Chapter 14 Innovation and continuous improvement
Difference between innovation and CI
Invention: the development of an idea that is new to the world
Innovation: putting into practice anything new that an organization has not done before
Incremental innovation: innovations that may be small of scale & limited impact individually
(and might be not new to the world and the organization is adopting something new that
others have already done) (= continuous improvement) it can also have a disruptive effect
on the impact it has on the organization
Radical invention: major change, typically based on invention, which significantly changes
what a firm produces; how a service operates; or indeed the way a whole sector performs
Levels of novelty
Novelty = ‘different levels of newness’
Six levels of novelty:
1. Modifications – change an existing product
2. Restaging – modify the product so it can be used on different occasions or by new market
segments or some other factor
3. Line extensions – product variation of an existing brand
4. New products in existing categories – developing a new product as a part of an existing
product range of products
5. New categories – developing an entirely new product or product range that they had not
previously produced before, although other firms may have done so
6. Inventions – product that is entirely new
NPD versus NSD
New product development (NPD): has to be flexible, many products are not simply products, they
have service implications too
New service development (NSD): are more complex to develop, because of their intangibility,
simultaneity and inseparability need additional stages in the development process to
accommodate the issues; also needs to be flexible
Stages in development process
Fifteen Steps has four main stages:
1. Formulating ideas
2. Deciding whether to proceed
3. Testing the design
4. Evaluating the outcome of the process
Formulating ideas
1. Objectives and strategy
2. Structure – companies have to structure themselves to support the innovation
3. Idea generation and screening – many ideas are screened to get to the best one (screening
criteria: level of investment needed, ease of implementation, demand from customers, fit
with existing product/service range)
Deciding whether to proceed
4. Concept development
5. Concept testing
Difference between innovation and CI
Invention: the development of an idea that is new to the world
Innovation: putting into practice anything new that an organization has not done before
Incremental innovation: innovations that may be small of scale & limited impact individually
(and might be not new to the world and the organization is adopting something new that
others have already done) (= continuous improvement) it can also have a disruptive effect
on the impact it has on the organization
Radical invention: major change, typically based on invention, which significantly changes
what a firm produces; how a service operates; or indeed the way a whole sector performs
Levels of novelty
Novelty = ‘different levels of newness’
Six levels of novelty:
1. Modifications – change an existing product
2. Restaging – modify the product so it can be used on different occasions or by new market
segments or some other factor
3. Line extensions – product variation of an existing brand
4. New products in existing categories – developing a new product as a part of an existing
product range of products
5. New categories – developing an entirely new product or product range that they had not
previously produced before, although other firms may have done so
6. Inventions – product that is entirely new
NPD versus NSD
New product development (NPD): has to be flexible, many products are not simply products, they
have service implications too
New service development (NSD): are more complex to develop, because of their intangibility,
simultaneity and inseparability need additional stages in the development process to
accommodate the issues; also needs to be flexible
Stages in development process
Fifteen Steps has four main stages:
1. Formulating ideas
2. Deciding whether to proceed
3. Testing the design
4. Evaluating the outcome of the process
Formulating ideas
1. Objectives and strategy
2. Structure – companies have to structure themselves to support the innovation
3. Idea generation and screening – many ideas are screened to get to the best one (screening
criteria: level of investment needed, ease of implementation, demand from customers, fit
with existing product/service range)
Deciding whether to proceed
4. Concept development
5. Concept testing
