Entrepreneur's Handbook
SOURCES OF INNOVATION
Innovation can occur in different ways. An unexpected error or an event seen as trivial can be considered as the first spark that will start the process of innovation. Of course, innovation is not that the interesting idea came to mind in a timeless way. If this were the case, there would be no need to define innovation as a process. It means reaching innovation for the business, being aware of the source of the ideas required for innovation. These resources are mainly technology and market information. It is important to follow technological developments, to evaluate the situation and potential of the market in order to obtain the factors that are the source of innovation. On the other hand, the business must know the sources of innovation. This is because the company gets the opportunity to allocate its resources in the most appropriate way in researches for innovation. In addition, it can know which of the information that is the source of innovation has an important potential in creating new products and services. In addition, by knowing the source of innovation, the company obtains important clues in recognizing potential competitors.
The source of innovation for businesses can be the user, manufacturer or supplier. (Uzkurt 2017, pg.190). Beyond this, any non-business institution, person, organization or country can be the source of innovation. All of these can be expressed as external sources of innovation. In addition, the business can reach innovation ideas based on its own processes. For example, a situation that the financial unit experiences from the credit and funding processes may result in the enterprise entering into an organizational innovation process. Internal sources of innovation include the functions and employees within the business. Another source of innovation can be evaluated situationally. New ideas, events and technologies brought about by conditions that arise depending on certain conditions can lead to the emergence of innovation. (Uzkurt 2017, pg.191).
4.1. External Sources of Innovation
Markets and customers, innovation communities, competitors and suppliers, strategic partnerships, universities, public institutions and private institutions and innovation actors of other countries are external resources that businesses can benefit from as a source of innovation.
4.1.1. Markets and Customers
Markets and customers in the market are the most important resources that drive businesses to innovation. Businesses must be customer-oriented by nature. Businesses that respond to the demands and needs of their customers more effectively and efficiently than their competitors always need to innovate. Because part of the customer focus required for them requires being innovative. The reflection of both product and service and process innovations to the customer is important for businesses. In this context, businesses evaluate to include their customers in the innovation process by having a user (customer) centered innovation approach. User-centered innovations can often be more advantageous than manufacturer-centered innovations. Because when users actively participate in the innovation process, they will have the opportunity to develop exactly what they want. The transformation of the users into an actor that not only benefits from innovation but also plays a role in production has made it necessary for a tight and dynamic communication and cooperation between the producer and the user. Of course, obtaining information that will contribute to the innovation process from the market and customers / users and making it meaningful will only be possible by monitoring and evaluating the course of change and innovation in the market.
4.1.2. Innovation Communities
Innovation communities are made up of institutions and people who come together for innovation. People and institutions that come together face to face or on the Internet share their knowledge of innovations. Sharing and discussing information in a social environment provides important information and feedback for businesses. The most important feature of these communities is that innovative users want to share and discuss their new ideas with other members. Members of innovation groups can be either manufacturers or users. Some community members can actively share information, while others can only passively listen or watch discussions and posts in the community.
If innovative enterprises learn about the innovations developed by users before their competitors and commercialize them, it will increase the acceptance and spread of new products and provide a competitive advantage. In addition, the enterprise can provide users with a basic product on which they can change, modify and innovate, or provide tools they can use in innovation. Thus, users' innovative efforts are supported.
4.1.3. Competitors and Suppliers
Competitors can be considered as a resource for businesses to meet their innovation needs. Businesses can share some ideas and information between each other based on an agreement between them. They can also be informed of innovations by examining competitors' products and services without an agreement. Information obtained from competitors can be brought together with correct and appropriate marketing strategies and produce profitable and productive results that will create a long-term competitive advantage for the business.
Besides competitors, suppliers can also provide important information for innovation. For example, the information received that the materials or processes needed by the enterprise for the product or service offered to the market may be different or transformed may cause the enterprise to enter an innovation process.
4.1.4. Strategic Partnerships
Agreements for two or more businesses to share their knowledge and resources in a way that will benefit all parties are called strategic partnerships (Vyas et al., 1995). By establishing strategic partnerships, businesses both want to take advantage of the synergy that will arise from combining their resources, and try to cover their weaknesses with the strengths of the partners they have partnered with. Of course, there are some potential risks to the strategic partnership. The prominent of these risks can be listed as the acquisition of confidential information by competitors, loss of ownership or business control, and the possibility of conflict due to the difference of the objectives of the cooperating businesses. Therefore, the purpose, scope and duration of the cooperation are important for the enterprises that are parties to the cooperation.
In recent years, innovation networks have come to the fore as a type of strategic partnership. Innovation networks are defined as an association that businesses carry out with their suppliers, producers or competitors over a network. Innovation networks are a network system that actors who are effective in the innovation process come together with their units and others based on interaction. Thus, enterprises try to gain benefits such as speeding up the sharing and interpretation of new ideas between the parties, ease in accessing information and reducing costs. Innovation networks affect those who are members in two ways. These effects, which are expressed as information sharing and members' control power, have a strategic importance in terms of reflecting the position of enterprises in the network, its power and control. Businesses can maximize the benefits of information sharing by maintaining their strong position.
4.1.5. University, Public Institutions and Private Institutions
One of the important sources of innovations are universities and public institutions directly related to innovation (such as KOSGEB and TÜBİTAK). In addition, private institutions and organizations also enable new ideas, inventions or ideas to be revealed. Academic studies conducted in universities and R&D studies conducted in research institutions such as TÜBİTAK can reveal predictions that will guide innovations for businesses, even if they are not generally directed to a product or service. In addition, new machines or software are developed with applied researches in such institutions. Businesses can see the values emerging as a result of these researches as a resource in their innovation processes. In addition, it may be possible to access financial or managerial resources by following programs that encourage innovations with institutions similar to KOSGEB.
4.1.6. Other Countries' Innovation System Actors
In the global world, the innovation system of every nation has a certain relationship with the innovation systems of other nations. With these relations, countries try to struggle with the situation of being behind others. Some countries are known to be better at certain areas of innovation than others. The fact that America's software, film and entertainment, Italy's design and fashion, Japan's electronics and robotics sectors are in a better position than other countries, businesses have to follow the innovation actors of the relevant countries in these areas.
4.2. Internal Sources
The internal sources of innovation are basically gathered under two headings. The first of these is business functions. Business functions refer to the units of the enterprise specialized in different areas. Accordingly, businesses have different functions such as marketing, production, R&D and financing. Features R&D has a leading role in generating new ideas and developing ongoing innovation processes. Of course, new ideas can also be raised from different functions such as marketing, production or finance. However, regardless of the function initiated by, different functions must work together and in harmony in all innovation processes. As stated before, the fact that innovation is a process requires functions to work in harmony.
One of the internal sources of innovation is employees. Employees as individuals who perform business functions are effective in the period from expressing their new ideas to the commercialization of the idea. As in different business functions, employees should be able to work in harmony. Functions and employees that cannot work with harmony are far from having processes that result in efficient innovations.
4.3. Situational Sources
Innovation may have emerged with the occurrence of some conditions or the fulfillment of conditions other than internal and external resources. In this case, it can be said that the source that reveals innovation is situational. Situational resources refer to situations that arise as a result of internal and external environmental activities. Situational resources are analyzed under the headings of planned operational activities, unexpected events and creative destruction.
Planned business activities are activities that the business carries out in a planned manner to innovate. As a result of these activities, new ideas, knowledge and inventions that will lead to the development of a new product, service or process emerge. Other than planned activities, sometimes unexpected events can also be a source for innovations. For example, it is seen that a product developed for a need is insufficient to meet that need, but has emerged as a new product developed to meet other needs. Another situational resource is expressed with the concept of creative destruction. In the aforementioned creative destruction, it is emphasized that existing ones become invalid with the emergence of a new technology or innovation in other fields. This situation sometimes creates a new sector and causes the existing sectors to disappear.
4.4. Transfer of Innovation
It is also important to know how to transfer new technology and market knowledge from these sources as well as to know which sources to use for new products and services. Because, regardless of the source of innovation, the business needs to effectively transfer this information to itself in order to transform the new information obtained from these sources into products and services. This transfer may occur sometimes by sharing new information or product and service idea among business units and sometimes by transferring the innovation system from outside actors to the business.
Certain factors need to be taken into account in order to ensure the efficient transfer of technological competencies or market knowledge transferred from different sources of information to the business for innovation. It is possible to group these factors, which are determinative in the realization of the effective transfer of innovation, in four groups. These are;
- the capacity of the enterprise to absorb / evaluate innovation and the capacity of the transporter institution and organization to convey innovation,
- cultural differences between sources of innovation,
- the nature of innovation and
- the timing of the transfer (Afuah, 2003: 75).
4.4.1. Absorption and Transmission Capacity of the Enterprise
In order for new ideas, information and inventions to be transformed into a successful new product / service or process, the enterprise must have the skills, capacity, technical and mental infrastructure to evaluate this new information. This is also characterized as the capacity of the business to absorb innovations. In this context, it is important that the new market information obtained by the marketing function is effectively transferred to R&D and production units and that these units have a business structure that can transform new market information into successful new products and services by using their existing knowledge and capacity.
As well as the absorption capacity of the enterprise that transfers the innovation, the transfer capacities of the institutions and organizations that transfer the innovation are necessary for an effective innovation transfer. Institutions that produce the main foundations for innovation such as new ideas, ideas, knowledge and inventions must have a specific distribution mechanism that can share and communicate them with other businesses, institutions and organizations. Otherwise, the new ideas and information produced may remain pure information that is not brought into society and economy and has no added value. In this case, the investments made to reveal this new information will not be able to be returned. On the other hand, for those who produce new ideas and knowledge, informing them about what kind of product, idea and process these information can be a source and guiding them on how they can contribute to the production of new products and services will also play a very important role in the transfer of innovations.
4.4.2. Cultural differences
Another factor influencing innovation transfer is the diversity of the cultures of businesses that receive and transmit new ideas and information. Moreover, the existence of a distinct subculture difference within an enterprise will make it difficult to share new information produced between units. Transfer of innovation will necessarily take place between two parties. The fact that these parties have many cultural differences will bring some difficulties in the evaluation of new ideas, ideas and information by the receiving enterprise. Parallel to this, cultural differences may have some negative repercussions in sharing and transferring information. As a matter of fact, the main problem underlying the negative results of sampling attempts between enterprises in innovation is the cultural differences between the parties.
4.4.3. The Nature of Innovation
Another factor that will play an important role in the efficiency of the transfer is the type and nature of the idea, thought, knowledge and invention that will lead to the transfer or innovation. It is important in transfer whether radical or progressive new information is open, understandable or implicit, confidential. Transfer of complex or radical innovations will be more difficult depending on the absorptive capacity of the recipient. Likewise, the necessity of more communication, improved absorption capacity and transmission capabilities in the transfer of innovations where more intense and implicit knowledge is the majority will bring some difficulties for the business.
4.4.4. Timing
The transfer time of new information that will lead to innovation is also very important for the commercial success of new products and services to be developed. The fact that the company transfers new information before its competitors and makes the innovation first based on this information will play an important role in providing a competitive advantage against its competitors. Early transfer of innovation from competitors is also important in terms of introducing products and services that will be developed in newer and different areas depending on the use of new information in different fields. Being late in the transfer of innovation may risk that competitors will benefit from this new information before and gain an advantage.
Although the transfer of innovation before competitors is a desirable situation, the transfer of innovation in the early stages of the life process may cause some negativities. Because at the first stages of innovation or new ideas and information, the effectiveness will be low due to the high uncertainty. Therefore, minimizing uncertainties in innovations and then transferring them will both facilitate the transfer process and provide an opportunity for the transferring parties to develop their capacity to absorb and transmit innovation. Thus, the transfer of innovation will produce more effective results for the business (Muah, 2003: 78).