Three Types Of Innovation. Here’s How To Manage Them
“Dreamers are mocked as impractical. The truth is they are the most practical, as their innovations lead to progress and a better way of life for all of us.” ― Robin S. Sharma
With a view of generating revenue immediately from new products, a firm should customize the process of product development for different kinds of innovations. For a company the biggest challenges aren’t in coming up with big ideas but in the organizational and management issues that these new ideas bring along.
No matter what a company is dealing in, companies strive to create innovative products and services adequately and accurately.
“Chance favors the connected mind.” ― Steven Johnson
For an individual to to bring new ideas to market, create more realistic testing and growth expectations and better manage their innovation pipelines, it is important to identify the types of innovations, needs and the correct approach to nurture and grow the type of innovation.
THE THREE TYPES OF INNOVATIONS
To prolong their stay in the market, companies need to come up with sustaining products and services. Sustaining innovations in products or services help any organization raise the bar enough to stay in the game. These innovations can sometimes be thought of as modification of an already existing product.
To significantly up the level of game within an existing category a company should come up with remarkable offerings. The product should be such that seeing it, customers couldn’t help but want it–over time making it the best-selling product.
“Progress is made by lazy men looking for easier ways to do things.” ― Robert A. Heinlein
When we think about an innovation, many of us have some sort of ideas in our mind. Such breakthrough ideas are called disruptive innovations because they disrupt the current market behavior, rendering existing solutions old-school, transforming values, and bringing previously marginal customers and companies into the center of attention.
The Social media could be considered a disruptive innovation within sports. More specifically, the social media has radically changed the way that news in sports circulates nowadays. Social media has created a new market for sports that was not around before in the sense that players and fans have instant access to information related to sports.
“In a world of change, the learners shall inherit the earth, while the learned shall find themselves perfectly suited for a world that no longer exists.” ― Eric Hoffer
To help explain the difference between these three types of innovations, let’s look at the coffee industry. Maxwell House came up with a dark roast version of coffee, it introduced a sustaining innovation. A new flavour was only a variation on their existing products.
A breakout innovation was General Foods’ line of International Coffees, which added connoisseur of fine flavors to the instant coffee category and elevated the at-home coffee experience. And Starbucks has obviously been a disruptive innovation, turning coffee into a destination experience worth paying a lot more for.
“Innovation is the specific instrument of entrepreneurship…the act that endows resources with a new capacity to create wealth.” ― Peter F. Drucker
In a given category, disruptive innovations come first and are then followed by a series of progressive innovations, with sporadic breakout hits interspersed. Eventually, the market is disrupted once again, starting the cycle anew.
Although disruptive innovations have the potential to yield the greatest benefit to a company, it is not necessary that it will lead to immediate market success. Because disruptive offerings differ significantly from the existing products, they often require time to gain market acceptance.
“You have to take your own bold approach, and if you do you will be rewarded with success. Or calamitous failure. That can happen too.” ― Steven Moffat
Analysis of revenue and consumer buying patterns:
Sustaining: Immediately moderate, then tapering off.
Breakout: Rapidly strong, then quickly dropping to a lower level.
Disruptive: Longer gestation period leading to exponential growth.
For disruptive undertakings, success typically requires different development processes,
different approval and funding mechanisms, and different performance expectations. At
times, work on a disruptive innovation gets stalled in a system that is optimized for the creation of sustaining offerings. For the success of a project a company should tailormade their approach depending on the goals.
“Innovation is an evolutionary process, so it’s not necessary to be radical all the time.” ― Marc Jacobs
To support the ultimate goal of generating immediate revenue, companies should classify each of its new product concepts within the framework of sustaining, breakout, or disruptive. This allows a company to manage risk and reward at a portfolio level.
Categorizing innovations using this framework is an effective way to ensure that target outcomes are in line with the expectations. Companies are able to focus their innovation efforts by clearly stating that they are prioritizing the development of breakout products and consciously minimizing the exploration of disruptive opportunities.
“Do not get obsolete like an old technology, keep innovating yourself.” ― Sukant Ratnakara
“If people are willing to bet on a lot of crazy notions, knowing that while some won’t work out, one breakthrough can change the world”. – Bill Gates
What is a Startup?
As defined by Department of Industrial Policy & Promotion(DIPP): Startup means an entity, incorporated or registered in India :
Not prior to seven years, however for Biotechnology Startups not prior to ten years,
With annual turnover not exceeding INR 25 crore in any preceding financial year, and
Working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.
“Build something you believe in — because that’s the first step to building a great brand.”
At the initial stages of setting up any organization, every entrepreneur is faced with a large number of challenges. All these challenges are hefty reminders that owning and Running a successful business is definitely not easy. It’s worth it though!
“Don’t aim for 10% improvement. Make it radically better and different.”
Before diving into the deep sea, founders should know that every legal decision they take has a potential to impact the company’s partners, investors, employees and customers. Therefore, it is essential that the founders develop an understanding of basic legal principles and practices associated with building a business.
Tax Laws and the Basics of Accounting
Every organization in the world, be it involved in any kind of business as to pay taxes to the Central, State and/or local/provincial government(s), as the case may be. It is essential for every new entrepreneur to be aware about accounting details and tricky lanes of the taxation world. An aspiring entrepreneur should have sector and area-specific knowledge of taxation because the taxes applicable to different sectors, geographical regions and/or products vary greatly and it is obligatory to be acquainted with any recent changes that have taken place.
Structuring the business-Choosing the type of venture
The most important thing before pulling up a startup is selecting a legal form of conducting business. It is indispensable to determine whether you want to have a private limited company, public limited company, partnership firm, or a limited liability partnership, depending on your long-term goals and vision.
Each form of business will be governed by separate principles and laws. Not complying with the relevant laws means hefty sums will have to be paid to the Government. Thus, heavy loss before you can even start making profit.
Labour and Employment Laws
When you start an organization, you will eventually have to hire new people.
Even if you plan to have independent consultants and contractors working with you or outsource, all these employee-employer relationships will be governed by labour legislations. Breaching these will not only harm you financially but would also harm your goodwill, even before it’s built!
Securities laws regulated by the Securities and Exchange Board of India (SEBI), will assist in managing the various stages of life cycle of business including fund-raising. Foreign direct investment, angel investors, crowd funding, venture capitals and even joint ventures are areas that a new entrepreneur must be aware about. It will help increase the profitability of the organization.
Information Technology (IT) laws
Today in this highly-digitalized, and technologically advanced era you inadvertently need the knowledge of Information Technology (IT) laws before starting a new business in order to protect your confidential data from any infringers or hackers.
Despite being a small organization, a sound knowledge about corporate governance and management will help an aspiring entrepreneur in effectively managing the organization and formulate further expansion plans.
A business survives on contracts. No organization would come into existence without the use of contracts. Therefore, basic knowledge regarding fundamental principles of contracts, arbitration, mediation, conciliation certainly helps!
Intellectual property laws
Legally protecting intellectual property is of supreme importance to any business. Hence, filing the right patent/trademark/copyright claims, and timely IP audits of your organization, would increase the profitability of your venture manifold.
Thus, in order for an entrepreneur to sail his ship of business smoothly, a decent knowledge about some of the important legal laws mentioned above is of utmost important.
“ Find the perfect business idea and start building your business today. Build the enterprise and the brand as if you’ll own them forever.”\
We at Tech Corp International Strategist(TCIS, India) have an expert team of Indian lawyers who assist Startups with patent, business brand, trademark and logo registration in India.
List of legal services offered by Tech Corp International Strategist (TCIS, India) to Startups in India-
Incorporation of different types of Companies,
Formation (procedure) of Companies,
Financing the Companies,
Filing of various forms and Returns with the Authorities,
Promotion of a Company,
Contracts and Conversions,
Transfer and Transmission of Securities,
Intercorporate Loans and Investments,
Economic and Commercial Laws,
Investments in India,
Transfer of Property,
Contracts and Agreements,
Registration of Documents,
Cost and Management Accounting,
Activity Based Costing,
Various heads under which total income is calculated,
Deductions from income Calculation of Tax of HUF/Companies etc,