IMPORTANCE OF INNOVATION

Importance of Innovation and Creativity for Success of an Organization

Innovation is the process of creating and implementing a new idea. It is the process of taking useful ideas and converting them into useful products; services or processes or methods of operation. These useful ideas are the result of creativity, which is the prerequisite for innovation. Creativity in the ability to combine ideas in a unique way or to make useful association among ideas. Creativity provides new ideas for quality improvement in organizations and innovation puts these ideas into action.


Change and innovation are closely related, even though they are not the same. Change often involves new and better ideas. The new idea may be the creation of a new product or process or it can be an idea about how to change completely the way business is carried out. Successful organisations understand that both innovation and change are required to satisfy their most important stake holders.

Strategic Importance of Innovation:

For both established organisations as well as new organisations, innovation and change become important in a dynamic, changing environment. When a company fails to innovate and change as needed, its customers, employees and the community at large can all suffer. The ability to manage innovation and change is an essential part of a manager’s competencies.

Types of Innovation:

Three basic types of innovation are:

(i) Technical,
(ii) Process and
(iii) Administrative.

Technical innovation involves creation of new goods and services. Many technical innovations occur through research and development efforts intended to satisfy demanding customers who are always seeking, new, better, faster and/or cheaper products.

Process innovation involves creating a new way of producing, selling or distributing an existing good or service.

Administrative innovation occurs when creation of a new organization design better supports the creation, production and delivery of goods and services.
The various types of innovation often go hand in hand. For example, the rapid development of business to business e-commerce represents process innovation. But this new process requires many technical innovations in computer hardware and software. Also as firms began to use business to business e-commerce, administrative innovation soon followed. Further, implementation of process innovations necessitated organizational change. “Doing something new means doing something differently”. Thus, innovation and organizational change go hand in hand.

Technology and Innovation:

Technology is defined as the systematic application of scientific knowledge to a new product, process or service. It is also defined as the methods, processes, systems, and skills used to transform resources into products. Technology is embedded in every product, service, process and procedure used or produced.
“Innovation is a change in technology”. When we find a better product, process or procedure to do our task, we have an innovation. Process innovations are changes which affect the methods of producing outputs. For example, manufacturing practices such as just-in-time, mass customerisation, simultaneous or concurrent engineering – are all innovations.

Managing technology requires that managers understand how technologies emerge, develop and affect the ways organizations compete and the way people work. Technology can greatly affect an organization competitiveness and managers have to integrate technology into their organization competitive strategy. Managers need to assess the technological needs of their organizations and the means by which these needs can be met.

Understanding the forces driving technological development and the patterns they follow can help a manager anticipate, monitor and manage technology more effectively.
i. First, there must be a need or demand for the technology. The need acts as a driving force for technological innovation to occur.
ii. Second, it must be theoretically possible to meet the need using the knowledge available from basic science.
iii. Third, it must be possible to convert the scientific knowledge into practice in both engineering and economic terms.
iv. Fourth, the necessary resources such as finance, skilled labour, time, space and other resources must be available to develop the technology.
v. Finally entrepreneurial initiative is needed to identify and put all the elements together.

                                    By Alphonce Bhoke BAPRM 42527