Innovation Management and New
Product Development
Lisanne Callewaert 1
,Chapter 1 | Innovation management: an introduction
I. Definition of innovation
Innovation is not a single action but a total process of interrelate sub processes. It is not just the conception of a
new idea, nor the invention of a new device, nor the development of a new market. The process is al these things
acting in an integrated fashion…
1 A typology of innovations
Product innovation = the development of a new or improved product (smart watch, a new service,…)
Process innovation = the development of a new manufacturing process (artificial intelligence, YIT systems,…)
Organisational innovation = a new venture division ; a new internal communication system; …
Business model innovation = going from an economy that is used to buying things to a shared economy (uber,
airBnB, car sharing,…)
2 New services that also create new business models/value
3 The interaction between development activities and design environment
For many people design is about developing or
creating something; hence we are into semantics
regarding how this differs from innovation. Design is
concerned with the emergent arrangement of
concrete details that embody a new idea.
Along the x-axis: the wide spectrum of activities that
design encompasses from clothing design to design
within electronics
Along the y-axis: shows how the areas of design feed
into outputs from choice of colour to cost
effectiveness
All are considered in the development of a
product
Design is an applied activity within R&D
Lisanne Callewaert 2
, 4 Radical or disruptive innovations
Disruptive/radical innovation = a type of innovation that disrupts or fundamentally changes an existing market or
industry by introducing a new product, service, or technology (the personal computer, smartphone, music
downloads, internet shopping,…)
5 Types of innovation
6 Doing, using and interacting (DUI) mode of innovation
In low and medium technology (LMT) intensive industries the traditional science and technology model of
innovation is not applicable and cannot explain continued product and process innovations. Products and production
processes in these industries may be highly complex and capital intensive. There is a dominance of incremental,
mostly process-driven innovations where disruptive innovation activities are scarce.
In LMT environments innovation can be explained through learning by doing and the use of networks of interactions
and extensive tacit knowledge.
Incremental innovations = the process of making small, gradual improvements or enhancements to existing
products, services, processes, or technologies. The goal of incremental innovation is to make existing offerings
better, more efficient, or more appealing to customers while maintaining a relatively stable product or service
framework.
Innovation management is not exclusively associated with products
New ways of doing business in service sector
Innovation management involves change, particularly technological change
Sometimes this involves product, service and process changes
The level of change is an important decision
Lisanne Callewaert 3
, II. Study of innovation
7 Overview of the innovation process
This overview of the innovation process includes
an economic perspective, a business
management strategy perspective and
organisational behaviour, which attempts to look
at the internal activities. Firms form relationships
with other firms and trade, compete and
cooperate with each other. The activities of
individuals within the firm also affect the process
of innovation.
Each firm’s unique organisational architecture
represents the way it has constructed itself over
time. This comprises internal design, including
its relationships with suppliers, competitors,
customers,…
This framework recognises that these will have a
considerable impact on a firm’s innovative
performance.
Neo-classical view : a theory of economic growth that explains how savings, investments and growth respond to
population growth and technological change. The rate of technological change influences the rate of economic
growth, but economic growth does not influence technological change. Population growth and technological change
are exogenous (are not influenced by the workings of the economic system).
Schumpeterian view : the way a firm manages its resources over time and develops capabilities that influences
its innovation performance. The varying emphasis placed by different disciplines on explaining how innovation
occurs is brought together in the framework above.
8 Explanations for innovative capability
These firms are delivering impressive
growth and/or return to their shareholders.
Lisanne Callewaert 4
Product Development
Lisanne Callewaert 1
,Chapter 1 | Innovation management: an introduction
I. Definition of innovation
Innovation is not a single action but a total process of interrelate sub processes. It is not just the conception of a
new idea, nor the invention of a new device, nor the development of a new market. The process is al these things
acting in an integrated fashion…
1 A typology of innovations
Product innovation = the development of a new or improved product (smart watch, a new service,…)
Process innovation = the development of a new manufacturing process (artificial intelligence, YIT systems,…)
Organisational innovation = a new venture division ; a new internal communication system; …
Business model innovation = going from an economy that is used to buying things to a shared economy (uber,
airBnB, car sharing,…)
2 New services that also create new business models/value
3 The interaction between development activities and design environment
For many people design is about developing or
creating something; hence we are into semantics
regarding how this differs from innovation. Design is
concerned with the emergent arrangement of
concrete details that embody a new idea.
Along the x-axis: the wide spectrum of activities that
design encompasses from clothing design to design
within electronics
Along the y-axis: shows how the areas of design feed
into outputs from choice of colour to cost
effectiveness
All are considered in the development of a
product
Design is an applied activity within R&D
Lisanne Callewaert 2
, 4 Radical or disruptive innovations
Disruptive/radical innovation = a type of innovation that disrupts or fundamentally changes an existing market or
industry by introducing a new product, service, or technology (the personal computer, smartphone, music
downloads, internet shopping,…)
5 Types of innovation
6 Doing, using and interacting (DUI) mode of innovation
In low and medium technology (LMT) intensive industries the traditional science and technology model of
innovation is not applicable and cannot explain continued product and process innovations. Products and production
processes in these industries may be highly complex and capital intensive. There is a dominance of incremental,
mostly process-driven innovations where disruptive innovation activities are scarce.
In LMT environments innovation can be explained through learning by doing and the use of networks of interactions
and extensive tacit knowledge.
Incremental innovations = the process of making small, gradual improvements or enhancements to existing
products, services, processes, or technologies. The goal of incremental innovation is to make existing offerings
better, more efficient, or more appealing to customers while maintaining a relatively stable product or service
framework.
Innovation management is not exclusively associated with products
New ways of doing business in service sector
Innovation management involves change, particularly technological change
Sometimes this involves product, service and process changes
The level of change is an important decision
Lisanne Callewaert 3
, II. Study of innovation
7 Overview of the innovation process
This overview of the innovation process includes
an economic perspective, a business
management strategy perspective and
organisational behaviour, which attempts to look
at the internal activities. Firms form relationships
with other firms and trade, compete and
cooperate with each other. The activities of
individuals within the firm also affect the process
of innovation.
Each firm’s unique organisational architecture
represents the way it has constructed itself over
time. This comprises internal design, including
its relationships with suppliers, competitors,
customers,…
This framework recognises that these will have a
considerable impact on a firm’s innovative
performance.
Neo-classical view : a theory of economic growth that explains how savings, investments and growth respond to
population growth and technological change. The rate of technological change influences the rate of economic
growth, but economic growth does not influence technological change. Population growth and technological change
are exogenous (are not influenced by the workings of the economic system).
Schumpeterian view : the way a firm manages its resources over time and develops capabilities that influences
its innovation performance. The varying emphasis placed by different disciplines on explaining how innovation
occurs is brought together in the framework above.
8 Explanations for innovative capability
These firms are delivering impressive
growth and/or return to their shareholders.
Lisanne Callewaert 4
