As already noted innovations involve transformation and change. Change is always for better. This is somewhat too broad a description of the important and integral of our present day lives. We then come to more formal definition and take a detailed look.

Innovation is a process to achieve

measurable value enhancement in any commercial activity¹

by introducing

new or improved goods, services, organizational / operational process²

which will result in

competitiveness, improved market share and reduction is cost³

We will take closer look at the phrases which have been superscripted.

1.      Measurable value enhancement is the main driver for innovating. A need is felt and will be addressed.

2.    This is very important. Innovations span all aspects of product cycle covering procurement, production and market. This will lead four major streams of innovation which will be discussed later.

3.       These are the beneficial effects of the innovation process. This in other words is the IMPACT.

Next, we move on to the four broad streams of innovation.

PRODUCT INNOVATION: This is what we see, feel and experience every day. It has become even more pronounced during the last two decades are so. Television sets we bought about twenty five years back have become museum pieces. We have seen main frame computers, supermini, personal computers and laptops. On almost every day, we see a new type of mobile phone. Automobiles have seen major changes though not as much seen for electronic items.

In Product innovation the ultimate user is always in mind. The introduced changes should appeal to the final user. Some of the important parameters are features, appearance, weight, dimensions, user-friendliness, durability and of course the cost.

PROCESS INNOVATION: This is normally internal to the organization and not visible to the consumer. The production process can be improved (say from casting to forging to improve durability or from forging to casting to bring down the cost), the assembly process can be optimized to reduce the turn-around time or one can opt for a different material or a new technology (say additive manufacturing). In all the cases a better product is realized or the cost of production is brought down or both. The reduced cost of production can be passed on to the consumer.

ORGANIZATIONAL INNOVATION: This again is an internal matter. This will focus mainly on indirect production costs, overheads and logistic expenses. Supply chain management is one of the important related issues. Management will take decision on the components to be procured from outside and those to be manufactured in-house. Running the organization in shifts so that there is optimal usage of assets is another aspect. Educational institutions can take call on optimum mix of full-time and part time faculty.

BUSINESS INNOVATION: This focuses on how the consumers are dealt with. Of late, we see that organizations come out with attractive packages and schemes to lure customers. One of the age old approaches is the instalment scheme. Consumer goods bring with them warranty and guarantee clauses. Nowadays many companies have come out with buy-back schemes. E-commerce has revolutionized shopping. Companies like Flipcart and Amazon have made huge inroads into the consumer market. They have the attractive cash-on-delivery schemes also.

Car manufacturers have of late are introducing exchange schemes. They (TRUVALUE of Maruti for example) buy your old car at a competitive price and also offer discount on the car to be purchased. The customers find this very convenient as the headache of finding a customer for the old car is not there.

 More recently car dealers have introduced lease schemes.