Managing Innovation: Theories, Benefits, and Limitations

MANAGING INNOVATION

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Definition, process and principles of theory...........................................................................3
Benefits as well as limitations................................................................................................5
Company Background ...........................................................................................................7
Historical Development..........................................................................................................9
Future developments............................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Innovation is basically the procedure of generating new ideas, thoughts as well as
products. Innovation is the method through which organizations are able to bring a well-through
solution to all the requirements and problems of the customers by bringing new and completely
different products, services, ideas, processes etc. The major concept behind innovation is to work
towards the welfare of entire community by providing a solution to all their problems. There are
various theories in innovation which are being used by organizations for establishing a great
position in market. This report mainly focuses upon disruptive theory of innovation. Disruptive
innovation theory is mainly the theory which allows organizations to create new market as well
as value network and eventually disrupts existing market. The major benefit of disruptive
innovation is that it helps the organizations to expand its market share by innovating products as
well as services.
MAIN BODY
Definition, process and principles of theory
Innovation is basically the process through which anew idea, process, product or service
is generated and thus is considered as new and completely different idea or creative thoughts.
Innovation plays a most important role within each and every organization and thus is viewed as
solution to wide range of problems which meets all the requirements. There are generally
numerous theories which has been proposed by various scientists and thus helps to bring a well-
through innovation in each and every aspect (Brem, Tidd and Daim, 2019).
Diffusion of innovation theory
One of the widely known and highly remarkable theory of innovation is diffusion of
innovation theory. Diffusion of innovation is basically the theory which mainly explains that
how and why and at what pace and rate the new ideas and thoughts are spread. This theory was
given by Everett Rogers and is considered as the most effective and significant theory of
innovation. In short, this theory provides the explanation that over the time how an idea as well
as product mainly gains momentum as well as diffuses through particular social system (van de
Wetering, Mikalef and Pateli, 2017).
The major principals of this theory is based on the four elements through which the
spread of the new idea occurs namely innovation, communication channels, social system and

time. These four principles form the major core strength of this innovation theory and thus
encompasses these for spreading the new ideas effectively to others.
The major process of this theory mainly involves fives steps in decision making. First
stage is knowledge where individual is generally initially exposed to the innovation but do not
have information. Second stage is persuasion in which individual shows interest in innovation
and tries to gather information about it. Third stage consist of decision where individual
compares advantages and disadvantages of this innovation and thus takes the decision of using or
rejecting this innovation. Fourth stage consist of implementation where the individual mainly
employs this innovation to some varying degree and thus determines its usefulness. Last and the
fifth stage is all about continuation wherein individual actually finalizes the decision of
continuing this innovation either throughout the life or for some extended period of time until all
the needs are fulfilled (Bahemia, Squire and Cousins, 2017).
Disruptive innovation theory
Disruptive innovation is the another most important as well as significant theory of
innovation which is nowadays completely misunderstood. Disruptive innovation is
predominately the innovation in which a new and completely different market as well as value
network is generally created and thus the existing market and value network are disrupted. This
theory was first given by Clayton M. Christensen. In the nutshell, disruptive innovation theory
mainly refers to technology whose all applications impact the manner in which market as well as
industry functions. One of the most common example of this theory is internet which have
drastically altered the manner in which organizations conduct their business and which impacts
organizations in negative way when they fail to adapt the modern technology (Natalicchio and
et.al.,2017).
There are mainly five principles which basically governs the theory of disruptive
innovation. The first principle states that organizational mainly depends on the customers as well
as investors for their resources as it is led by these two entities. These two mainly direct the
organizations allocation of resources towards the sustainable innovation. The second principle
states that the small markets generally do not solve all growth needs of big companies. The large
organizations need to depend on the emerging markets and cannot rely on small market for its
revenue stream. Third principle addresses that market which do not exist cannot be analyzed.
Planning tools which are used for understanding the technologies do not work when used in