Introduction

Chapter 1

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 Objectives
When you have completed this chapter you should be able to:
• appreciate the importance of innovation for business and the
national economy;
• describe the principal phases of innovation;
• understand the nature of innovation and be able to
distinguish between the exploration and exploitation phases;
• analyse the factors that trigger exploration;
• appreciate the part business models play in exploitation;
• understand the link between innovation and diffusion.
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 Definitions of innovation

‘An innovation is an idea, practice or object that is

perceived as new by an individual or other unit of
adoption’
Rogers (2003: 12)

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 Definitions of innovation

‘the implementation of a new or significantly

improved product (good or service), or process, new
marketing method, or a new organisational method
in business practices, workplace organisation or
external relations’
OECD (2005)

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Different forms of “newness”

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 Examples

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 Examples

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 The process of innovation

• Exploration
• Exploitation
• Diffusion

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 The phases of innovation:
exploration, exploitation and diffusion

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The triggers to innovation

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 Scenarios for idea generation
• Problem-related
• e.g. Ron Hickman and the ‘Workmate’ portable
workbench
• Associative
• e.g. Karl Dahlman and the ’Flymo’ lawn mower
• Serendipitous
• e.g. Georges de Mestral and ‘Velcro’

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Inventions and Innovations

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Exploitation: the function of
business models

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Three types of business model

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Possible paths of diffusion

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Factors that influence the rate of
diffusion

• Relative advantage
• Compatibility
• Complexity
• Trialability
• Observability

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 Some attributes of innovation
• Uncertainty and risk
• Trial and error
• Failure
• Fits and starts
• Perseverance
• Collaboration

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