Importance of Innovation in Organizations

This report discusses the importance of innovation in organizations and compares it with invention. It explores different sources of innovation and how organizational vision, leadership, culture, and teamwork shape commercialization. The report also explains the 4P's of innovation and the usage of the innovation funnel to examine and shape ideas. Additionally, it introduces the concept of frugal innovation and its application in an organizational context.

Innovative
Business Case
1

Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................2
TASK 1............................................................................................................................................2
P1 Explain innovation and determine its importance to organisations in comparison with
invention.................................................................................................................................2
P2 Explanation of ways in which organisational vision leadership and culture and teamwork
shape commercialisation along with analysis of different innovation sources......................4
TASK 2............................................................................................................................................5
P3 Explanation of 4P’s of innovation and usage of innovation funnel to examine and shape
ideas........................................................................................................................................5
P4 Frugal innovation development and application of frugal innovation and innovation funnel
in organisational context.........................................................................................................7
TASK 3............................................................................................................................................9
P5 Significance of commercial funnel and application of new product development process
for commercialisation and innovation....................................................................................9
P6 Innovation business case for Essence Drinks..................................................................11
TASK 4..........................................................................................................................................13
P7 Evaluate the different tools Essence Drinks could use to protect the intellectual
property rights of a new drink..............................................................................................13
CONCUSION................................................................................................................................15
REFRENCES.................................................................................................................................16
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INTRODUCTION
It is important for business firms to focus on innovation in order to offer new products with high
utility to their consumer base so that they are able to survive in this industry for a long time
period. The present report is based on Food production company essence drinks. Significance of
innovation in comparison to invention is provided in this report. Different sources pf information
are analysed in this report along with the impact organisational culture and leadership on
commercialisation. 4P’s of innovation are explained in this report and frugal innovation along
with innovation funnel are applied to Essence drinks. Commercial funnel and new product
development process are discussed in this report along with the ways to protect intellectual
property rights for Essence drinks. Innovation business case for essence drinks is also provided
in this report.
Background to the company and the problem: Essence drinks was established in UK in
the year 2019. Initially the sole offering of the company was a healthy mango lassi beverage
which gained huge success in the UK market. This rapid success of the company is attributed to
the distribution capability and innovative products. Sales of the company have decreased
recently and introduction of innovative product is required to boost the sale of the company.
MAIN BODY
TASK 1
P1 Explain innovation and determine its importance to organisations in comparison with
invention.
Innovation
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Innovation is the process of improvement in the existing product adding suitable features and
attributes. Basically an innovation is an action taken by someone to develop new ideas for the
better performance of an organisation (Leckel, Veilleux and Dana, 2020). In essence drinks the
company always implement the approach of innovation to maintain good collection of drinks and
to meet the changing customer demands. Innovation is a systematic and formulated
implementation of new idea in order to optimally maximize the capabilities of the business and
also to maintain the satisfaction level within the customers. There are different factors that drives
the innovation and an organisation suggests technology, new customer demands etc. Whereas
invention is a process of generating new idea in market that has never been heard or think about
in the past. Invention is a process with the potential to bring change in the market by its
objectives.
Importance of innovation in organisation
In essence drinks innovation is highly important to retain the existing customers and to to attract
new potential customers. The process of innovation in an organisation helps the company to
maintain the balance between the growth and the sales to optimum level. The innovation of new
products or services for process helps Ascent strings to gain the competitive advantage over the
Rival firms and also help organisation to increase its brand value among the consumers by
providing them with new products. An organisation that drives innovation help their employees
to develop their critical thinking and creative skills in order to commercialize the innovation in
the market. The innovation helps an organisation to capture the larger market share and thereby
able to gain better profits with the new innovation of product (Schmid and Kwon, 2020). Hence,
innovation is highly profitable for an organisation in different aspects thereby increasing the
recognition of the brand name and attracting more people towards the brand.
Difference between innovation and invention
Basis Innovation Invention
Meaning The process of adding new attributes
to the something that already exist
within an organisation basically it
improves existing product process
Invention is an occurrence of raw and
fresh idea for a product or service or
process which is never been thought
or heard about in the market thereby
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by implementing the new idea
within it which increases the value
of business and productivity of
organisation.
it creates a new product that adds
value to the company's image.
Resources
required
For Innovation strategic
management skills, Knowledge of
market trends, competence and
financial support is required.
For invention scientific skills,
financial aid and invention tools and
techniques are required
Activities The innovation activities are
performed in whole organisation
The invention activities are limited to
Research and Development
department
Launch Innovation is resulted into the
commercialization
Invention is not commercialized
necessarily
Motive The innovation has economic motive
of increasing the sales and profits of
the organisation
The invention relies in both whether a
motive to earn profit or a non earning
motive (Kratzer, Meissner and Roud,
2017).
Source The innovation is induced with the
change in customer trends,
technology advancements, etc.
The invention is autonomous and
majorly due to the curiosity and
interest for research.
P2 Explanation of ways in which organisational vision leadership and culture and teamwork
shape commercialisation along with analysis of different innovation sources
Organisational vision influences business innovation of the company. The vision of the
organisation includes expansion limits, priority to responsiveness or maintaining rare brand
image of the company which shapes the types of innovation selected by the business firms.
Leadership of the company plays an important role in building and offering innovative products.
Leadership directs the workforce towards attainment of organisational vision which affects the
innovation process (Albert, 2019). Organisation culture plays an important part in shaping
innovation as it sets the norms of the workplace and is deciding factor in uniting the workforce
for attaining a common goal. Teamwork shapes communication as effective workplace
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teamwork ensures the innovative products which have high utility are developed by the company
in a timely manner.
Analysis of different innovation sources is provided below:
Unexpected: Innovation created from this type of source is developed unexpectedly as inventors
and business firms understand the elements of profitable innovation unexpectedly. The
advantage of this innovation source is that it provides new ideas to corporations spontaneously.
This disadvantage of this source is that the possibility of gaining an effective innovation idea
from unexpectedly is low.
Necessity: The need for improving an existing product or service or offering innovative products
to fulfil needs of the consumer base is another source of innovation. The advantage of this
innovation source is that products created from this source have high utility as they solve
consumer requirement (Alrowwad and Abualoush, 2020). The disadvantage of this source is that
this innovation source can be gained with heavy research.
Chagrining perception: Changes in perception of specific social trend or product is a source for
innovation as business firms offer innovative products which attract consumers with changes in
perception. This is an advantageous innovation source as it provides the company ways to handle
external changes. The disadvantage of this innovation source is that changes in perception can
also make an innovation irrelevant if it is generated from this source.
TASK 2
P3 Explanation of 4P’s of innovation and usage of innovation funnel to examine and shape ideas
Types of innovation
Incremental innovation: This type of innovation includes making innovative changes to
existing products and offering them to existing consumer base. This is the most common type of
innovation and every business firm engages in incremental innovation in one form or other
(Anning-Dorson and et. al., 2017).
Disruptive innovation: Businesses firms utilise new technology for their present market
as part of disruptive innovation. Application of new technology to existing markets is not
favourable at the start due to its complicated nature. Business firms are able to gain success after
recapitulation in this form of innovation.
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Architectural innovation: As per this innovation, business firms utilise existing
technology and knowledge and apply it to different markets from the market in which it is being
currently used. The risk associated with architectural innovation is reduced by the technology
being proven in a particular market.
Radical innovation: Revolutionary technology is used by business firms in order to
create new markets or dissolve existing industries in order to utilise radical innovation. Radical
innovation not only impacts the industry of the business firms but affects other industries as well.
Advise form innovation for Essence Drinks; The firm needs to utilise disruptive innovation as it
will help the company gain mainstream consumers which have high demand after some time and
directly compete with incumbents of the beverage production industry.
Directions of organisational change Strategic transformational change: This type of change results in creation of new
organisational culture and future direction of the company. Transformational change is
implemented with impactful change sin thee market (Fontana and Musa, 2017). People centric organisational change: Changes which are directed towards improving
employee performance, skills, attitudes, behaviour and loyalty of employees to
the organization come under this direction of change. Structural change: This type of change affects the organisational structure and help
business firm enhance productivity and drive innovation to attain business goals of the
company. Remedial change: This type of change is undertaken by business firms as a means of
remedying current business situations such as decreasing sales or efficiency. Remedial
change helps business firms improve business processes and recover from unprofitable
business situations (Fontana, 2019).
4P’s of innovation
Product: The changes in products or services offered by the organisation are discussed
under this element. This element supports innovative ideas as innovative changes in products or
services increase the product portfolio and utility of the company offerings.
Process: The changes on product or service deliver are part of this element. This element
supports innovation capability of the company as improvement in delivery channels provide
consumers better services.
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Position: The changes in ways in which the product or services introduced to the
consumer is part of this element. Changes in position of the company support innovation as it
changes the narrative associated with the product.
Paradigm: The framing of the company or changes in underlying mental models which
frame the firm are provided in paradigm. The changes in framing of the company ignites and
supports innovation as innovative products are developed on the basis framing associated with
the firm.
Explanation of innovation funnel
The steps in production of an innovative product or process are provided in the
innovation funnel. The steps of the innovation funnel and it’s usage to examine innovative ideas
is provided below:
The first step is depicted by the wide mouth of the funnel
In this stage business firms collect as many ideas as possible which can lead to
development of innovative product or process (Johannessen, 2019). This step can be speeded up
by understanding objectives of the company and internal capabilities of the firm. Examining
ideas on the basis of their suitability to organisational objectives and capabilities ensures
collection of effective ideas in this step.
The second step is depicted by narrowing segment of the funnel
The ideas collected in the first step are screened in this step. This involves determining
the relevance of the ideas and assessing the risks and returns of the idea. Resources are allocated
to the most attractive ideas and ideas are examined on their ability to help company carry out
future strategic projects. In addition to this risks associated with the idea are examined to select
the most profitable ideas.
The third step is depicted by narrow segment of the funnel
The company makes efforts to ensure that the objectives decided in this first step are
fulfilled with the help of this idea. The product service developed through the idea are realised in
the market.
P4 Frugal innovation development and application of frugal innovation and innovation funnel in
organisational context
Frugal innovation
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The concept of frugal innovation refers to low-cost new products, methods, processes and
designs that have been created for or come out of what is known as the bottom of the pyramid or
the unserved lower end of the mass-market (Johnson, Friend and Lee, 2017). Frugal innovation
helps business firms offer innovative products or services for the consumer base which is ignored
by incumbent organisations and increase sale. The first step in development of frugal innovation
is creation of accessible and affordable products or services which enable the company to grow
in a sustainable manner. Business firms need to adopt design thinking at product level and
systems thinking at macro level in order to develop frugal innovation. In addition to this
development of frugal innovation also involves utilisation of innovative business models to
facilitate frugal innovation. Corporates which aim to use the approach of frugal innovation also
need to leverage advanced technology to provide frugal innovation products.
Appraisal of role of frugal innovation in organisational context
Frugal innovation helps business firms find cost effective innovation which is targeted at
lower end of the market. The company is able to solve the problems faced by the lower end
consume base in a unique manner which enables the firm to increase consumer base (Klaic,
Burtscher and Jonas, 2020). In addition to this business firms can enhance their frugal innovation
after offering it to lower end of the market and offer the improved version to mainstream
consumers to attain leading position in the industry. The advantages and disadvantages of frugal
innovation are provided below:
Advantages:
 Frugal innovation enables the firm to compete with cheaper production firms and secure
beneficial position in the industry.
 Frugal innovation can be used by business firms reduce complexity of innovation and
offer to wide consumer base.
Disadvantages:
 Frugal innovation is costly and time-consuming.
 Frugal value focuses on delivering value at low costs to more people and the firm is not
able to focus on niche market to develop unique and radical innovation.
Frugal innovation in an organisational context
Essence Drinks can utilise the concept of frugal innovation to offer affordable and unique
products to consumers on the lower end of the beverage market. This can be attained by
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developing affordable vegan beverage compared to other beverages of this category which are
highly priced for the lower market.
TASK 3
P5 Significance of commercial funnel and application of new product development process for
commercialisation and innovation
Importance of commercial funnel: The commercial funnel is a marketing tool which
enables business firms to sell their products to the consumers. The commercial funnel includes
the process of attracting consumers to product and persuading them to purchasing the product of
the company (Koyuncuoglu, 2021). The importance of each stage of commercial funnel is
provided below in context of Essence Drinks:
Stage 1; Awareness: In this stage consumers became aware of the product or service that it
offered by the company. This stage is important as it introduces the products to the consumers
which is essential to persuade them for purchasing the product or service. In this stage Essence
Drinks needs to advertise their affordable vegan products directly to the consumers with the help
of digital marketing.
Stage 2; Interest: In this stage consumers evaluate the product by comparing it with offers from
rival business firms (Kuo and Smith, S., 2018). It is important for business firms to offer best
value proposition in this stage in order to ensure that the consumers remains interested in the
product. Essence drinks needs to create interests of the consumer by communicating the benefits
of the product.
Stage 3: Decision: Consumers in this stage look for various options to gain the best deal. This
stage is important as it enables the company to offer the best discounts and enhance consumer
satisfaction. Essence drinks needs to provide various offers to the consumer in order to ensure
that they make the decision of purchasing the products. This includes buy 1 get 1 offers or
discounted products.
Stage 4: Action: In this stage consumers make the final decision of purchasing the products.
This stage is important for business firms as the sale of the products is dependent on this stage.
Importance of application of New product development process: This is the process
through which business firms conceive a product idea, refines the definition of the idea,
develops it and then launch in the market (Lei, Gui. and Le, 2021). The process of new
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product development includes four steps. The importance of these steps is provided below in
context of Essence dinks: Discovery: This stage involves exploration of new ideas with the view point of
organisational strategy and profitability. Thus stage is important as business firms are
able to understand every aspect of the idea. In case of Essence drinks the contribution of
project teams and brainstorming practices play an important role in finding suitable idea
for the company. Definition: In this stage major risks are identified, technology of the product or service is
tested and concept is tested early in the new product development activities and ideas
are screened early (Lüdeke-Freund, Schaltegger and Dembek, 2019). This is an
important stage as business firms understand the risk, technological implementation
and concept of the innovation in a profound manner. In case of essence drinks, this
stage involves understanding the risks associated with innovative ideas and
determining the execution and feasibility of technology.
 Design: Commercial potential of the product is identified and measured in this stage. In
addition to this performance and architectural design of the product is determined and
consumer feedback is gathered to make various improvements. In case of essence drinks
this stage is important as it helps business firms create suitable design for their product
and understand the commercial aspect of the innovation. Development: This stage involves full realisation of the products. Business firms develop
profitable launch plans and market plans to ensure that the product is introduced to the
target consumers in an effective manner (Milley, and Szijarto, 2020). In case of essence
drinks this stage is important as it ensures successful introduction of the product.
Strategic capability of the proposed solution
The proposed solution for innovation to enhance sale of Essence Drinks and build
product portfolio includes creation of affordable vegan beverages because of the rise in demand
of sustainable products from the consumers.
Alignment with business objectives: The proposed solution is aligned with the business
objective of the company as it will help the company reach new consumer groups which will
enhance sale and growth of the company.
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Resources and capabilities: The capabilities of essence drinks matches with proposed solution
as the company has the infrastructure to produce beverages which can be used to produced vegan
beverages.
Risk assessments: The primary risk associated with this proposed solution is the financial risk.
The risk mitigation strategy which can be used in this situation is risk limitation which can limit
the exposure to financial risk (Owusu-Agyeman, 2019). In addition to this, another risk
mitigation strategy used in the innovation business case is to implement a quality assurance
programme. This will assist in ensuring that each consumer gains quality services.
P6 Innovation business case for Essence Drinks
Executive Summary: Essence Drinks is a beverage production company established in the year
2019. The sole product offered by the company was mango lassi, recently the sale of the
company have decreased. The firm needs to enhance their skills and seek innovation in order to
enhance innovation.
Proposed solution: The solution proposed for the firm is to develop product range of affordable
vegan beverages in order to attract consumers. This is an effective solution for the company as
the consumer preference for vegan and sustainable products is increasing. Consumers will prefer
the affordable and sustainable options provided by Essence drinks in comparison to other
products of rival business firms due to their affordability.
Innovation: This is an innovative products as lassi is a conventionally non-vegan product which
is created from milk. Providing a sustainable and vegan alternative to lassi drinks is an
innovation as it will be created by using sustainable milk alternatives such as almond milk or soy
milk.
Consumer Research: In order to gain profound knowledge about conditions of the digital
clothing retail market and consumer behaviour, both secondary and primary research is useful.
They are explained below:
Primary Research: This type of research is conducted by gaining first-hand information
directly from the sources.
Secondary Research: This research utilises existing information which is précised and
organized to gain effective results.
Design and development plans: The development plan for the present solution includes
construction of a vegan lassi which can be used by business firms.
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Investment requirement
Expected Benefits
Environmental benefits: This innovation provides environmental benefits to the company as the
vegan and affordable beverages provided by the company are more sustainable than the
beverages which utilise dairy products. This healthy alternative will have positive environmental
benefit as it is no dependent in the dairy industry which is one of the largest contributor to global
climate change. Essence drinks will be able to have appositive impact on the environment with
the help of this new innovation along with diversification of their product line and increase in
sales.
Branding benefits: The branding benefits gained by the respective company include increase in
positive branding of the company as the sustainable products offered by the company will create
positive public image of the company which supports the environmentalist cause. The company
will be able to gain positive reception from environmental conscious consumers which will build
overall brand image and brand recognition of the company.
Financial benefits: Essence drinks will gain financial benefits from the success of this
innovation. This is because the consumer be of the company will be increased after the
introduction of this innovation. This is because the vegan lassi alternative offered by the
company at affordable prices will attract environmentalist consumers who prefer vegan and
sustainable products over dairy based products along with consumers which are not able to
intake diary based products due to lactose intolerance. Lassi is a dairy based drink which
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alienates many consumers in the beverage industry but introduction of beverage which provides
similar taste as dairy based products and includes vegan milk alternatives will attract large
amount of consumers. In addition to this there is les risk of the sale of this product decreasing in
the future as the climate change movement is becoming more popular which will further
influence consumers to prefer sustainable and animal cruelty free products instead of dairy based
beverages. The company will gain high financial success after introduction and the product and
in future which will contribute to continuous growth of the company.
TASK 4
P7 Evaluate the different tools Essence Drinks could use to protect the intellectual
property rights of a new drink
Registration of trademarks and Copyrights: This is one of the most effective ways of
protecting intellectual property rights of vegan lassi. Trademarks are applicable unique tangible
and intangible property such as innovative beverage. On the other hand copyrights is applicable
on symbols, catchphrases, logo designs and other characteristic which are part of the brand
identity of the company (Tsai and et. al., 2019). In ace of essence drinks the company needs to
use this method of protecting intellectual property rights by registering copyrights and
trademarks.
Advantage: The advantage of this intellectual property protection method is that it
enables the company to protect intellectual property from copyright and trademark
infringements.
Disadvantage: The process of registration of trademark and copyright is time taking and
requires various documentation.
Creation of confidentiality: This method includes taking various efforts to increase
confidentiality during deal with external parties. This includes drafting anon-disclosure
provisions with legal advice. Essence drinks need to contact with legal tams to create non-
disclosure agreements so that the recipe of their beverage remains disclosed.
Advantage: Non-disclosure agreements and provisions helps the firm safely deal with
external parties and take legal actions against parties which breach this clause.
Disadvantages: The impossibility of tracking and proofing breach of non-disclosure
agreement is the main disadvantage of this method.
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Open sourcing: This involves open sourcing technology related to innovation. This way,
the respective company can focus on the added value on top of the technology stack that remains
proprietary, and can execute with speed and agility. Essence drinks need to open source software
for digital sites in order to use this method.
Advantage: Open sourcing is cost effective and increases information security.
Disadvantage: Compatibility issues of open sourced technology is limitation of this
method.
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CONCUSION
From the above report it is determined that innovation is vital for business firms as it
ensures growth. In addition to this, there are different types of organisational changes which
include strategic transformational changes, people centric organisational changes and structural
changes. The P’s of innovation product, process, position and paradigm shape innovation in a
business firms. Frugal innovation and innovation funnel can be used by business firms to drive
innovation. Commercialisation funnel and new product development process also plays an
important role in fostering innovation. Apart from this innovation business case and methods
for protecting intellectual property needs to be developed by enterprises in order to build and
secure innovation.
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