, it is called as business model innovation.