Innovation And Its Importance In Business: An Essay On The Subject.

Creativity and Business Wealth Assignment Brief (London January 2017)

This module considers how creativity and innovation lead to sustainable business. Students will develop appreciation of the role of culture, behavioural structures, systems and policies at global, national and organisational level on the development and sustainability of innovation. The module explores the application of creative problem solving and the process of creativity with a focus on the role of team leadership, and the influence of corporate culture. Students will become familiar with tools and processes that will enable them to become more creative, innovative and entrepreneurial in their business attitudes and practices.

1. Critically evaluate the development of creativity and innovation and its impact on sustainable organisations
2. Develop extensive and critical knowledge of the criteria for creating an innovative organisation
3. Critically review the structures needed to create an organisational environment that facilitates creative work practices in order to enhance business effectiveness
4. Develop an in-depth knowledge of the contribution of other business functions in enhancing organisational innovation and creativity

Write an essay of no more than answering the following question: Innovation is about big leaps forward,  moments and radical break throughs or is it?

Using examples from a sector of your choice, make a case for the importance of incremental innovation.

Different Types of Innovations

Innovation is a very diverse term. In general, innovation means exploiting new ideas or change existing ones for the betterment. Innovation focuses on being creative at work. It can be technological, which includes product innovation or process innovation. Also, it can be related to changing business model, exploiting new markets, and developing new processes. The main aim of innovation it so make the business more successful. This can be done by increasing market share of an existing product or introducing a new product or reducing the cost of production.

Innovation is important for both employees and the owner of the business. For the owner of the business, innovation helps to keep up with the competition. With the fast growing pace of competition, the organizations have to be on toes to keep an eye on the work of their competitors. The new processes or technologies developed by the competitors can be benefitted from only if the organization introduces innovation in the company. For example, retail stores have faced tough competition from other brands that are available online. This could be coped by introducing online selling in the business (Nation, 2016).

Similarly, for the employees of any organization innovation holds great importance. Due to technological advancement the older generation of employees feels incapable to give their best. Hence, innovating their style of working will help employees to keep pace with any changes in the working style of the organization. This helps the employees  stay confident and give their hundred percent in their work.

Radical innovation is characterized by a major effect on a market or on the economic operations of organizations in that market. This innovation includes changing the structure of the market, establishing new markets or disrupting existing products. Incremental innovation on the other hand, involves making changes in an existing product, process or service to enhance its usefulness (Kishore, 2013). This can be done in two ways: either by improving a simple product which usually includes increasing the usefulness of the product or decreasing the cost of production; or by improving a complex product by innovating one of the integrated subsystems.

Radical innovation is usually a complex process. This kind of innovation is based on smaller incremental improvements, development of complementary technologies and organizational changes. Incremental innovation is in fact a simpler process that involves small changes in the business. It paves way for big radical changes by introducing smaller changes in the organization. These changes have a low degree of risk involved (Globerman & Lybecker, 2014).

Radical innovation is prevalent in industries that are fast moving and involve rapid change. The industries which are characterized by high technology tend to have radical innovation. On the contrary, incremental innovation is practiced more in smaller firms with medium or low level of technology. The organizations dealing in services introduce more incremental changes as they involve a continuous process comprising of a number of small changes. Radical innovations are carried in the organizations that have a huge potential to create new products or increase efficiency of their existing product on a very high magnitude (Team, 2017).

Difference Between Incremental Innovation and Radical Innovation

Radical innovation involves looking at the bigger picture. It is a large scale approach that tends to change the basic fundamentals and the purpose of the business. It includes making bigger changes in the organization itself, in order to bring major changes in the market. A great example of radical innovation is Pebble Smart-watch. The company introduced a whole new category of watches way before Apple introduced its Apple-watch. Incremental innovation on the other hand, focuses on finding new ideas in an already existing market. This innovation finds the scope of improvement in the usefulness of the product or in the way a product is perceived. Joseph Joseph Elevate collection has used incremental innovation to create a huge empire by starting from simply designed kitchen products and then slowly adapting to every kitchen utensils, building a whole family of products.

In this section, the role of incremental innovation in the pharmaceutical industry is stated. Advancement in medicines can be made by introducing incremental changes which involve expansion of therapeutic classes, incline in the number of existing dosing options, inventing new physiological interactions of known medicines, and enhancing the properties of medicines that are already in use. It varies from creating complex molecular structures and making changes in formulations. The ultimate goal of incremental innovation in the pharmaceutical industry is to increase the number of treatment choices available to the patients (Muckersie, 2016).

Expanding therapeutic classes, is a method of introducing incremental change in the industry. This involves recognizing and interpreting human physiological pathways. These pathways can be metabolic, biological and disease mechanisms. It increases the quantity of drugs in therapeutic classes and helps researchers to gain better understanding of the physiological pathways. Exploration of these pathways enables the researchers to compare molecular variations during different stages of the disease and ultimately helps them to identify best medicinal interventions. This forms 30% of the incremental innovations (Hult, 2014).

Active Pharmaceutical Ingredient (API) is the therapeutic component of any medicine.  It is the basic molecular structure that induces a medicinal effect by interacting with a physiological pathway. The API can get degraded because of the metabolic process in the human body that could break it down into an ineffective compound. Also the way a person reacts to a medicine is dependent on the patients’ compliance with treatment regimens. The efficiency of the API can be improved by devising a new mechanism to deliver it or simplify treatment regimens by introducing alternative dosing options. This incremental change can improve the overall effectiveness of the medicine (Santella & Santella, 2005).

Incremental change in pharmaceutical industry also includes using existing medicines and compounds to address conditions beyond their actual initial indicated uses. While treating one particular category of conditions, doctors might find therapeutic advantages for another set of conditions which initially has been unrecognized. To gain surety about alternative usage of an existing compound, clinical trials are conducted. This ensures whether the medicine is safe and effective for alternative use or not. Once the doubt is cleared, regulatory approval is seeked. This is also known as New Indication and roughly forms 6% of the incremental changes in the pharmacy industry.

Another incremental innovation in this industry is New Active Ingredient innovation. This includes drugs that possess same percentage of active moiety but have different race, salt, complex,  etc. These ingredients have the same effect, but using innovation, these can be used to treat diseases. They form 4% of the incremental innovations.

Incremental innovation in the pharmaceutical industry has helped the economy by reducing the cost of treatments. Irrespective of the cost of a new drug, research shows that the creation of new drugs has reduced cost of treatment by minimizing the number of visits to hospitals and clinics and  increasing compliance. Contributions to cardiovascular therapy and the addition of newer ACE inhibitors provide clear examples of reduced overall costs resulting from incremental innovation. Incremental innovation not only improves the quality of care and treatment, but also increases competition among different manufacturers. This competition results in the availability of medicines at a lower price. Advancement within a class of drugs reduces side effects and consequently contribute towards a quicker recovery period. This improves the overall health, work capacity and quality of life of individuals. For instance, in the U.S. the main reason for not showing up at work was seasonal hay fever. The medication involved consumption of antihistamines that had a side effect of sedation. This highly affected the overall productivity of the country. The improved version of antihistamines contained non-sedating elements which helped the workers to take fewer leaves and increased the productivity of the country.

References

Globerman, S. & Lybecker, K., 2014. The Benefits of Incremental Innovation, Available at: https://www.fraserinstitute.org/sites/default/files/benefits-of-incremental-innovation.pdf

Hong, P., 2015. 5 Examples Of Innovative Marketing Strategies, Available at: https://www.linkdex.com/en-gb/inked/innovative-marketing-strategies-examples/

Hult, K., 2014. Incremental Innovation and Pharmaceutical Productivity, Available at: https://home.uchicago.edu/khult/jmp_draft.pdf

Innovation, D., 2017. Using business model innovation to create new paths to growth, Available at: https://www.innovation-management.org/business-model-innovation.html

Kishore, S., 2013. The Power of Incremental Innovation, Available at: https://www.wired.com/insights/2013/11/the-power-of-incremental-innovation/

Kowalik, O., 2012. Types of innovations, Available at: https://www.productbookshelf.com/2012/01/types-of-innovation/

Moth, D., 2014. 10 very cool examples of experiential marketing, Available at: https://econsultancy.com/blog/65230-10-very-cool-examples-of-experiential-marketing/

Muckersie, E., 2016. 4 examples of increment innovation in action, Available at: https://www.freshminds.net/2016/08/4-examples-of-incremental-innovation-in-action/

Nation, I., 2016. 8 reasons why innovation is important to businesses today, Available at: https://www.imaginenation.com.au/innovation-blog/8-reasons-innovation-important-businesses-today/

Santella, A. & Santella, T., 2005. Pharmocoevolution: the benefits of incremental innovation. pp. 1-18, Available at: https://www.who.int/intellectualproperty/submissions/Pharmacoevolution.pdf

Team, I., 2017. Incremental Innovation Vs. Radical Innovation, Available at: https://www.incrementalinnovation.com/incremental-innovation/incremental-innovation-vs-radical-innovation