Global Innovation. Buzzword or Growth Strategy?

Contents

Abstract

Introduction
Invention
Innovation

Innovation management

Differentiation of innovation types

Product innovation
Process innovation
Connection between product and process innovations

Innovation strategies
S-curve product & innovation improvement
Kondratiev Cycles
Hype Cycle

Incremental & radical innovation

Understanding of innovation in the telecommunications customer survey

Best practice: Swarovski
About Swarovski
Innovation at Swarovski works as follows:
Swarovski’s success factors

Comparison A1 Telekom Austria and Swarovski

Conclusion & recommendation: does innovation increase profit?

References

Abstract

This research paper examines the question: Is innovation a critical success factor for today business or merely a modern buzzword? Setting the example of the ITC and luxury goods industry

Europe is increasingly under innovation pressure. Is innovation increasing the profit of firms and the growth strategy of European companies?

Even today there are sharp divisions among experts regarding the definition of innovation.

But they agree that innovation is being something new and expected to risk. When defining something new, the experts can’t agree.

Keywords: 3 – 10 innovation, buzzword, growth strategy, swarovski

Introduction

Definition and demarcation of the concept of innovation

Mobilkom Austria and Telekom Austria was merged in 2010 and now form together A1 Telekom Austria. One of the main problems of the company is the management of innovations and to find a clear innovation strategy.

Strategy & Planning is the executive department of CCO Area at A1 Telekom Austria who is assigned to this Project. The main goal is to clear and implement an innovation definition, strategy, process and business unit at A1 Telekom Austria

For further discussion we have to define for ourselves: what is innovation about?

Invention

Invention is a necessary preliminary stage in the process of innovation. It is restricted to the process of knowledge generation through research and development, and the technical realization of a new problem solution for the first time. This can take place in both a planned and an unplanned way.^[1] Creative ideas and technical realizations are by no means innovative.

Innovation

The term ‘innovation’ comes from the Latin innovatio, and is translated as follows: Innovation = Lat. innovatio, meaning ‘introduction’, ‘renewal’, or ‘renovation’, which can be traced back to novus (‘new’).^[2]

An innovation is principally understood as being the commercial application of a new problem solution for the first time. It aims to achieve the introduction to market and market probation (‘diffusion’) of the invention in the form of a new product or process.

Innovation can be expressed in a formula:

Innovation = Idea + Invention + Diffusion^[3]

The difference between this and invention related to a specific point in time is the result of a process or the process itself, which passes through all the stages in the innovation process. From idea generation through to successful diffusion in the market.

Innovation management

Innovation management is an holistic management task which should be sustained above and beyond any hierarchical levels. The basis for innovation management is an innovation culture embedded and lived in the corporate culture, both from the top down and the bottom up.

The tasks of innovation management can be wide-ranging, and vary from company to company. The fundamental principle is management of the innovation process, from idea generation through to successful marketing and the achievement of diffusion. It takes in both strategic and operational tasks.

The aims of innovation management can be divided up at three levels:

- The nominative level, such as the vision, mission, values and overall concepts
- The strategic level, such as resources, technologies, knowledge and competences of employees, markets, customers, suppliers, cooperation partners and competitors
- The operational level, such as the design and management of the innovation process, service, quality, costs and time^[4]

Differentiation of innovation types

Innovations can be classified in different categories based on various criteria and features. Possible criteria and features for the differentiation of innovations: field of enquiry, trigger, level of novelty and scope of change. There are, of course, other differentiating features for innovations.

Important for A1 Telekom Austria are the product innovations and process innovations and the connection between the innovation types.

Product innovation

Products are material and immaterial services provided in the market by a company which are suited to satisfying the customer’s needs thanks to specific features. A product consists of its product core, the product exterior, and the additional services. The product core consists of the technical-constructive features and basic functions, while the product exterior allows for a wide range of variations. The extent to which a company is able to develop the Unique Selling Point (USP) and product benefits into an unmistakable product personality is crucial for the product.

Product innovations are of particularly high economic importance for a company. Increasing and changing customer needs lead to ever-shorter product life cycles, and thereby to a wide and diverse product range in the market. The basic aim of product innovation, therefore, is for a company to defend its competitive position through market introduction and to satisfy the wishes of its customers.^[5]

“Surveys show that product innovations are associated with a considerable risk of failure. Of every 100 product ideas, just 3.7 percent actually make it as successes in the market. Another survey shows that of every 58 product ideas in the USA, just one could be successfully implemented in the market.” (cf. Nieschlag, R/ Dichtl, E/ Hörschgen, H 1997, p. 262).

Despite this, product innovations are the highest form of the innovation stages. While they are highly risky and cost-intensive, successful innovations increase competitive advantages, and structured innovation management increases the opportunities for economic success.

Process innovation

A process is understood as the targeted provision of a service by means of a sequence of activities. The service is provided in a certain order, a certain processing time, and according to certain rules. Process innovations can also be described as ‘process innovation’.

Pleschak/Sabisch criticise the fact that process innovations are paid relatively little attention.

The internal efficiency of the company is only of interest to the customer him- or herself if it has an impact on the quality of the product. A balance should be struck between product and process innovations at any company in order to create appropriate competitive advantage in the market.^[6]

Connection between product and process innovations

So when should a company press ahead with processes, and when with product innovations? Harvard Professors J. Abernathy and James M. Utterback explored this question. The results of empirical surveys show that the manufacturing process is becoming increasingly important. The scope for further improvements to be made in the course of the product lifecycle is becoming narrower. The fact is, however, that while product innovations are an important driver of growth, improving the manufacturing process in order to achieve financial success is more valuable still. The progress in research reduces as a product ages. Both recommend, therefore, concentrating on improving processes as certain products become older, so yields can continue to be increased.^[7]

The changing of sides does not happen entirely voluntarily, however: low-cost providers exert massive pressure on the market. Not all customers are interested in innovative products; instead, they are looking for cheap offers and rates, as shown by the latest results of an empirical survey carried out in the telecommunications environment.^[8]

Diagram 1: Connection between product and process innovations

Innovation strategies

The management and control of innovation, growth fields is a major challenge. The main strategies and models found in subsequent chapters

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^[1] Schlick, G.H. 1995 S. 2

^[2] Vahs D., Burmester R. “Innovationsmanagement- Von der Produktidee zur erfolgreichen Vermarktung, 1999

^[3] Müller-Prothmann, Nina Dör: „Innovationsmanagement“- 2.Auflage

^[4] Gassmann O., “Innovation- Zufall oder Management?“, München 2008

^[5] Vahs D. Innovationsarten, 1999 S. 72- 76

^[6] Pleschak F./ Sabisch H. 1996 , S.20

^[7] Scheuss R „Handbuch der Strategien“ 2012, S.262- 265

^[8] Brand Tracking A1, „Was verstehen Sie unter Innovation?`“, 2012