Innovation Concept
Beyond the productivity levels, economic development also depends on the innovations’ quantity and quality and here, once again, the management quality influence is crucial. In fact, such as Schumpeter defended in the beginning of the century, innovation is the main source for the success of market economies and economic growth. According to Schumpeter, innovations, as long as they satisfy specific needs, stimulate search, leading to a production and employment increase and, consequently, of the performance. One of the important aspects is that it’s not necessary a complex innovation to originate this performance increase, being enough its usefulness.
According to Peter F. Drucker, the majority of innovations arise from the changing operation existing seven areas (or innovation sources) where the organizations should seek that change as a way to identify the innovation opportunities. Those innovation sources are debts in innovation sources inside the organization and innovation sources outside of the organization:
Inside the organization:
- Unexpected events or results: in case of success or unexpected positive results, these usually indicate a transition or a tendency that opens a new potential market that can be explored through the development of new products or services; as to the failure or unexpected negative results, can also indicate a market change that can be transformed in opportunity if it’s effectively seized through innovation;
- Inconsistencies: means that something exists that doesn’t make sense for the organization, usually originated by wrong assumptions referent to market or referent to processes; these inconsistencies can also form important opportunities for the organizations as long as they are identified in order to change the managers’ perceptions or assumptions;
- Process needs: guided innovations to process needs satisfaction consist on improvements introduction in production processes or others, allowing gains and efficiency and, consequently, productivity increase;
- Unexpected changes at the industry or sector structure level: the fast growths and strategy changes of the competitors, clients or suppliers can be well exploited if its causes be correctly identified and if are performed innovations that allow an adequate adjustment to the new context;
Outside of the organization
- Demographic changes: educational level increase, age or size of a specific market segment is easily identifiable and predictable, also forming an important innovation source;
- Perception changes: represents the changes in people’s habits and lifestyles and can be identified through, for example, unexpected successes and failures, forming also an important innovation source;
- New knowledge: the scientific progresses provided by investigation and development is the last innovation source identified by Drucker and also the less accessible to the majority of organizations due to the high financial and human technical resources that it normally requires.
