Impact of Innovation on Firm Performance

The assignment provides a detailed analysis of the impact of innovation on firm performance in small and medium-sized enterprises (SMEs). It discusses the concept of innovation, its classification, and its influence on business performance. The study examines several articles and research papers that investigate the effects of innovation on SMEs, including open innovation, R&D efficiency, and technology commercialization. The assignment aims to understand how innovation can improve firm performance and provide insights for businesses seeking to innovate and grow.

Innovation and
Commercialisation

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Meaning of innovation and its importance to organisations in comparison with invention. .1
P2 Role of organisational vision, leadership, culture and teamwork in order to shape
innovation and commercialisation..........................................................................................2
TASK 2............................................................................................................................................3
P3 4Ps of innovation and use of the innovation funnel to examine and shape innovative ideas 3
P4 Developments in frugal innovation and provide examples of how it is used in an
organisational.........................................................................................................................7
TASK 3............................................................................................................................................9
P5 Importance of commercial funnel and application of New Product Development (NPD)
processing for commercialisation of innovation....................................................................9
P6 Innovation Business Case for organisation, including ways to access funding..............12
TASK 4..........................................................................................................................................13
P7 Different tools organisations use to develop, retain and protect knowledge and intellectual
property.................................................................................................................................13
CONCLUSION..............................................................................................................................14
RECOMMENDATIONS...............................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Innovation refers to process through which current process or product gets changed to
create value and satisfy consumer demand. In order to launch or innovative new products and
services, it is important to plan operations accordingly through which best idea can be executed.
While innovating new products and services, there are possibilities of failure of ideas as well,
hence different tools are used to launch best from it (Aarikka-Stenroos and Lehtimäki, 2013).
This report is based on Essence Drinks (started with health mango Lassi) which is initiative of
Akshay Kumar. Now in third year of their business, they want to launch something which is not
different from Lassi segment. In this report there is discussion about meaning of innovation,
difference between innovation and invention, different types of innovation, process required to
commercialise innovation and different methods of protecting innovative ideas with their
advantages and disadvantages.
TASK 1
P1 Meaning of innovation and its importance to organisations in comparison with invention
Innovation refers to the procedure through which new ideas and methods are used to
conduct business operations. There is requirement of complete information through which
innovative idea can be implemented properly and with understanding external factors. With
innovation there is impact on sales and profits of organisation. Venture of Akshay Kumar
Essence Drinks is thinking to launch some innovative ideas through which they can maintain
their market share in industry.
Difference between innovation and invention
Basis Innovation Invention
Meaning Innovation is the procedure
with which there is
improvement or some
additional feature is
implemented.
While invention is launching
of new products or services
which is not done previously.
Hence creation of new product
is done.
Skills For innovation, there is
requirement of research ad
While for invention, scientific
knowledge is required, so new
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development skills. ideas can be executed.
Involvement of departments Innovation in organisation can
done by research and
development department
because there is requirement of
analyse market and get new
idea.
While invention is
implemented with involvement
of all the departments because
there is requirement of change
in activities of whole
organisation.
Examples Different flavours of shakes Launching of lights, fan, etc.
Importance of innovation
There is important role of innovation in organisation as compared to invention. Some
importance are discussed as under-
Assist in technical advantage- There is technical assistance to Essence Drinks with
innovation because for market analysis and get to know which is best idea managers has to use
different techniques. While in case of invention, there is no technical assistance because
operations has to start with ground level (Ahn, Minshall and Mortara, 2015).
Retains best talent- Innovation attracts new talent, if Essence Drinks is innovating, then
talented workers want to work with them and retain long term in industry. But in case of
invention, individuals have to work on their own according to their skills and knowledge. So new
individuals does not want to invent new things.
Growth of organisation- Innovation is done with consideration of current market and
understanding different ways to come with new idea, so possibilities of loss or failure is less. But
in case of invention, there are possibilities of failure as well because new product might get
useless. This results in mis- use of resources and growth is not possible.
P2 Role of organisational vision, leadership, culture and teamwork in order to shape innovation
and commercialisation
As managers of Essence Drinks are thinking to launch new products through which they
can excel in industry. So there is requirement of proper planning regarding collecting resources,
employees, funds, etc. Apart from this there is requirement in proper environment at Essence
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Drinks with which innovation can be shaped and conducted in proper manner. So leadership,
culture and team work are also important for innovation (Chun, Chung and Bang, 2015).
Organisational vision- Vision is short term objective which organisation want to achieve
within specified time. So organisational objectives has something which provides new
information regarding growth. If organisational vision is boring or does not set because
employees does not work accordingly and this affects implementation and results from new idea
and innovation.
Leadership- Leadership is important for launching new ideas as innovation. If managers
of Essence Drinks does not lead individuals while they are launching new products and services,
then workers are not able to implement plans and procedure properly. With prop[er leadership,
workers are able to discuss their issues which managers and get best outcome of it.
Culture- Culture is required to be positive and dynamic of Essence Drinks, through
which employees are ready to accept new changes and have complete knowledge about it. New
workers are able to understand culture and implement new and innovative ideas to outshine in
industry (Dries and et. al., 2013).
Team work- In organisation, if mangers of Essence Drinks wants to launch new product
with same segment, then team work is important because they are working as per their skills and
characteristics. Hence with working in team, proper roles and responsibilities has to be allotted
which assist in completing task in better and effective manner and launching new product.
Hence it is clear that organisational vision and mission has to be communicated to
workers through which they give their best to innovation. Leadership is also important in
Essence Drinks because when departmental head lead team, then innovation can be done
properly and positive outcomes can be achieved. Culture of Essence Drinks has to be dynamic
with which it is easy for workers to launch new products. Team has to be made with
understanding skills and knowledge and roles has to be allotted accordingly. This assist in
getting positive outcome from innovation and new product “Organic Saffron Mixed Fruit Lassi”
is successful in society.
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TASK 2
P3 4Ps of innovation and use of the innovation funnel to examine and shape innovative ideas
In order to implement innovation, there is requirement of complete information about
factors which are required to understand to get positive results. For implementing innovation, it
is important that mangers must have complete information regarding process, product, etc.
through which they can know direction to perform operations (Edison, Bin Ali and Torkar,
2013). There are 4 P's of innovation which has to be considered by managers of Essence Drinks
to launch new product-
(Source: 4 P's of Innovation, 2019)
Product- Product which organisation is providing has to be identified. Essence Drinks is
dealing in mango Lassi. So they are thinking to improve this to become stable in industry and out
shine as compared to competitors. There are different suggestions in this regard such as Paan
Lassi, saffron mixed fruit lassi, etc.
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Illustration 1: 4 P's of Innovation

Process- Process is the way through which innovative product is created. There is
specific way in which idea generation is done and final product is launched. Managers of
Essence Drinks are launching saffron mixed fruit lassi get idea through innovation funnel (Hang
Do and et. al., 2014).
Position- Position refers to market share of organisation in industry. As market share of
Essence Drinks is good in industry but due to many competitors, so they want to improve their
position.
Paradigm- This is idea where new and innovative product and services is launched. This
provides better idea to individuals regarding change in working style. It is crucial and significant
to understand complete idea about positive aspects which can be achieved with new products and
services.
INNOVATION FUNNEL
Definition
Innovation funnel is the process through which innovation is done in systematic and
proper manner by considering different methods. Business idea is implemented in innovation
funnel through which it can be converted in reality with considering best resources. With this it
is easy to sort different business ideas and get best out of it.
Diagram
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(Source: Innovation Funnel, 2018)
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Illustration 2: Innovation Funnel

Application of innovation funnel
In this there are different steps which has to be considered for attaining positive result
from innovating new products. There are mainly three steps in innovation funnel i.e. idea
generation, concept development and concept to launch (Hemphill, 2014).
Idea generation- this is the stage in which managers of Essence Drinks thinks to change
working style through which they can improve their performance. Hence different ideas are
generated regarding it such as discount offers, change in ambiance, launching new products, etc.
This is the stage in which different ideas are generated which can be used to improve sales and
probability of Essence Drinks.
Concept development- After idea generation, concept are developed regarding different
ideas which are generated by managers. There are many ideas, so analysis is required regarding
each idea, then some ideas are rejected because of non availability of resources. Hence three four
ideas are left in this step. Hence it is easy for managers of Essence Drinks to select out of them.
After proper understanding each and every idea best among them is selected. Some ideas such as
launching of Paan Lassi, saffron mixed fruit lassi, kiwi Lassi, etc. ideas are generated.
Concept to launch- At last launching is done of idea as innovation. This is the step in
which idea is launched in market for testing. After test, its flaws are removed and actions are
taken in order to launch it. After in- depth analysis, “Organic Saffron Mixed Fruit Lassi” is
selected as new product for innovation (MacGillivray and et. al., 2014).
Hence with the help of innovation funnel, it is easy for managers of Essence Drinks to
understand what is requirement of current market and ideas through which it can be satisfied.
Apart from this managers gets some information where scope of business expansion is more.
Best idea is generated after considering all the concept, so possibilities of wastage of raw
material and other resources is less. So innovation funnel assist in shaping and executing
innovative ideas as launching of “Organic Saffron Mixed Fruit Lassi”.
P4 Developments in frugal innovation and provide examples of how it is used in an
organisational
Frugal innovation refers to the process through which innovation products and services
are launched with faster rate and cheap rate. There are different resources used in society but if
those resources are made easily available and produce with cheap rate, then it is because of
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frugal innovation. In order to understand frugal innovation there are some principles associated
with it which are discussed as under-
Engage and iterate- For implementing frugal innovation, there is requirement of
complete knowledge about field and individuals has to engage with it. When individuals is
engage in launching in products, then they are able to achieve goals and targets. For instance: for
launching mixed fruit managers have to engage for launching it (Maritz and Donovan, 2015).
Flex your assets- In order to reduce complexities arise in launching innovation, then
resources which are required for it, so proper analysis has to be done regarding it. This reduces
supply and demand gap. For launching mixed fruit, there is requirement of different fruits which
has to be preserved properly for use.
Create sustainable solution- While planning for frugal innovation, sustainability has to
be considered. These days, there many environmental issues, so it can be reduced with it. People
demand eco- friendly product due to having concern for environment.
Shape customer behaviour- It is responsibility of mangers to create desire among
consumers regarding new product. In case of Essence Drinks there must be marketing through
which people become aware about new product and its demand arise in society.
Co- create value with prosumers- There is requirement of some parties through which
co- branding is possible. This gives positive impact on marketing and sales of product. In case of
Essence Drinks, Akshay Kumar's brand ambassador image assist in sales of “Organic Saffron
Mixed Fruit Lassi”.
Make innovative friends- With motivation and innovation of peer members, there is
positive impact on improving performance. When surrounding of individuals motivate to give
best, then possibilities of positive outcome is more (Mazzarol and Reboud, 2017).
Frugal innovation products are cheap for consumers and sometimes nature friendly as
well. So these are beneficial for organisational growth as well. Frugal innovation products are-
Wello's Water Wheel is the wheel through which water can be travelled from one place to
another. Ride me is the vehicle which is prepared with recycle products and free from pollution.
Sure chill vaccine refrigerator which assist in keeping vaccines cool. Cheap rate razor made after
P&G watches. These are the some examples of frugal innovation.
APPLICATION OF FRUGAL INNOVATION AT ESSENCE DRINKS
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Frugal innovation is the best way through which consumers get proper benefits at lower
cost. This is essential and significant for making long term relations with consumers because
new product is provided at cheap rate. In order to come with frugal innovation in Essence
Drinks, managers can plan flavoured coffee such as fruit coffee, herbal coffee, etc. These drinks
are planned with herbal fruits which are cost effective and effective for every age group. There
must be preservation of fruits, so it can be used for whole year with maintained quality. There
are different approaches which has to be considered while launching flavoured coffees such as
availability of raw material, trained employees, taste of new product. It is essential for managers
of Essence Drinks to maintain frugal innovation best because people prefers it and its marketing
is also easy because of cheap rate and good quality.
TASK 3
P5 Importance of commercial funnel and application of New Product Development (NPD)
processing for commercialisation of innovation
Commercial funnel is also known as sales funnel. This is the pictorial representation of
process of sales which an individual follow when they purchase a product. This is the best way
through which buying process of consumers, when they are purchasing it from organisation.
With the help of commercial funnel, individual when they are strangers for saffron mixed fruit
lassi gets attracted towards it. Then individuals observe it and they gets converted in consumers.
Importance of commercial funnel are as under-
 This assist in picking marketing strategies. It is important to market products and services
while launching new. saffron mixed fruit lassi has to be marketed through consumer get
knowledge about it.
 With the help of commercial funnel, it is easy for managers to relate new saffron mixed
fruit lassi with consumers. They plan marketing strategies according to targeted
consumers. With this there is increment in sales because consumers are getting new
products from Essence Drinks (Polzin, von Flotow and Klerkx, 2016).
 When commercial funnel is implemented at Essence Drinks, then growth of business is
possible. There is ease in collecting feedbacks from consumers with the help of
commercial funnel, hence it is easy to understand what has to be done right and wrong.
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Definition of New Product Development
New product development is the process through which new product or service is
launched in market because of change in market trends. In current market, consumers wants to
get full return of their money, so they want new products and services from Essence Drinks. It
can be result from smart improvement in current products. For instance: in case of Essence
Drinks managers launching “Organic Saffron Mixed Fruit Lassi” because of decreasing sales and
consumer preferences.
Steps for new product development
There are some steps which has to be followed by managers of Essence Drinks to follow
steps through innovation can be launched properly. These steps are as under-
Idea generation is first step under which assist in launching new products. Under this
different ideas are used regarding understanding what are the reasons of decrement in sales of
Essence Drinks. Hen some ideas are selected such as offering discounts, reducing in price,
quality issues, etc.
Screening is second step under which selected ideas are put and evaluated in context of
available resources. It is important because under this step sorting is done with available options.
This is the step in which all the ideas are compared with resources available in market.
After screening, Concept development is done. In this process selected options are
evaluated with concern aims and objectives. This assist in selected “Organic Saffron Mixed Fruit
Lassi” which is new flavoured and healthy for all the age group consumers.
After developing concept, Product development stage arrives. In this stage, product is
developed and its cost and price is set. Marketing is done among consumers for “Organic Saffron
Mixed Fruit Lassi” which communicates consumers about it.
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At last, Commercialisation and Roll out is done. In this testing is also done of saffron
mixed fruit lassi among some consumers and after their comments and feedback corrective
actions are taken. This assist in launching “Organic Saffron Mixed Fruit Lassi” in proper manner
(Sonne, 2012).
New Product range “Organic Saffron Mixed Fruit Lassi” of Essence Drinks
Image-
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Flavours- Flavour of “Organic Saffron Mixed Fruit Lassi” is mixed fruit which is healthy for
every age group and consumers feels satisfied because of coolness to individuals.
Ingredients- Ingredients for “Organic Saffron Mixed Fruit Lassi” are- Curd, banana, Pistachios,
sugar, almonds, Chashew nut, milk, Apple, kiwi, rose water, coriander, mango, etc.
Price- Pricing strategy for “Organic Saffron Mixed Fruit Lassi” is price skimming under which
high price are set for new products through which higher revenue is possible. While with passage
of time its price gets reduced. Its initial cost £80.
Packaging- Packaging of “Organic Saffron Mixed Fruit Lassi” is in the form of Mud glass
which keeps Lassi cool for longer time and gives good taste to consumers.
Marketing and sales- Marketing of “Organic Saffron Mixed Fruit Lassi” can be done with
display marketing through which it is easy for managers to communicate about its positive
values. Apart from this hoarding and digital boards will be used. Sales is done through
transparent manufacture process through which consumers are excited to purchase it because of
its organic values.
Nutrition value- “Organic Saffron Mixed Fruit Lassi” is very nutritional for health of consumers
because it is cool and have good nutritional values such as calcium, iron, vitamins, sodium,
fibers, etc.
P6 Innovation Business Case for organisation, including ways to access funding
Business case refers to systematic process through which launching of new product and
services can be studied, so it can be done in proper manner. Business case of launching “Organic
Saffron Mixed Fruit Lassi” is as under-
Vision & mission: The vision of the Essence drink is to provide best taste of lassi to
provide them real joy. While mission of this business is provide different types of lassi and
expend four outlet in different cities of UK. With taste of “Organic Saffron Mixed Fruit Lassi”
become delicious and provides ultimate satisfaction to society.
Market analysis: With the help of marketing analysis, it is easy for managers to
understand demand of consumers and reasons of declining of sales with strategies of competitors
(Theyel, 2013). Market analysis is important because this provides knowledge about what has to
be done and actions planned to execute it. After marketing analysis it is found that people want
sometimes different flavour in lassi but considering health.
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Cost & benefit analysis: Cost and profit are two main and crucial because this mangers
of Essence Drink is working for it only. Cost has to reduced and profits must be increased. Cost
of new product manufacturing, marketing, etc. has to be less than sales price. As “Organic
Saffron Mixed Fruit Lassi” is new in market, so prices are high for initial stage for earning good
revenue, but at the same time as competitors enters in market, it prices has to be reduced. So
marketing has to be done with lowest price and raw material has to be raised from appropriate
suppliers, Preservation can also done.
Financial projection: There is requirement of different activities such as market analysis,
suppliers, marketing, installation of machinery, payment to chef and other employees, etc. So,
finance required for this project of “Organic Saffron Mixed Fruit Lassi” is 3000 pounds.
Funding raising: Funds for launching new product is raise from external sources. Loans
is taken for long term purpose is bank loans and for short term treasury bills are used. There is
proper accounting of loans to communicate it to stakeholders. Apart from this there is
requirement of funds for uncertainty, accidents, etc. with which operations can be run smoothly
and in appropriate manner.
TASK 4
P7 Different tools organisations use to develop, retain and protect knowledge and intellectual
property
There is requirement of some protection and security for launching of new products and
services in industry. This is covered under intellectual property right. There are different
intellectual rights such as copyright act, patent right, registered trade mark, etc. Some intellectual
rights are as under-
Patents- Patent is right with holder of invention not to allow others to use that product or
services. There are different types of patents i.e. utility, plant and design. This is the right
provided to individual for 20 years. Advantage of patent provides protection against mis use of
innovation by others. While disadvantage is applying patent is time and cost consuming.
Trade marks- Trade mark are the symbol, design and words which makes differentiation
of product with others. For launching “Organic Saffron Mixed Fruit Lassi” trade mark is used
which can not be used by other organisation which they are coming with similar product. With
trade mark user can use product and service at national level. While disadvantage of trade mark
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that individual have to regular use new launched product and services in public for the purpose
of proof.
Copyright- Copyright is the formula or system through which some specific product and
service is launched. This is done with art work such as music, painting, etc. which is provided to
individual who launched it. Registration of copyright is voluntary, but with registration it can not
copied by other. Advantages of copyright is inexpensive and have simplify process of
registration. While disadvantage is it protect expression of idea but does not idea, so it can be
copied easily by others (Wang, Vanhaverbeke and Roijakkers, 2012).
For Essence Drinks, while launching new product as “Organic Saffron Mixed Fruit
Lassi”, there is requirement of trade mark and copy right intellectual right. There is requirement
of registration of logo under copyright act, while patent is used for registering “Organic Saffron
Mixed Fruit Lassi” which can not launched by other with specific name. But at the same time,
copy right is not effective because it restricts others to express similar idea but they can copy
product with minor changes.
CONCLUSION
From the above discussion, it is clear that innovation is different from invention because
with innovation organisational growth is possible and it assist in retaining talented personnel.
Team working, culture, leadership are important in organisation for successful launching of
product and services as innovation. With the help of innovation funnel, there is selection of best
method for innovation. With the help of frugal innovation, cost of new product can be reduced
with better efficiency. With the help of 4 P's of innovation, it can be launched properly with
understanding external market. There is requirement of complete procedure through which
product can be launched properly. Business case assist in knowing what has to be done to launch
new product and get to know about different ways to funding for it.
RECOMMENDATIONS
As a junior brand strategy innovation consultant, I recommend that there is requirement
of some sources of funds apart from finance for launching new products. This assist in
performing smooth operations if there is any mis- happenings. Employees has to be
communicated regularly regarding change in working style through which they are able to
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understand what has to be done if something has went wrong. There must be evaluation while
planning for launching “Organic Saffron Mixed Fruit Lassi”. This provides knowledge about
progress tare. There must be testing among loyal consumers, so brand image does not gets
affected and correct feedback can be achieved.
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REFERENCES
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Ahn, J. M., Minshall, T. and Mortara, L., 2015. Open innovation: a new classification and its
impact on firm performance in innovative SMEs. Journal of Innovation
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Chun, D., Chung, Y. and Bang, S., 2015. Impact of firm size and industry type on R&D
efficiency throughout innovation and commercialisation stages: evidence from Korean
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Dries, L. and et. al., 2013. Open innovation: a case‐study of the Hungarian wine
sector. EuroChoices. 12(1). pp.53-59.
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Mazzarol, T. W. and Reboud, S., 2017. Entrepreneurship and innovation. Tilde Publishing and
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