Internal and External Sources of Innovation: Analysis & Examples

This essay explores the sources of innovation available to organizations, differentiating between internal and external factors. Internal sources include research and development (R&D) departments, exemplified by Apple's continuous innovation in products like the iPhone, and unexpected outcomes, where product failures can lead to new insights, as seen in Honda's motorcycle strategy in the US market. External sources encompass industry and market changes, illustrated by the rise of Uber, and demographic and population changes, demonstrated by the emergence of Hispanic-focused media channels like Telemundo. The essay concludes that organizations must actively research their environment to identify and capitalize on innovation opportunities, whether through new products, services, or processes, to maintain their market presence. Desklib provides access to similar solved assignments and past papers for students.

INNOVATION 1
INSIDE AND OUTSIDE SOURCES OF INNOVATION
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INNOVATION 2
Sources of innovation
There are many sources of innovations for organizations both inside and outside. These sources
provide an opportunity for the company to develop either new products or services into the
market or modify the existing ones into more superior quality. We are going to examine two
sources of innovation for organizations both from inside and outside and give real-world
examples of how they have created opportunity.
Inside sources of innovation
Research and development: A company can look into its products’ features, and the information
they gather will be useful in identifying an innovation need. The company can make some
modifications and invent a more powerful product or even come up with a new product (Rogo,
Cricelli, Grimaldi, 2014, p. 71). An example is Apple, which continues to invest heavily in its
R&D department to come up with increasingly sophisticated and innovative products such as the
iPhone.
Unexpected outcomes: A unexpected event such as a company’s failure of a product can be an
excellent source of innovation as it will have an in-depth look at the product. It can then develop
a product that better suits customer’s tastes and preferences in the industry. For example, Honda
Motor Company initially failed when it introduced low-powered motorcycles into the US
market. However, it later enjoyed greater success when it instead sold high-powered motorcycles
(Brait, 2004, p. 173).

INNOVATION 3
Outside sources of innovation
Industry and market change: It is vital that an organization be adept at the fast-paced market
changes or its products may become obsolete. The technology revolution has had a significant
impact on different industries from transport, healthcare, hospitality and tourism, financial,
communication and other service-oriented industries. These developments pose a threat to the
existing traditional organizations as the disruptive technologies cause them to lose their market
share. Organizations can take advantage of the countless opportunities opened to come up with
innovative products that also suit the consumer tastes and preferences. Consumers now continue
to demand instant and round-the-clock services that give them quick access to goods and services
(Christensen & Bower, 1995, p.48). For example, the rise in popularity of Uber taxis globally
shows how industry and market chances created a source of innovation. A tech company took
advantage of the opportunity which enables clients to use mobile-based services to enjoy their
innovative services (Rogo, Cricelli, Grimaldi, 2014, p. 65).
Demographic and population changes: the make-up of the population based on aspects such as
ethnicity, religion, education, age, disposable income offer opportunities for organizations to
provide innovative products or services in a particular region. The composition of the population
will determine the consumers' tastes and preferences. The organization will, therefore, need to
come up with products that are particularly convenient for the target demographic group. It may
involve coming up with newer products and services or customizing existing ones
(Shehabuddeen,2007). For instance, the rise in the Hispanics in the US created a new opportunity
for media organizations to exploit. Newer channels catering for the specific ethnic group such as
Telemundo and Telenovela were created which features their culture, language. As a result, the

INNOVATION 4
innovative product was able to satisfy the tastes of the Hispanic-American population (Korzeny
& Chapa, 2017).
In conclusion, organizations need to actively take advantage of the sources of innovation by
researching the population, market, and industry to find out if there is any available opportunity.
They can take advantage by coming up with fresh new products, services or processes to
maintain their presence in the market.

INNOVATION 5
References
Brait, R.A. (2004) ‘Lead users as a source of innovation’, International Journal of Law and
Information Technology, 2 (2), pp. 168-177.
Christensen, C.M. & Bower, J.L. (1995) ‘Disruptive technologies: catching the wave’, Harvard
Business Review, 73 (1), pp. 43-53.
Korzenny, F., Chapa, S. and Korzenny, B.A., 2017. Hispanic Marketing: The Power of the New
Latino Consumer. Routledge.
Rogo, F., Cricelli, L. & Grimaldi, M. (2014) ‘Assessing the performance of open innovation
practices: a case study of a community of innovation’, Technology in Society, 38, pp. 60-80.
Shehabuddeen, N. (2007) Innovation in real life: a hands-on guide to genuine innovation. Open
Innovation Ltd.

INNOVATION 6

INNOVATION 7
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