Innovative methods of innovation

 

Nikolaos Karanassios MBA[1], Jaques Guenot Ph.D[2]., Ioannis Chamalis[3]

 

Abstract

 

Innovation is considered to be a new use of established procedures of approaching the citizens’ demand for improvement of the quality of life. The result is innovative products, services, production, distribution and administration.

All systems involved in innovation creation and promotion, seek innovative actions to be taken, in order to succeed in their tasks. Enterprises use several tools aiming to innovation mining among their employees, in the form of quality circles, brainstorming and motivation. They also establish contacts with higher education and research institutes with the hope to find innovation there. Supporting systems are based on innovation assessment, promotion and technology transfer.

Questions accompany all established routines for innovation creation and discovery. Persons are carrying innovation in their minds. Persons have strong ambitions as well as weaknesses. It is them that are meant to stimulate, in order to reveal their innovative ideas, in exchange of inspiring their personal goals achievement.

Several formal recognitions of origin of innovation are currently being used. From company appreciation and promotion to personal patent. Bridging academia with the enterprises balance, between cost and effectiveness, is challenging and is relating both sides; firms and academia.

All involved parties; firms, academia and public administration, may have to create the most favorable environment in order to facilitate persons to express, not just create, innovative ideas, to evaluate them in terms of feasibility, to calculate their profitability and promise in return whatever innovators expect to be a desired award of their efforts and offer.

A survey is in course, trying to put personal against institutional incentives and see innovation under the reflections of common and conflicting interests. Conclusions are expected to follow the degree of acceptance of the methodology of innovation creation, by both public bodies and enterprises, in their search of innovative policies and actions concerning innovation itself.

 

Keywords: innovation, Patent, motivation

 

1.    Introduction

Globalisation of competition and the evolution of financial markets have taken economic activities under a different framework than the one we knew as the establishment for the last decades.

Traditional methods of local development have left behind protectionism and artificial barriers to the world trade have been lifted long ago. The financial needs for global marketing, as well as mass production able to meet global demand, underlined the significance of the financial markets, transforming the production and distribution system into a credit system.

The incorporation of digital electronics with their accompanying software to all, products, distribution systems and production itself, under the umbrella of the financial markets, namely the “new economy”, gives the impression that things have drastically changed. From another point of view, there are no differences, since consumers are still seeking the maximum satisfaction from whatever they give their money for and remain producers themselves either as workers or as entrepreneurs, trying to maximize their revenue, in other words their source of money.

On the other hand, savings are the only source of capital that covers the expenses of enterprise creation and evolution, are driven to the most profitable destinations, taking into consideration the risk involved.

Widening the borders of capital movement, increasing the size of the enterprises and incorporating fast and secure communication, seem to make the economic activities more sophisticated and complicated. The intrinsic relations between the various factors remain the same, while the instability of the international financial markets give enough ground to the reconsideration of development, seen as the local creation of wealth.

The questions about the ability to create wealth in places where the global finance shows little or no interest at all, are getting the same answer; innovation.

Policymakers, at least for two decades in Europe, are trying to stimulate innovation and motivate all, entrepreneurs, researchers and local authorities alike, to deploy innovation and use it as an instrument of development. Subsidies depend on innovation as it is presented by the applicants for national or European grants and then are being evaluated by bureaucrats. On the other hand, innovators, in need to meet the global market demand with an adequate company size, address themselves to the global financiers, facing the same bureaucrats, sometimes even the same persons, with identical results. Real innovation, seen as something that has never been done before the same way, is then considered too risky by both the financial and institutional bureaucrats, because in their turn, they are evaluated by the short-term results they achieve.

It has never been said that innovation creates wealth just because actions taken are innovative. Innovative actions, either in the productive or the supporting system, have to be assessed according to the expected results and the possibility to achieve them.

It is difficult to have valid date about the acceptance of an innovative action because it is new and there is no statistical data available. Time series projection and other statistical methods are not applicable, while questionnaires are usually answered in an arbitrary way, most of the times and they do not reflect the real degree of acceptance by the questioned samples. Even key questions fail to discover the real reaction of the sample, because an innovation is intangible. The innovative action is then projected at the imagination of the individuals and each one of them has a different item or service in mind, answering accordingly.

Observation of the market reaction to innovation using assimilations or proportions give little or no indication at all, since innovation is usually disturbing what people are familiar with.

Most of the times a market survey gives misleading results, while a desktop analysis seems to be most appropriate, since innovators know what exactly their product, service or action will be.

Companies and public authorities alike use several methods of innovation creation, while bureaucrats assessing innovation are using standards like cost versus benefit, risk versus expected revenue, all based on calculations of the expected market, as shown by surveys.

An innovative approach of innovation should then take into consideration the critical components concerned, like motivation of individuals, motivation of entrepreneurs, assessing system and expected degree of acceptance by the determinant population, such as consumers, beneficiaries, workers, social forces and controlling authorities.

 

2.    Nature of Innovation

Various definitions of innovation concentrate the attention on the various aspects of innovation or it’s use, so there is not a standard definition, which may have a universal application.

Common, in all definitions, is the aspect of something new, either a natural characteristic of a product, a production procedure, a sales network or technique, a new use of an established product or service, or even a new combination of product/service ensample.

The Webster dictionary indicates that innovation is:

“The act of innovating; introduction of something new, in customs, rites, etc

A change effected by innovating; a change in customs; something new, and contrary to established customs, manners, or rites”

It is necessary to distinguish other similar terms, in the sense of their content and usual application.

Philosophy seems to be the initial stage of innovation, when seen as a subversive statement about the nature of things, using a new viewing angle of life. A philosophic idea is innovative, otherwise cannot be a part of philosophy at all. It may be confusing, but philosophy is used in all common aspects of innovation as an underlying thinking process of connecting causes to expected results in all cases, from technical constructions to marketing techniques.

Theory is closely connected with philosophy, since the formulation of a hypothesis of the internal laws of the behavior of either nature or the society is explained in detail providing an applicable tool to the scientific work and documentation.

Discovery is frequently confused with innovation. A discovery, seen as the procedure of revealing the proof of an interconnection between causes and results that have been stated in a philosophical or theoretical manner, with a clear interconnection between actions and results, is a potential instrument for innovation but not innovative itself.

Invention, seen as the original construction of something that did not exist before, is a part of innovation. Invention is the usual starting point of innovation.

Innovation is a marketable commodity, service or know-how. It can be examined as having separate or accumulative characters of:

• New products
• New production procedures
• New organization systems
• New methods of Selling
• New financial procedures

The purpose of innovation is profit creation by all parties involved, the result is the increment of local wealth, thus improvement of the living standards. Innovation has always been the driving force, the locomotive of progress, being the perpetual vehicle of both prosperity and civilization.

 

3.    The need for Innovation

Competition, on one hand and the chaotic infinity of human needs and desires on the other, describe the environment in which economic subjects operate and live.

Competition is congenital to human nature (to all living organisms, as theorized) which is a satisfactory explanation of the economic cycles, as well as the life cycle of a product or service. Every economic subject is trying to perform better than others and it is beyond the limits of the present to examine why (there is a vast collection of literature, from Freud to Argyris).

Enterprises, in their competitive framework, are trying to innovate their products, in order to gain the consumer’s attention presenting an alternative way to get more satisfaction by consuming them, their services, trying to convince the users that theirs are better than other available, their production procedures, trying to diminish costs and increase quality and so be cheaper, better or both, their marketing methods, trying to better meet the consumer desires, their financial scheme, in order to exploit the credit system and their organization, for a better performance.

Thriving to perform better than competitors, enterprises are seeking as much innovation as it is not risky for their established products, markets and profits. This is usually represented as a reaction to change, common to all profitable operations. Changes are not necessarily innovative, while innovation means a change itself. Reaction to change includes all parties, entrepreneurs, financiers, workers and managers alike. Reaction to change is obviously also reaction to innovation, since any change means to take the risk of failure, everyone is trying to avoid it. In the same time, any change is a turbulence of the equilibrium of conflicting interests with unpredictable results.

The market forces, even under protectionism, are feeding ambitions and drive innovation to competition with the establishment. Business ideas are created continuously, either as an imitation of success cases or as innovations.  Investors are trying to balance between the risk of innovation and the security of the establishment. The less an investment comprises risk the lower are the expected revenues. The more an investment is based on speculations about the market reaction, the higher are the expected revenues, while this speculation is not based on documented forecasts but just on a hypothesis which may or not be verified. Uncertainty is not attractive to common investors, so speculation, when it is successful, brings back as high profits as much as the risk of failure, because of the lack of competitors in the initial phase. When it proves to be successful, many imitators follow, but innovators still have an advantage, having already created an establishment.

It is common to enterprises that have introduced innovation to become conservative after their success, creating barriers to further innovation and react to any change. Competitors, on the other hand, appear all the time, trying to place themselves in the market, with a competitive advantage over the established enterprises.

Managers are aware of the need of innovation or at least diversification, while investors and financiers alike prefer to keep the enterprise position and when they adopt innovation they do it avoiding the risk of failure. Mergers, hostile take-overs and other similar methods are commonly used in order to satisfy the necessity of innovation without the risk. Innovation is still there and innovators are still revolutionizing the established market terms, undermining the domination of all competitors, even the best positioned.

Economic history has an endless series of examples collapses of colossal enterprises reluctant to innovation, as well as miniature enterprises that became main players after introducing innovation. History observation shoes that drastic innovation is introduced by rather small investments than market dominating ones.

 

4.    Innovation creation procedures

Established firms use several methods of innovation creation, such as:

• Brainstorming
• Quality circles
• In-firm Research
• Joint Research with Higher Education institutions
• Joint Research with government run Research Institutes
• Project assignment
• Use of Ph.D. candidates

They also buy innovation, instead of creating it, wherever it is available, using methods such as:

• They buy patents or just the license to use them.
• They take-over successful innovative companies, in early stages.
• They merge with successful innovative companies, in early stages.
• They recruit researchers and scientists with innovative knowledge.
• They create partnerships with knowledge of innovation implementation persons.
• They recruit innovation developers from competitors with attractive salaries and / or shares.

Research and Development is concentrating attention of businesses, as well as the government, as the source of innovation, because innovation is widely connected to technology.

Inventions are certainly necessary to the innovation of products and production systems, yet innovation is closer to a new use of existing knowledge, than the application of newly created knowledge. It all starts from a business idea, in the sense of an expected number of economic units (consumers, enterprises or public authorities) ready to pay in order to get the new product or service, obtain it in a new way, with unusual terms of payment, in a faster delivery time or with most desired standard characteristics, otherwise called quality.

Employees, managers, engineers, external collaborators, researchers and academic personnel are all individuals coming across innovative ideas. In spite of their connection or bounds to the enterprise, research institute or education unit, they all have the primary will to exploit the innovation which their brain has created. Some of them obtain a patent in order to safeguard their intellectual property and then start to market their idea. Most of those market ideas are never applied, for reasons that exceed the purposes of the present.

 

 

 

 

 

 

 

 

 

 

 

 

 

5.    Application of innovation procedures in innovation creation

Innovation is a product of human activity. It is brainpower and knowledge that permit its creation, while “dreaming” of it is the real generating procedure. Being a product it has a commercial value, its commercialization means risk to lose the invested time and effort together with the money needed to finance expenses of going into detail, write proposals, meet the potential investors (or receivers) or obtain a patent and risk taking means expecting profits.

A “bottoms-up” approach of innovation creation may start from the fact that innovation is a product, so producers are the offer side, while investors are the demand side.  This is applicable in all cases, from company employees to public servants, from politicians to academic researchers, from students to company managers and from housewives to academic teachers.

Traditional methods of innovation creation and implementation may need a revision using the same procedures, which are being used for the creation of innovative products and / or innovative production and marketing methods. Innovation as a result of creativity is now the major concern of management. In the traditional authoritative approach, it is the manager’s ability to promote the innovation concept among the people working under his guidance. It is his responsibility to assess the innovative ideas and adopt or drop them. Creativity and innovative orientation is then a result of leadership, effective in some extend.

Innovative business ideas need their own marketplace, which cannot be simply invented. The market rules derive from bridging the conflicting interests of the offer and demand sides. The demand side is always in search of better offers, while the offer side is advertising, in order to convince the demand side to buy, highlighting the most convincing characteristics of their product or service. Both sides are trying to make a profit out of these transactions. Sellers are trying to establish long-term maximum margins, while buyers are trying to maximize their long-term margins with optimal provisions.

Although the marketplace operates under formal and ethical rules, agreements that satisfy both the giver and the receiver sides are eligible, whatever their content. Public authorities and non profit organizations, as well as enterprises, have to create a marketplace of innovation. The creation itself of this marketplace may be considered as an innovation. If it will be limited by bridging offer and demand, then innovation vanishes after its creation. Looking back at the innovation creation procedures of the enterprises, it would be rather a continuous innovation creation if the same methods were used, instead of a static act, even if it is a breakthrough.

Innovation, when examined as a product, has consumed human effort and money, put at a risky venture with the hope of a corresponding profit. Procedures that bring to surface and thus make evident the potential opportunities for the prospective receivers the creativity results of the individuals need the participation of the interested parties, givers and receivers, in order to adapt to the ever-changing expectations. 

Brainstorming is an example of such a way of usage of the methods of innovation creation, which may lead to innovative procedures. Research is another way of obtaining similar results. Steering committees are used by social organizations and local authorities as an instrument of determination of development strategy. They may be used as the organizers of brainstorming and research about the procedures of creating innovation in development actions.

Firms should be aware of the value of the procedures of innovation creation, without confusing technology and development with it, just because in many cases technology is needed in order to apply it.

 

6.    Conclusions

Enterprises located far from the densely populated centers, such as Serres (Hellas), and Cosenza (Italia), have no awareness at all about maters concerning innovation itself. We had to redesign the survey after 65 responses to our questionnaire made evident that entrepreneurs and managers alike cannot understand the meaning of innovation, although they innovate. Reports from highly developed centers, such as Attica and Milan, show a considerably acceptable rate of recognition of innovation.

It is imperative to create awareness about innovation to peripheral enterprises; otherwise economies will end up with complicated logistical problems, if enterprises flourished only in the central points of the Regions.

On the other hand, it is the peripheral enterprises ready to adopt innovative action of innovation creation, as they are “technology consumers” created in regional, national, European or even global central points. This is because they do not have any bounds with researchers, either in external institutions or formal internal divisions. They just can start from scratch and thus setup their system from a zero base.

Globalization, knowledge based economy, electronic society and all other components of what is being called “new economy” are promoted in order to create wealth and subsequently prosperity to the citizens. These components have at least two aspects; technological and economic. Basic research is needed as the platform of future technology. Applied research is needed as the platform of the creation of new products and / or services, as well as mew manufacturing and organization methods.

Peripheral economies should concentrate their efforts to innovation rather than invention, based on laboratory research executed in the appropriate Institutes. Enterprises and local authorities in these less developed areas, if they try to create technological breakthroughs are in a great disadvantage against central economic entities. Enterprises are after profits and local authorities are after prosperity and social welfare. Their interests are common as common is the way of reaching their goals; take innovative actions for innovation creation.

In almost all regions of Europe there are institutions, mostly in the form of NGO, with a balanced participation of local authorities, financial institutions and enterprises. The European Commission has greatly facilitated the creation of such institutions, as National Documentation Centres, EC Business and Innovation Centers, Euro-Info Centers, just to name a few. Their tasks are to support the innovative actions of either businesses or local institutions, in optimizing their efforts. They act as bridges between the various market actors, helping mutual understanding even in terms of acceptable rewards. This way, they may be used as the platform of development of a possible “innovation marketplace” where individuals will meet entrepreneurs and local authority personalities with a firm goal; to end up with a plan of actions.

Higher education institutions have a crucial role to play. They have attracted and recruited most of the peripheral brainpower, which has been driven to basic research motivated by academic incentives. It is not surprising that the academia personnel is motivated by economic incentives, while academia itself creates bureaucratic obstacles. This happens because academia is uni-disciplinary and concentrated in the scientific aspect, which has to be controlled otherwise academia, the compass to the future risks to lose credibility, if control of its personnel actions is lost. Once the innovation content and process is clear, it becomes evident that it is multidisciplinary, with an equilibrium between scientific coherence, feasibility compromises, profit expectations, cost/benefit consideration, social impact and collaborative in terms of scientific fields, personal, scientific and institutional authority, authenticity and superiority.

Involved parties will be rewarded according to their degree of acceptance of the contribution of all the others.

 

7.    Bibliography

 

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