Sources of innovation

We can distinguish several sources of innovation:

• internal research (R & D)
• purchase of new knowledge in the form of patents, licenses, technical services, etc.
• purchase of the so-called: material technology, the innovative devices and machines with improved technical parameters.
• growing importance of technology
• change in market structure or industry
• unexpected technological breakthrough
• changing demographic characteristics of customers
• resource depletion
• research performed in science and academic institutions
• results of market research
• rising competition from low cost producers
• government funding for R&D activities

There are many sources of innovation external and internal to the company, main sources of innovation are:

• changing needs of customers and fluctuation in demand
• technological challenges, unexpected problems to be solved
• creativity and skill and competencies of employees
• market competitors
• goals and objectives of management
• motivation of managers and employees
• open mindedness
• risk taking
• danger of bankruptcy or financial problems
• scientific research, publications
• information from employees, customers and suppliers
• social relations, open communication, internal discourse

Sources of innovation differ between enterprises and industries

According to Drucker, there are seven sources of innovation that can provide the company's success:

• The unexpected - unforeseen success, failure or event
• The incongruity - divergence of real world and expected reality
• Innovation based on process need - improving the efficiency of process, delivering missing parts of it and creating the links
• Changes in industry or market structure that catch everybody unawares - growing or downsizing markets
• Demographics - changes in a population's structure (size, age, status)
• Changes in perception, meaning and mood - changes in customer perspectives and expectations
• New knowledge - scientific or non-scientific breakthroughs that provide the idea of new product or service

Areas in innovation

Many of the most useful innovation come from workforce: both employees and managers. When the workplace environment leads to individual creativity, it provides new multiple solutions and ideas. There are six areas/methods that help people to become the source of innovation:

• challenge - matching people to jobs with optimized challenge with no boredom
• freedom - giving employees autonomy in running the process to feel part of ownership
• resources - keeping some time pressure but with no restricted deadliness
• work-group features - sharing different perspectives and combining ideas
• supervisory encouragement - encouraging risk-taking and accepting failures
• organizational support - collaborating and sharing all information

Partners in innovation

The increasing of developed complex technology and the role of innovation caused that many cooperation agreements entered into force. There are many various type of partners that can become source of innovation:

• other enterprises within the same group
• suppliers of raw materials, equipment or software
• customers
• competitors
• consultants and R&D specialists
• educational institutions
• government and public initiatives

Some research show that the biggest amount of innovation come mostly from clients (25%) and suppliers (24%). The lowest value (3%) belongs to competitors that do not often share their ideas and knowledge.

Outsourcing

Nowadays many companies decide to outsource innovation activities, especially in areas that they do not have in-house ability. Outsourcing, despite of negative site as integrating into organization on basic level, it can acquire external knowledge and gain more advanced skills. Moreover, it helps build enterprise's reputation, create new relationships and establish cooperation with group of innovators.

Sources of innovation — recommended articles

Knowledge economy — Organizational innovation — Types of organizational change — Industrial park — Development of resources — Network structure — Knowledge management system — Innovation — Centre of excellence

References

• Adams K., (2005), The Sources of Innovation and Creativity, National Center on Education and the Economy, 31-32.
• Ahonen M., (2009), Sources of Innovative Opportunity and Mass Customization - An Analysis of EMF&Health Business Area, University of Tampere, 3-4.
• Choi J., (2015), Create or Buy - Internal vs. External Source of Innovation and Firm Productivity, University of Oxford, 7.
• Correia A., Braga A., Braga V., (2017), Determinants, Obstacles, Sources and Cooperation to Innovation in Portuguese Firms, using Community Innovation Survey, AIP Publishing, 4-5.
• Feldman, M. P., & Florida, R. (1994). The geographic sources of innovation: technological infrastructure and product innovation in the United States. Annals of the association of American Geographers, 84(2), 210-229.
• Oksanen, K., & Ståhle, P. (2013). Physical environment as a source for innovation: investigating the attributes of innovative space. Journal of knowledge management, 17(6), 815-827.

Footnotes

Author: Justyna Kurnik