Report: Innovation and Commercialisation in a Small Business Setting

This report delves into the critical concepts of innovation and commercialisation within a small business context, using Essence Drinks as a case study. It explores the significance of innovation, differentiating it from invention, and examines various types of innovation like incremental, disruptive, architectural, and radical. The report further analyzes how organizational vision, leadership, culture, and teamwork shape innovation and commercialisation efforts, including the application of Handy's organizational culture model. It then focuses on the 4Ps of innovation (product, process, position, and price) and the use of the innovation funnel to refine and shape innovative ideas. The report provides a detailed examination of these key elements, offering a comprehensive understanding of how businesses can foster innovation and successfully commercialize their products and services.

Innovation in a small
business context

INTRODUCTION
Innovation is the new and creative idea which companies can apply into their business
activities. It is not just the idea but it defines different methods or ways to do any activity.
Innovation help the organisation to set themselves at a completely different paradigm and it bring
many opportunities for the firm, grow it economically as well as bring success in their
operations. For realizing innovation, one has to think with their open mind and collaborative. On
the other hand concept of commercialisation is bring was brought for a new product or service in
the market which include activities like production, distribution, marketing, sales, customer
support and other important areas to attain success in the competitive market. Essence drinks is a
company which is taken for better understanding the concept of innovation and
commercialisation. In this project importance of innovation in the context of organisation will be
discussed and 4Ps of innovation will be analysed. Apart from this development if frugal
creativity and importance of commercial funnel will be discussed as well (Dutta and Folta,
2016).
TASK 1
P1.1 Innovation and its importance to organisations in comparison with invention.
Innovation refers to a procedure where ideas are converted into the final action by
creating a goods or services. This is represented by implementing or initiating new ideas or
methods. This includes multiple activities. A UK based company, Essence drink wants to
increase its sales. For increasing the sale of the products, company has to bring some innovation
into their production process or in the product so that the customers can be easily attracted.
(Carayannis, Cherepovitsyn and Ilinova, 2016).There are different type of innovation which
company can use-:
 Incremental innovation- This very common type innovation which every company is
using one or other way. In this form of innovation, Essence drink can use their existing
technology to increase the value of their products by adding new features, design or some
other changes in it. And sale it to the same existing market so that new customers can be
target as well as existing remain with them.
 Disruptive innovation- This is again a type of innovation which Essence drink can use
into their organisation. If company uses this technique it is require to apply some new

technology into their business operation to bring something innovative in it. This is not a
good type of innovation for the organisation to choose because it is costly as compare to
other techniques as well as it is not very easy to handle.
 Architectural innovation- This is different form of innovation which company can use.
In Architectural innovation, Essence drinks has to take some lessons and skills related to
it and then have to apply it in the new market from where they can tap new customers. it
is an amazing method for attracting new buyers to the organisation as well as new market
is receptive. Company can choose this method because it involves less risk most of the
time (Walsh, Lee and Nagaoka, 2016).
 Radical innovation- This is the last method or type of innovation technique which
Essence drinks can use into their organisation. As per this method, new business or
industry take birth for the first time with the new technology. For example launch of
airplane, it was not the first mode of transportation but it was an innovative and new
mode of transportation take into the market years back. Similarly if Essence drinks
planning to go for this method they are require to plan something very different and new
which one had think before.
Essence drink chooses Incremental innovation method it is one of the simplest and best
mode of innovation. They only require bringing new features in their existing products which is
helping them to attract many new customers (Hossain and Kauranen, 2016).
Invention : Invention is the process of inventing new scientific or technical idea which
needs to be proven as workable. It is a types of composition, discovery or imagination of any
product or services.
Basis Innovation Invention
Meaning It is concerned with
implementing the idea for the
product or processes for the
very first time.
It is in relation with
occurrences of the idea of
implementation of products
and services that has never
made before.
Concept It is related to the concept of
practical innovation of new
It is related to the concept of
original and real idea.

idea.
Skills required This requires set of strategic,
technical and marketing skills.
It requires scientific skills.
P1.2 Organisational vision, leadership, culture and teamwork can shape innovation and
commercialisation
Commercialisation is the process of managing and running operations of something for
the purpose of earning or gaining financial gains for the company. It refers to an activity of
bringing new goods and services to the marketplace. Innovation and commercialisation are
related to each other on some parts indirectly. There are some factors which affect these two
terms in shaping it-:
 Vision- It pays an important role for every organisation, in Essence drinks it helps in
forming commercialisation and innovation. Vision is the long term agenda of the
organisation for which they perform activities to achieve some goals and objectives of the
firm. Vision provide a reason to company for running their activities and innovation is
based on these visions. An individual think for an innovative idea because they want to
achieve these long term goal. On the contrary, commercialisation is bringing new
products in the market which is possible only if company have some vision.
 Leadership- Essence drink is following transformational style of leadership, as per this
style company and employees work together collaboratively. In Essence drink, company
always encourage their employees to think ahead and big which polishes their innovative
thinking skills. This also put a positive impact on the workplace which motivates workers
to think in different ways for achieving the goals of the company. Leadership also has
hands is shaping commercialisation because supervision of a good leader can make it
possible to achieve the success in launch of new products (Xiao and Liu, 2016).
 Culture and teamwork- Culture that Essence drink is following is focusing on making
the professional journey of the employees and teams smooth and happy along with
achieving the business ambitious. For same, company is providing good training to their
workers so that they can improve their performance as well as any obstacle can be
removed from the path while performing the activities. These training provide

satisfaction to the employees and they feel happy as well as motivated. It gives birth to
the innovative ideas. As well as culture of company also train their employees to work in
teamwork. Collaboration of these two factors help the company in attracting more
customers.
Handy model of organisation culture
This model of culture was developed by Charles Handy and is concerned with dividing
the culture into four different roles. The first one is power culture in which entrepreneurial
characteristic of culture is taken into consideration. Such organisation have flat structure and are
led by charismatic leader. Then another one is role culture which is concerned with the
organisations who are highly job oriented and generally found in bureaucratic organisations. It
has low degree of corporation and low power of distribution. Then the another one is person
culture which is found in professional organisations where employees work independently who
are highly educated and expertise. The last one is task culture which is concerned with higher
level of both cooperation and power distribution. In this, employees are highly experienced
professionals and problem solving oriented.
 Teamwork: It is a fundamental constituent of business as it emphasises on inspiring
people of the organisation to work together which will lead to easy attainment of
business goals. In order to assist imaginative ideas at the workplace the employees can
team up collectively with the help of teams, new ideas can be developed in business and
the result of which will facilitate in the development of new and innovative ideas and will
also facilitate in development of new products. There are various types of teams.
For instance functional teams, which is referred to as permanent team, includes
individuals of the same sector with different responsibilities. The manager of such teams assures
that there will be no obstacle while transferring an individual from one team to another. The
another team is cross functional team, which consist of individuals from different departments.
This team handles particular task which requires different expertise and inputs. The another one
is virtual team which is related to involving employees who works in different locations and rely
on power of collaboration.

TASK 2
P2.1 4Ps of innovation and the use of the innovation funnel to examine and shape innovative
ideas.
Innovation is an all-rounder this which can be applied to anything to make it innovative.
It is a multidicipliniery field which can be applied to every aspect of the company (Mollick and
Robb, 2016). Impact within the organisation, which is caused by the innovation, is very much
important for shaping the innovative idea. In addition to these, 4Ps are some factors which affect
it-:
 Product- These are the physical element of the company on which organisation and
future of organisation is completely dependent. For attracting more customers toward the
firm, company has to put some innovative element in it for achieving their objective. This
effort of the company will also be appreciated by the customers which increase the sales
of the company as well as profitability if the firm. For example, Essence drink is a
beverages company which came into existence two years back. It has not yet seen any
growth because of which, company launched their new and innovative product into the
UK market. Company’s creative and innovative product is a drink called healthy mango
lassi which customers are liking very much.
 Process- It is the way of organisation to perform their business activities like production,
sales, marketing and other operations as well. In terms of Essence drinks, company is
require to evolve their process of production by making it more cheaper and of good
quality to the employees as well as for the customers. Bringing innovation in production
process also attract customers toward the organisation and increases company’s
productivity as well as the profit.
 Position- Position innovation is related to the promotional activities which company
perform for increasing the sales of their products. Position also deals with the
advertisement part of the firm, it include ads on television, newspapers, magazines etc.
By bringing innovation in their promotional tools Essence drinks can achieve great
success and attract many new customers.
 Price- Essence drink can also bring innovation into their prices they are offering for the
products. Company can cut their additional cost and sell their items on lesser price to the

customers. This change will help the company in targeting many new customers which in
return increases the profit of the firm.
Innovation funnel
Innovative funnel is another element to examine and shape the innovative idea
(Bernstein, 2015). These funnels help in taking a decision regarding the steps of developing
process or products. In case of Essence drinks their first process is to get the idea about the
concept, after that next step is to evaluate that idea if it matches with the company’s goal or not
and the last step id to deal with the fact of the idea to achieve the goals of the company. It
comprise of various steps that are focused on development of products. The focus of the funnel is
to develop ideas and then convert the same into products and services that can effectively satisfy
the needs and wants of customers. Essence drink needs innovation funnel which comprises of
certain steps that can be elaborated below-
Investigation: The fist step of the process pertains to assembling substances in order to
gain knowledge about market. Then it involves collection of different ideas which are based on
the collected market information which will help business in acquiring ideas. For collecting
information the Essence drink can collect information from a number of sources such as from
external and internal sources.
Development: In the initial stage of the process the data or information was collected
from different sources. Then the data is being screened which comprises of comparing range of
selected data in relation with the overall organisation goals and objective in order to find t about
the relevancy of the collected data.
Shipping products: This step comprise of selection of appropriate ideas which can
fulfil the organisations goals and objectives. Along with it involves introducing new ideas which
an organisation performs to satisfy the customer needs and wants. This helps the business in
testing their product in the actual marketplace before introducing the same in the market on a
large scale.

Source : Innovation Funnel. 2019
P2.2 Developments in frugal innovation
Frugal innovation is a technique which Essence drink uses for reducing the complexity in
their business activities, to reduce the cost of goods as well as the production. With the hep if
frugal innovation, unwanted activities which is adding to the costs can be removed easily this can
help in reducing the cost of the company. This will help the organisation to produce quality
products at lower rate which satisfies the needs of the customers.
Sale act as the blood for the organisation which company can innovate by focusing on
these factors -:
 Get social- Company should try to reach their customers with the help of social media
and create a interrelationship between public and business (Bashmakov and et. al., 2015).
 Sponsor community events- Company should sponsor some events to promote their
brand and to grab the marketing opportunities.
 Become a resource- Company has to provide resource to their precious customers by
providing them with compete information of the products needed by them.
Company has to focus on these factors developing their frugal innovation-:
 Quality
 Distribution
 Adaptability
Illustration 1: Innovation Funnel. 2019

 Affordability
 Performance
 Servicing
 Input cost
 Scale up
Essence drinks is providing good quality products to their customers which is according
to the demand and preference of the buyers. Another factor is distribution which is applied for
making company’s product available to the customers easily. Next is the output cost which is
fixed by the firm for their customers. Performance is related to the company’s activity which
they are rendering to achieve the goals of the company. Next is servicing, company is providing
good and quality service to their customers and employees to meet their satisfactions. Company
is focusing more on their input cost, they keep on cutting their extra costs from their product as
well as from the production process so that they can sell it at cheap rate as compare to the
competitors (Kolychev and Prokhorov, 2015). As the market is demanding for healthy flavoured
drink in order to satisfy market the essence drink will introduce new variant in their current
product.
TASK 3
P 3.1 Importance of the commercial funnel and the application of New Product Development
(NPD) processing for commercialisation of innovation.
Commercial funnel help the organisation to find out the journey of customers related to
the products and services. Five steps are involved in commercial funnel and those are
opinion,awareness, consideration, preferences an all purchase. This funnel gives an idea how the
size of people are very much during the sales of the product but at the time of purchase it remain
very less. Main element which lies under this are awareness about the customers in the market ad
what problem they are facing and to find out the reason behind not buying the products.
Company is involved in finding out the solution to these problems so that they can attract
customers. they do it by arranging some campaigns and sending emails as well as social media
marketing to reach out the customers. all these are done to increase the interest of the customers
which in return increases the sales of the company.
Essence drink is a healthy beverage company and because of its amazing distribution
channel it has achieved the desired sales (Greco, Grimaldi, and Cricelli, 2015). It increases the

engagement of customers in the performance of the company in the form of information and
questions.
There are many tools and techniques made to make the commercial funnel effective. In
Essence drinks employees have full credit for the innovation ideas into the company. This tool
has been adopted for increasing the efficiency of employees to increase their retention in the
working environment. It also increase the feeling of togetherness in among them wit the help of
which, employees are able to increase their customer base.
Source : Commercial Funnel. 2019
New product development is the process which include some steps starting from the
generation of idea, screening of idea, making strategies and implementation. Thousand of
products enter into the market which is increasing the competition of the company, and to deal
with it, organization has to make good quality products to serve the customers as well as use
excellent techniques for promoting their products. Company is using advanced technology for
their production process as it is helping them tp produce quality products are cheaper rates.
With the adoption of commercialisation funnel and new product development, an Essence
drink is able to innovate in the market and drive the product into the market. The new product

development has certain stages. The first stage will consist of challenges such as challenge of
accumulated cost which will be needed in development process of their innovative product. The
NPD process involves element such as generation and screening of ideas. In order to generate
idea the business will use certain external and internal sources in order to generate ideas. The
further step of the process involve concept testing in order to see the relevancy of the ideas
generated in the upper stage with the organisational gaols and objectives. The next step involves
is business analysis and product development that can be done by reviewing the sale, cost and
profits that are attached with the new product ideas. Where as the product development involves
physical development of product to assure that the selected idea can be converted into physical
form. The last part the process involves Essence drink testing the new product in the actual
market in order to test their efficiency. After this the organisation will commercialise the product
that means actually launching the product in the market.
The new product of essence drink will be available in different flavours namely, mango,
chocolate and kesar pista. The product is healthy and will be provided in recyclable and organic
glasses which will minimise the cost of packaging. The ingredients which will be required for
this includes, curd, powdered sugar, cream, ice cream, mango pulp, saffron flavours, chocolate
powder, nutella, choco chips, etc. For marketing it will use online platform which is not only
economic in nature but also taps large amount of customers in very short period of time. This
will involve Facebook, Instagram, you tube, etc. Furthermore, it wil use advertisements on radio
and in newspapers as well.