Innovation and Commercialization: A Business Development Report

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Innovation and Commercialization
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Table of Contents
Introduction......................................................................................................................................2
LO1 Explanation of innovation and the difference between invention and innovation..................2
P1 Innovation and its influence to companies comparing to invention.......................................2
P2 Explanation of the way of shaping innovation and commercialization by the vision, culture,
teamwork and leadership.............................................................................................................4
LO2 Different kinds of innovation..................................................................................................5
P3 Explanation of the 4Ps of innovation and the use of the funnel of innovation to examine
and shape innovative ideas..........................................................................................................5
Innovation Funnel........................................................................................................................6
P4 Developments in frugal innovation with example..................................................................7
LO3 Process which is essential to commercialize innovation.........................................................8
P5 Usefulness of the commercial funnel and the utilization of New Product Development
(NPD) processing for commercialization of innovation..............................................................8
P6 An Innovation Business Case for an organization.......................................................11
LO4 Methods for conserve ideas and benefits and prejudice of those methods...........................11
P7 Evaluation of various tools used by the company to develop, maintain and preserve
intellectual property and knowledge..........................................................................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................15
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Introduction
Today’s business world is a globalised world. Every single company is competing with each
other. Whether it is a big multinational company or a small company, its main motive is to
maximize its profit margin. Every company has its own business plan and business structure. As,
their key goal is same, they are forced to compete with each other to exist in this globalised
world. Almost all company follows the same operational structure. Several companies may deal
with the same product. Only innovation can make a difference.
Innovation is a process of making a new product with existing resources (Bena and Li, 2014). It
may be termed as a way to innovate. The newly invented product should add value to customer’s
life and should have capacity to increase the quality of their life.
LO1 Explanation of innovation and the difference between invention and
innovation
P1 Innovation and its influence to companies comparing to invention
Innovation: Innovation means to innovate anything. It may be a product or a new idea to run the
business (Edquist, 2013). In our case study, Akshay Kumar is the founder of Essence Drinks. He
started a new company two years back and stared with healthy mango lassi as product. In first
year the sales was satisfactory. But in third year the sales decreased due to the competition in the
market. Akshay can start a new health drinks or can re-structure his business. Both the idea is
innovation. He can make a market to survey to take the feedback from the customers about their
needs.
Invention: Invention means to invent a new thing which is not present now (Conti et al., 2013).
In our case study Akshay Kumar can invent a new product; it may be an energy drink or
something else. In this case he or his invention team has to invent something new which is not
present in the market.
Importance of Innovation comparing to Invention: Innovation can be a wise option for the
business than invention (Gault , 2013). Innovation doesn’t mean to introduce a new product all
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the time. It can be a change in business model, change in product design or change in business
strategy. Innovation does not need a group of technical experts all the time. Business
organization does not need to change their area of business in innovation. They just need to
restructure the business. On the other hand, invention required special group of people with
specific skill sets. It needs extra cost for the company. In invention a new product will be made
which may lead the company to diversify their area of business. It is not a good scenario all the
time. Innovative idea can help the organization to reach a new height. An innovative mind can
provide several innovative ideas (Van den Hoven, 2013). Invention needs people with specific
skill sets where as innovation needs people with creative mind. It may be adding value to the
existing company product. It may be a new approach of sale. Customer’s feedback collection and
use those feedback for further product development is also an innovative idea.
P2 Explanation of the way of shaping innovation and commercialization by the
vision, culture, teamwork and leadership
Vision: Every company has its specific vision. They have their own way of seeing the future.
Organization has its set of goals to be achieved in future. Every commercial organization has a
common motive to commercialize their product and achieve more revenue. To achieve this
specific goal, innovation can be a key idea. Total process of commercialization can be new and
innovative including the production and marketing. Adding a specific feature to the product can
be an innovative idea (Block et al., 2013). Marketing team can make a survey to collect the
feedback from the customers. Ultimately customers are the revenue provider. Their choice of
product is an important factor for commercialization. Company’s marketing team should
organize a survey with innovative questions to collect the customer’s feedback and to know the
demand of the customers. They should use the bliss of advancement of technology. They can use
the modern survey tool and analytics tool in this purpose.
Leadership: Leaderships are the policy maker for the organization. They are the people with
organizational responsibilities. They set the long term and short term goal for the organization.
This people run the day to day activity of the organization. To encourage innovation there should
be a clear and professional relationship with every level of leadership and every employee.
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Employees should have the freedom of thought. A free thinking practice is also needed. Only a
free thinking mind can provide innovative ideas. There should be a cordial relationship between
the leadership and the employee. An employee can provide an innovative idea and he or she
should have freedom to communicate with leadership (West and Bogers, 2014). There should be
a formal communication medium. There should not be any via medium. Employee should have
the option to communicate with leadership directly. Leadership has to take the initiative to
provide the freedom of free thinking and proper communication medium.
Culture and Teamwork: Organizational culture is an important factor for innovation and
commercialization. Not only company’s work culture but also internal organizational culture
should be in favor of innovation. There should not be any insecurity within employees. The work
culture is needed to be cordial. Proper communication has to be made between organizational
leadership and employees (Partanen et al., 2014). Regular meeting and feedback collection
should be there. Company should encourage teamwork to get an innovative idea. There should
be a good coordination between Human resource, marketing, research and development and sales
team. Marketing team should have very strong relationship with sales team. Marketing team
provide monthly and early target to sales team. In this way, the commercialization is proceeding.
Marketing team is responsible to collect the feedback from the customers and have to send those
feedbacks to the research and development team. Based on those feedbacks research and
development team can design a new product or can add value to an existing product. A healthy
work culture and proper teamwork is suitable for innovation. Commercialization can be smooth
and effective with good coordination within respective departments.
LO2 Different kinds of innovation
P3 Explanation of the 4Ps of innovation and the use of the funnel of innovation to
examine and shape innovative ideas
Like marketing mix or the 4Ps of marketing there is also innovation mix or Ps of innovation. It is
a special tool to get an idea about what the innovation model gives and how we can impose the
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innovation. The 4Ps are product innovation, process innovation, position innovation and
paradigm innovation (Anderson, 2013).
Product Innovation: Product innovation means the change of product which a company offers.
The company has a specific product. They might be specialized on that product. But ultimate
customer demand should be meeting (Abdel-Razek et al., 2013). There lies the need of a new
product. Research and development team is responsible for providing a new product. In our case
study Akshay Kumar is the founder of Essence Drinks. Their first product was healthy mango
lassi. Due to the decreased sale of that product they need to introduce a new innovative product.
This is called product innovation.
Process Innovation: Process innovation means making a change in the way they created and
delivered (Alsanad and Abdel-Razek, 2016.). In our case study, Akshay Kumar initially has
launched mango lassi. This product was doing good business in UK market in first year due to
innovative formula and distribution capacity. The sale of the product decreases in third year
because different competitors entered into the market with same product. Akshay may introduce
a new drink. A traditional lassi or lassi with different flavor can be an innovative idea.
Position Innovation: Position innovation means making a change in the context of introducing
the product (Baregheh et al., 2016). Here the product may be offered in a retail shop or outlet.
There might be different size of packaging. In our case, Akshay Kumar has mango lassi. He can
sale it in retail outlet. The company, Essence Drinks can change their distribution channel.
Attractive packaging can also be a good idea.
Paradigm Innovation: Paradigm innovation means to frame what we do (Chesbrough and
Bogers, 2014). The overall business scenario can change. They can be negative or positive. But
leadership has to the change in possible positive way. In our case, Akshay Kumar can change the
mode of sale. Besides retail sale he should introduce online sale of mago lassi.
Innovation Funnel
To introduce new innovation many company has use innovation funnel. The idea is that, the
research and development department of a company starts with different ideas and end up with
selecting an innovative idea and lunch it (Hakkarainen and Talonen, 2014). The main parts of
innovation funnel are:
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Opportunity assessment: Here the marketing team collects market data. The team collects the
customer feedback about the product and also gets an idea about their demands (Vanhaverbeke
and Cloodt, 2014). Marketing team make a report based on that data and send it to research and
development team. After analyzing those data R&D department finds opportunity on existing
product or try to develop any new product.
Insight-base idea: Based on the available data the team finds out what kind of opportunity is
available for the existing product (van den Ende et al., 2015). The new idea should be in sync
with company’s overall strategy and culture. They focus specially on target customer and their
needs.
Conceptualization: After getting the idea, this stage comes. In this stage the team
conceptualizes the idea. They try to decide what should be the new innovation. It might be new
packaging or value addition on product
Evaluation: Now it is the time to go back to the customer with concept and check whether it can
meet their expectation or not. This can be a choice modeling or customer testing. Customers can
be provided with a sample product. Based on the feedback of the customers, the team may re-test
it.
Go or not: After collecting the feedback from the customers, R&D team need to analyze the
feedback and collected data. They need to analyze the best concept to get maximum success.
Here, leadership has to take the decision of launching the product of re-check it.
Launch: After getting at least one idea is feasible and can have potential to be successful; the
leadership decides to launch the product.
P4 Developments in frugal innovation with example
Development in frugal innovation: Frugal innovation is an innovation where the organization
innovate a product with reducing cost and complexity (Bhattiet et al., 2013). The main motive
for a business organization is to maximizing the profit. There are many ways to maximizing it.
One innovative idea can be cost cutting. Sometimes the production cost of a product become
huge. It is really tough to make profit from a product which has huge production cost. Next is the
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complexity factor. Customers always prefer a product with less complexity. The innovation
process and production process should not be complex. The commercialization of the process
should be done in a minimum complex way. Non essential features of the product usually make
the product complex. Non essential features of the product should be removed to make it simple
and free from complexity (Zeschky et al., 2014). The production cost includes labor cost,
development cost, raw material cost. Use of modern machine can reduce the labor cost. Some
companies have their own raw material provider. They can buy raw material in a fixed price.
Development cost can also be reduced by using technology. There should be a strong and
technically capable R&D team to reduce complexity of the product. With cost cutting and
reducing complexity company can have a feasible product for the target customers and can be
way ahead to their rivals. The overall development of a company can be achieved by frugal
innovation.
Example: In our case study, Akshay Kumar is the founder of Essence Drinks. He has launched a
product “mango lassi”. The product did good business in UK market due to innovative formula
and distribution capabilities. But when the company enters in its third years, the sales suddenly
decreased. Several competitors enter into the same market with same kind of product. Due to
extreme competition, the sales of the product decrease and therefore the profit of the company
also decreased.
Akshay can come up with an innovative product. In the first stage he should focus on cost
cutting. Akshay can think about frugal innovation. The company can arrange a survey among the
target customers. Based on the idea they can even change the flavor of the drink. The distribution
process can be free from complexity. Even with the demand of customers Akshay can introduce
a new product.
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LO3 Process which is essential to commercialize innovation
P5 Usefulness of the commercial funnel and the utilization of New Product
Development (NPD) processing for commercialization of innovation
Importance of commercial funnel: Commercial funnel means generation of leads by the
organization through customer feedback collection. The company may offer the product the
thousands of people, only a small percentage will be agree to become leads and very less number
will become the actual customer (Harmsen, 2013).
Strangers: In first stage, company offers the product to as many people as possible. Those
peoples are strangers to the company. They might be interested to talk or might not be. Some of
them might visit the company outlets.
Visitors: A small number of the strangers will be agreed to visit the company outlet and a small
percentage will actually visit. Those people who visit the company outlet are the visitors.
Leads: Within the visitors very small percentage will provide their contact information. There is
other information too. Other information can be their buying habits, their choice of product and
demand of product quality. Very few people will agree to provide their information and generate
leads. Those people who provide their information are leads.
Customers: A small percentage of leads will actually buy the product and become a real
customer. Those people who actually buy the product are customers.
By using commercial funnel, company can have generated leads and ultimately can get actual
customers. The marketing team takes the responsibility to collect customer feedback.
Organization can approach to ample number of people advertisement. According to the approach
of the advertisement, few people shall visit the company outlet. Among the visitors, few will
provide their information and become the leads. Among the leads a small number certainly buy
some product and become actual customer. In this way company can have a loyal customer base.
Here the feedback of the customer is very important. Company emphasizes on the customers
demand while developing a new product. They have their target customer and their main focus is
customer satisfaction.
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New product development process (NPD): In order to stay ahead of the rivals, company has to
develop new and innovative product. There are eight stage of new product development process.
 Idea generation: The first stage is idea generation. Company can generate hundreds of
ideas. Only few will qualify to be launched in market. Company can generate ideas from
its internal employees or from external sources (Colombo et al., 2015). Distributors and
supplies may also be a good source to collect ideas.
 Idea screening: Among hundreds or thousands of ideas company has to screen the ideas
in accordance with company strategy and ideology.
 Concept development and testing: The research and development team then develop a
concept. Using those idea the conceptualize it. After developing a suitable concept it
needs to be tested. The new concept should be tested among the group of selected
customers.
 Marketing strategy development: The next step is to develop a suitable marketing
strategy. When an idea is conceptualize and tested, it is time marketwise it with a feasible
marketing strategy.
 Business analysis: When a new product is decided and tested with target customers and a
suitable marketing strategy is developed, leadership has to analyze the business potential
of that product. The attractiveness of the product, the usefulness of the product and the
customer demand is analyzed.
 Product development: After finding the product feasible, next stage is developing the
product with maximum possible qualities. The development cost of the product should be
minimal (Felekoglu et al., 2013). The research and development department of an
organization takes the responsibility to develop the product in accordance with the
business model of the company.
 Test marketing: Before actual commercialization of the product there is test marketing
stage. The newly developed product is marketed for test marketing. The product goes
through different marketing steps. The actual demand of the product among the
customers is tested in this stage.
 Commercialization: Test marketing gives the leadership a final opportunity to take the
decision where the product should be marketed or not. The final stage is
commercialization. Commercialization means simply introduce the product to open
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market. Customers are free to buy and use the product. Two factor should be keep in
mind before commercialize a product. Introduction and introduction place. Proper and
suitable timing to introduce a product should be followed. Every product has a feasible
place to introduce. Place feasibility should be kept in mind.
P6 An Innovation Business Case for an organization
Essence Drinks in a company founded by Akshay Kumar. The company has started with on
product which is healthy mango lassi. During first year the sales of the product is up to the mark
due to innovate ideas and proper distribution. But in third year the sales of the product has
decrease. Different competitor has enters into the market with same type of product. The
company, Essence Drinks has launched its healthy mango lassi in UK market. The company
wants to increase its revenue but does not want to move away from lassi. In this case, Essence
Drinks can have arranged a survey by its marketing team. The first stage is customer’s feedback
collection. The company should encourage customers to provide feedback about the product.
There should have an option for the customers to provide advice also. As the company want to
produce lassi specially, different flavor can be introduced and tested by the customers. After
getting the feedback from the customers, the market data and feedback should be analyzed. If it
is seen that the customer want quality development, then it is easier for the company. Just by
increasing the product quality they can solve the problem.
Often the solution is not so easy. Customers demand may differ. Not only quality improvement
but also introducing new range of product may be required. Akshay Kumar can encourage
providing innovative ideas to his employees. After gathering those ideas a suitable idea can be
choice. Classical lassi with attractive flavor might be a good idea.
The company can gather funding by selling its share to market. Finding an investor for the
business is also a wise idea.
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LO4 Methods for conserve ideas and benefits and prejudice of those methods
P7 Evaluation of various tools used by the company to develop, maintain and
preserve intellectual property and knowledge
Every small as well as big organization wants to have their individual identity. Small business
wants to take a unique name which is already not taken by their rivals. Every company want to
be unique in terms of name, product name and product knowledge. Intellectual property refers to
the property which owns by intellect. The innovative ideas, company logo, mission, vision,
business plan, knowledge about specific product this all are intellectual property (Kim et al.,
2013). Company wants to protect its intellectual property. There are various tools to develop,
maintain and protect intellectual property and knowledge.
Patents: patents can protect new inventions. After taking the patents, the newly invented product
becomes the property of the inventor or the organization. No other company can demand the
ownership of that product. Patent is an effective tool to protect intellectual property. A patented
product cannot be taken without the permission of its owner. It is a protection by the law of the
country.
Trademarks: It is very important tool to protect intellectual property and knowledge. Company
name, company logo, any slogan to market a specific product, symbol, images, and tag lines are
unique for any company (Freeman, 2013). Trademark can protect these from being copied.
Copyright: Copyright is for artistic, literary and music industry. An authentic writing or music is
a property of the author or the music composer. After taking the copyright, no one can claim the
ownership of that writing or the music. Copyright is a special tool for protecting intellectual
property.
Conclusion
Every organization wants to be ahead from their rivals. Business organization has key motive to
maximize the revenue. Every business organizations are competing with each other. The
competition is increasing day by day. This is a globalised world. Local small organizations are
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