Where to Hunt for Ideas: Sources of Innovation

Technology-related industries are especially sensitive to integrating innovation in their processes and routines. Among the companies that invest in innovation more than others are pharmaceutical, information technology (IT), automotive, airline, banking, food processing, semiconductors, and oil and gas organisations. However, the degree of innovativeness varies in technology-related industries from incremental to breakthrough technology changes. As demonstrated by the below classification, radical innovation implies a new technology change as well as a new business model change. Alternatively, incremental innovation does not suggest any in-depth change and remains close to the existing technological solutions.         

So, where can companies search for truly innovative ideas that would lead them to a radical technology change? In accordance with Peter F. Drucker, sources of innovation that exist within a firm or industry represent opportunities in such spheres as “unexpected occurrences, incongruities, process needs, and industry and market changes”. Sources of innovation that exist in the external environment include “demographic changes, changes in perception, and new knowledge”.

Internal Environment

Scan your internal organisational environment very carefully to discover what talents, dynamic capabilities and resources have not been fully realised yet. The previous experience of your employees may become a source of innovation. As Steve Jobs’ speech to the graduates of Stanford University highlighted, Jobs would not have invented fonts for computers if he had not studied calligraphy before. The integration of seemingly “incompatible” experiences may give birth to astonishing ideas. Think of any unaddressed needs inside your firm – this may pave a direction for further research and development (R&D) and innovation.

External Environment

IBM sourced its innovative ideas from the unexpected success, which occurred when the company got a refusal from banks to buy their accounting machine in 1930. Later on, IBM received an unexpected agreement from libraries to purchase the same product in 1933. A decade later, other businesses realised the importance of IBM computers, which boosted a great demand for the company’s product. This is an inspiring story of how changing consumer perceptions can make a highly demanded product/service what you already offer. Just remain adaptive to the customer needs and knock at all available doors.

The new marine renewable energy strategy presents an example of innovation sourced by market and industry changes – a more advanced technology that generates sea energy with minimal costs and environmental damage in the UK. This example is also in line with Drucker’s view and proves that even the insufficient funding provided by the UK government did not impede the marine renewable energy industry to lead on a global scale. Of course, it is not easy for small technology companies to remain patient and wait for large-scale industry, demand and customer perception changes given their limited resources. Therefore, it is often a matter of luck whether the external changes will contribute to your innovative strategy or not.

The Global Innovation Index (GII), which was based on such quantitative indicators as an increase in three-year earnings and sales, and a share of R&D in sales, served for ranking the most innovative companies in the world, like Apple, Amazon, Dell, General Electric, Motorola, Procter & Gamble, Target, Walt Disney and others. Any company could observe a rise or fall of the GII posted online every morning. Nonetheless, this index is no longer calculated starting from March 2012 because “innovations ecosystems have become more complex”. The complexity of innovation is also reflected in finding a trustworthy and effective source of innovation. If it were possible to give a detailed instruction of how to arrive at a radical change successfully, all companies in the world would be equally innovative, and hence, not competitive. For this reason, only the most creative and knowing ones will be able to scan their internal and external environments and separate the wheat from the chaff.

Author Bio

Anna Clarke is the owner of online writing company 15 Writers. She is a successful entrepreneur with over 20 years’ experience in both freelancing and academic writing industries, specialising in Business, Economics, Finance, Marketing and Management.