Difference between innovation and invention: Howells (2002, p.1) describes invention as the creation of a product or introduction of a new process for the first time in an organization. On the other hand, the author describes innovation as a process of introducing improvements or significant contribution on existent products, processes or services.
Walker (2015) identifies several differences between the terms with the major difference being the end result developed in each case. The author notes that while invention results in a new product or service that did not exist previously, innovation results in a more improved version of an existing product. Secondly, a difference is also noted in the skills required for each process where invention calls for scientific skills while innovation requires a combination of marketing, technical and strategic skills.
For instance, while scientific knowledge would be required to put together the different elements making up an mp3 player, it would, however, require different strategic and marketing skills to come up with an iPod which provides a unique value proposition. Thirdly, a difference is also noted in respect to the activities each process is restricted to. Inventions are restricted to the research and development departments while innovations are spread throughout the organization in different types of activities.
Drucker (2012, p.147) identifies several reasons supporting innovation and invention activities in organisations, especially those operating in highly competitive environments. First, the activities result in the development of either new or improved products thereby helping organisations to survive the competition existent in their environments.
b) How Heinz can shape innovation and commercialize inventions
Following a merger between Kraft and Heinz company in 2015, the company is currently referred to as Kraft Heinz. The company is a global leader in nutrition with thousands of products in its portfolio. The company’s vision is to be the best food company globally and grow a better world. Additionally, its values include innovation, meritocracy, quality and putting the consumer first (Heinz, n.d.).
With more than 46,900 employees as at 2016 and operations in over 200 countries, leadership is pivotal in the success of the company. The leadership structure in the company is headed by a chief executive officer in its Pittsburgh headquarters with different managers in charge of the operations.
In order to shape innovation and commercialize invention in the company, the organization emphasizes on the value of ownership or meritocracy. As such, each employee is encouraged to act like the business owner thereby facilitating experimentation and an innovative culture.
A second way innovation is encouraged is through the employee reward system where the exceptional performance of employees is rewarded periodically. As the organization rewards its employees, a culture of innovation is encouraged in effect.
c) Sources of innovation for Heinz
According to Matthews and Brueggemann (2015, p.33), sources of innovation in an organization fall into three categories: configuration; offering; and experience. In terms of configuration, the authors note that innovation arises from the improvement of the inner workings of the enterprise and its business system. As such, the company innovates through improvement of its profit model, network, structure and processes.
Secondly, in terms of its offering, the innovation emphasizes on improving the core products or services that the organization produces. As a result, focus is laid on improving product performance and the general product system. For instance, adding varieties of a product. Thirdly, in terms of experience, the innovation focuses on improving the customer’s experience through aspects such as service delivery, channel, brand and customer engagement.
Heinz organization is able to innovate on the three different levels. However, in order to improve sale of its product offerings, emphasis should be laid upon the offering and experience aspects. As such, different sources of innovation for the company emerge. First, is through increasing the variety of its product offerings.
A second source is developing a new product that targets a specific demographic. For instance, nutrition products for young infants and growing children. A third source of innovation pertains to looking into the future where current consumer trends are examined in order to predict future areas where demand lies. For instance, evaluating the consumption trends of nutrition products serves as an important aspect to predict future demand for the products.
Robbins et al. (2014, p.200) identify various ways an organization such as Heinz is able to foster a culture of innovation. First, is by empowering employees to take part in the ideation process regardless of their positions. As a result, more ideas are generated through the collation of the different perspectives. Second, is by facilitating risk taking by directly investing in ideas generated by employees.
Task 2
a) 4Ps of innovation and use of the innovation funnel
Bessant and Tidd (2011, p.468) describe the 4P innovation mix as a tool useful in enabling organizations to discover what the innovation process can bring to their businesses. The authors define the 4ps as: paradigm, product, position, and process. The paradigm aspect pertains to improvement of how business is done in order to generate more profit for the organization. For instance, introducing an online platform to supplement physical stores.
Secondly, the authors note the product aspect pertains the different ways a product or service can be improved and made more appealing. Third, the process aspect pertains to the activities associated with creating a product or service. Finally, the position aspect describes the different processes necessary in creating a context for the products or services.
b) Application of the innovation funnel by Heinz
Colomo-Palacios (2012, p.215) describes the innovation funnel as a tool useful in managing and controlling innovation through controlling the interaction of goals, actions, teams and results used in the innovation process. As such, the tool is useful in refining the different innovation ideas before selection and implementation. O'Sullivan and Dooley (2009, p.61) argue that ideas are refined in a similar manner to how the funnel narrows in shape, from its wide mouth to the narrowing middle and the final narrow end.
The authors note that in the first phase, likened to the wide mouth of the funnel, emphasis is given the collection of as many different ideas as possible. As such, the organisation generates diverse ideas from aspects such as customer feedback, complaints, competitor review and surveys. As such, the main activity in this phase is idea generation. O'Sullivan and Dooley (2009, p.61) further add that the clearer the objectives of innovation are, the faster the ideas are generated.
In the second phase, the narrowing section of the funnel, the generated ideas are screened. O'Sullivan and Dooley (2009, p.61) note that the screening process involves matching the ideas with the goals of the organization as well as undertaking risk assessments to determine the least risky ideas for implementation. Finally, the narrow segment emphasizes on the realization of the already selected ideas.
c) Meaning and development of frugal innovation
Prabhu et al. (2013, p.10) describe frugal innovation as the commercialization, in regards to limited resources, of quality products and services which are affordable to the masses. As such, the term describes an innovative process that provides functional solutions through the application of few resources for the many who have little means.
The authors further note that unlike its traditional variant, frugal innovation targets clientele at the bottom of the pyramid and proceeding upwards to benefit all users. As a result, it debunks myths on heavy investment by R&D departments and the notion of resource constraints in leading innovation. Additionally, Prabhu et al. (2013, p.10) note that on its input side, are challenges associated with resource constraints while on the output side, is the challenge of low affordability.
Radjou and Prabhu (2014) note that organisations employ frugal innovation through the discovery of new business models, through the reconfiguration of value chains and the redesign of products to serve customers who face constraints with affordability both sustainably and in a scalable manner. Several examples of frugal innovation at work include the development of the Indian Mangalyaan spacecraft and the Dacia vehicle by Renault.
With the Mangalyaan case, use of frugal innovation led to a faster development of the spacecraft, thrice the speed of NASA crafts, utilizing an expenditure ten times lower than that of NASA by reusing existing components. Further, the project was a success since in 2014, the spacecraft reached Mars. On the other hand, with the Dacia vehicle, Renault employed frugal engineering leading to the development of low cost cars with the Dacia model used in different markets.
d) Role of frugal innovation
According to Radjou and Prabhu (2014), frugal innovation enables organizations to do better with less. As a result, organizations are able to improve their overall financial performance while minimizing their costs. In Heinz company, more products are innovated while spending less on R&D activities through the reorganization of the company’s business model and the reconfiguration of the value chains.
Secondly, such innovation enables organizations to run their operations efficiently thereby competing effectively against rivals in the market. For instance, as Heinz adopts frugal production, less costs are spent on production with more resources being spent on marketing the products. As a result of the wider reach, the organization performs better.
Thirdly, frugal innovation helps simplify organizational structures by eliminating bureaucracy and empowering employees thereby fostering a flexible workforce mindset. As Heinz empowers its employees through the reconfiguration of value chains, the company fosters a culture of innovation and in effect empowers its employees to engineer high valued products.
e) The development of innovation and its measurement in Heinz
Szirmai, Naudé and Goedhuys (2011, p.116) note that in order for an organization to develop innovation, it is important for its leaders to foster an enabling culture that provides innovation tools to employees. The authors further note that innovation is developed as leaders encourage employees to continually develop ideas in order to recognize and seize opportunities. Similarly, by discouraging complacency among employees, leaders are able to empower them to innovate further.
In addition to fostering an enabling culture of innovation, leaders also inspire passion by directly motivating employees through talks and team briefings. Additionally, by providing finance to implement ideas generated by employees, they are empowered to continually innovate different offerings made by the organization (Pyne, 2014).
Once a culture of innovation has been developed in the firm, it is important to embed it in the values of the organization. Schweisfurth (2013, p.162) notes that one way to achieve this is through developing organizational structures that facilitate innovative work behaviour.
Grübler and Wilson (2014, p.75) highlight several metrics useful in measuring the outcomes of innovation in a given firm. First is through the assessment of financial returns after innovation products have been implemented. As such, emphasis is laid upon cost savings, increase in revenue or efficiency in processes.
A second metric to ascertain success of innovation is the growth in the company’s portfolio of customers, products and technologies. For instance, Heinz is able to assess the effectiveness of its innovation practices by evaluating the increase in number of customers or the growth in the number of technologies available for its production processes.
Scenario 2
Task 3
a) Importance of the commercial funnel and application of New Product Development
Trott (2012) highlights the importance of the innovation funnel as a tool that enables organisations to create innovative products that both meet the needs of consumers and are easily developed. As such, the tool helps refine different ideas and actualize only those that are can provide gains for the organization thereby facilitating the commercialization of innovation.
The author further describes New Product Development (NPD) as a process that takes products or services from the conception phase to the market. In the process, an idea goes through eight stages before being realized. First, ideas are generated through brainstorming exercises before being evaluated and screened in the second phase and the carrying out of feasibility analysis in the third phase.
The fourth phase involves strategic analysis of the ideas in order to ensure alignment with the business needs while the fifth phase regards the development and testing of the new product prototype. The sixth phase involves marketing while the seventh and eighth phases involve commercialization and launch of the products.
Consequently, the author highlights similarity between the innovation funnel and the NPD process since in both instances, ideas are transformed into new products. Additionally, Colomo-Palacios (2012, p.215) argues that the innovation funnel is important in commercializing innovation by facilitating the implementation of only those ideas that can generate favorable returns for the organization.
b) Issues regarding innovation at Heinz
Kraft Heinz company deals in the production of foods and beverages. Over the years, the company has continually developed diverse food products in order to meet the needs of its consumers. However, during the same period, numerous competitors have as well emerged and in effect, reduced the market share of the company. The entrance of suppliers such as Nestle, Danone, and General Mills has resulted in stiff competition for Heinz’s products. As such, a major reason why the company ought to innovate is in order to survive in the market.
A second reason for innovation is that consumer tastes change quickly thereby necessitating organizations to adapt to the changes quickly in order to retain their performance. Heinz in particular produces different nutritional products that meet consumer needs. However, as consumer tastes and preferences change, the company needs to consistently innovate in order to match their needs. Thirdly, Heinz should innovate in order to raise its standards even higher in order to avoid complacency and stagnation.
While the three reasons discussed above provide a solid business case for Heinz company, however, without funding innovation is not possible. Radjou and Prabhu (2014) highlight two major sources of finance to facilitate innovation: internal and external. With the former, the organization can use some of its retained earnings to facilitate innovation activities while with the latter, sources such as debt, equity and venture capital can be adopted to facilitate such access.
c) Innovation business case for Heinz
An area that presents potential for innovation at Heinz company is the development of a new yoghurt variant that targets young infants and children under the age of 2 years. With the new variant, nutrients and essential vitamins are added to yoghurt that is easily digested by the infants. Additionally, flavours are eliminated from the yoghurt brand in order to avoid harming the health of the infants.
The innovation not only acts as an additional stream of revenue for the company, but also, a way to rise above its competitors in the nutrition sector. Funding for the innovation can be provided internally, through retained earnings and externally, through debt financing in form of equity. Such finances enable the organization to actualize the idea.
In order to measure the effectiveness of the innovation, useful metrics include the revenue generated from the sale of the new yoghurt brand and consumer feedback on the product. Similarly, evaluating the number of new product users provides important insight regarding the use of the product.
Task 4
a) Tools used by organizations to develop, retain and protect knowledge
Chilton and Bloodgood (2014, p.251) note that two forms of knowledge exist in organizations, tacit and explicit knowledge. While the former describes knowledge that is embedded in the human mind as a result of experience in the job, the latter describes knowledge that is digitized in books, reports and documents. As such Chilton and Bloodgood (2014, p.251) posit that tacit knowledge is more difficult to develop than explicit knowledge which is easily shared.
However, the authors argue that organization knowledge is a mixture of the two types thereby making it difficult to classify it into one form or the other. As such, different tools for knowledge development range from mentorship sessions where individuals learn from highly experienced colleagues to training sessions where experts interact with employees in order to facilitate knowledge development. Additionally, by availing opportunities outside the daily work activities, knowledge is developed further.
O’Reilly (2016) notes that retaining organizational knowledge is important in order to avoid failure of the business when employees exit the organization. As such, the author recommends three methods useful in retaining such knowledge. First, is by advocating for the documentation of work processes and procedures by employees in different departments. Such documentation is useful in ensuring continuity of work processes in instances where employees are out of work.
A second approach is by cross-training team members in order to enable employees to step into the roles of their colleagues in instances when they are unable to perform at their work. Thirdly, is through the development of a mentorship program to facilitate the distribution of knowledge across different individuals thereby ensuring business continuity.
Peled (2004) advocates different ways to ensure such knowledge and intellectual property are protected. One way is through implementing trademarks and copyright aspects in order to ensure different forms of knowledge are protected from rivals and scrupulous individuals. Secondly, is through the adoption of detection systems that monitor the flow of sensitive information outside the organization.
b) Evaluation of the different tools
The different tools highlighted in the previous section, have been widely used in developing, retaining and protecting knowledge in successful organizations. Chen (2014) notes that Apple adopts in-house training programs for its staff in an effort to develop explicit knowledge.
In terms of knowledge retention, Chen (2014) notes that Apple achieves the same through retaining its employees throughout their work life. The author notes that the company offers suitable incentives such as health and housing allowance for the employees in addition to offering them paid vacations. Secondly, the company adopts mentorship programs thereby indoctrinating its employees and facilitating their growth.
c) Evaluation of the nature of innovation and the context in which it is developed
According to Välikangas and Gibbert (2015) sources of innovation include the enhancement of paradigms, products, positions, or processes. As such, the authors highlight that the four aspects influence the nature of innovation that can be developed in an organization. For instance, based on the paradigm aspect, a business can innovate by introducing an online platform in order to increase the reach of its customers. An example is observed with Apple company that provides both retail stores and an online platform in order to sell products to customers.
Similarly, based on the product aspect, Apple has continually developed new product lines to supplement its current offer. Consequently, over the years, the company has been able to increase its offer from personal computers in the late 1980s to consumer electronics such as iPhones, iPads and the Apple TV in the early 2000s.
Based on the 4P innovation mix proposed by Bessant and Tidd, an organization such as Heinz is able to overcome challenges hindering innovation in several ways. First, the mix facilitates the development of an innovation strategy as the organization is able to consider different ideas regarding the source of innovation. Secondly, Heinz is able to overcome innovation challenges by fostering an innovative culture where all employees play an active role.
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