All complex process, such as innovation, it requires some conceptualization work to reduce the difficulty and understand it´s causes and effects.
I must say that most definitions of innovation are recent and still are subject to revision as there is greater scientific understanding of the related phenomena .
Moreover, the conceptualization of the phenomena of innovation has evolved into an extremely abstract science, which, in many cases makes it very difficult to be understood by future innovators and entrepreneurs.
I therefore, took the liberty to use and adapt definitions according to my practical experience after testing and register innovation concepts during the last 15 years.
In this blog I will start with simple definitions and after I will go deeper into them while progressing in each particular subject.
Let's begin:
Anchoring or Infatuation of Own Ideas: The belief, present in most beginners innovators/ entrepreneurs, consisting of their ideas, besides being the best are the only, which causes major problems in finding the approach required to develop the new business. But if a beginner can survive to anchoring, he may take his project forward.
Innovation: Creating or modifying a product or service and its introduction into the market. The most relevant characteristics of the innovation process are:
a. Uncertainty: In the innovative processes nothing is certain no matter how much time and money are invested to planning, the reality will be different.
b.Ambiguity: Everything understood or any belief about an innovation process can be validated or not depending on their results in reality, in other words, you should have an open mind and willingness to change if it is required by reality .
c. Constant presence of error: Error will always be present in the innovation process, the problem is not to make mistakes, the problem is not to have methodologies to register their causes, to learn from them and solve them.
d. Excessive optimism or pessimism: All innovators, from my point of view, are overly optimistic, and in very specific cases will be very pessimistic. The only way to control these extreme states is to think objectively about what is real and separate from what is not, and to be careful with technological, marketing or business expectations. It sounds complex, but necessary.
Invention: Creating a product or service that did not exist before.
Radical Innovation (RI): Development of products/servieces that were not known before and market them. To market RI the following is required: Technological development, market development and business development .All stages require a large investment of time, money and other resources to covert an idea into a profitable business.
Radical innovations have been rare in the history of mankind, but once arrived generated hundreds of new business. I.e; Automotive and complementary business (fuel, tires, insurance, etc).
Incremental innovation (ININ): is to make improvements or changes to an existing product. While it requires significant efforts to new design improvement , these are much smaller than radical innovations and in the same way are the marketing costs and business development. These innovations are more common in many industries since the existing information from the original product on the market is used, which represents a lower technological, market and business risk. Ej. Changes in packaging made on a product in order to reach new market segments.
Entrepreneurship: Is the action taken by people to develop a project. Usually it is accompanied by risk taking, hard work, perseverance, resilience to errors and failures, open mind, and ability to learn from good and overall callenging circumstances. Great ability to execute plans, to exercise foresight, to review results and make changes where needed. Resistance to social pressures, financial problems and market challenges, etc.
Market: Environment, place or social organization in which business are made.
Business: Exchange value between people occurs within the market.
Value: Although this concept has many deep definitions. The working definition in the topic of interest may be: The desire or need for a specific group of people, under certain circumstances and in a defined period for a specific product within a market. An example: The value of diamonds is high, since the product has some very unique features desired by certain groups of people; to get them is costly and the supply does not exceed demand so their price is also high. In the diamond business the most frequent value exchange is: diamonds for money.
Price: Manifestation of the monetary value of a product.
Business Plan: A document that seeks to show the technological, market and business potential of a new project, usually done to get resources for business development.
Patent of Invention: It is a right that a state gives it an inventor to use his own inventions for profit exclusively for a limited time.
Product Patents: Protect developed products.
Process Patents: Protect manufacturing processes that enable a competitive advantage in an existing or new product.
Trade Secret: Any knowledge on industrial products and processes that keep in reserve allows the holder a competitive advantage. Trade secrets are another way to protect products and processes without resorting patents.
Seed Capital: Funds required in the earliest stages of the development of an innovative project. Usually comes from friends, family and the entrepreneur himself.
Venture Capital in Innovation: Monetary resources needed to develop a new project. In this case the novelty of the project is the main cause of the risk. In practice venture capital are all resources, primarily economic, the entrepreneur does not have and that he believes is necessary for the development of his new project. When funds belonging to individuals or organizations that specialize in managing money for others to generate the highest possible return in the shortest time possible, while minimizing the risk is known as risk capital.
Angel capital: Resources that come from a very special investor, who decides to support new projects in exchange for an ownership equity, profit or personal satisfaction. They can provide management advice, contacts, expertise to the new proyect. The literature defines them as affluent people who can provide resources for StarUps.
Star Ups: These are new projects in its earliest stage. By definition such good ideas are those that arouse interest and enthusiasm, but are fraught with uncertainties.
Tactics: Short-term actions that should be part of the process to carry out a strategy. Are so easy to be confused with strategy. Business tactics without strategy only generate profits in the short term and are very effective to "putting out fires", the interesting thing is : many successful companies make their money just "puttin out fires" . The main confusion between tactics and strategies is present when managers ask vendors to define "sales strategies", freeing managers to structure "business strategies".
Strategy: These are actions that seek long-term complex and deep goals. Confused with tactics very often. An example: When a football coach is leading a match, he is running high complexity tactics . But when the managers of a football team are planning a long-term goals and the resources to achieve them, that's strategy. If the comparison is allowed, most sellers are actually tactical implementers and managers, in some cases, are strategic planners. The great challenge of the strategy is to formulate the objective and keep it in time despite all the problems or correct if is required, in other words not to lose your way.
I must say that most definitions of innovation are recent and still are subject to revision as there is greater scientific understanding of the related phenomena .
Moreover, the conceptualization of the phenomena of innovation has evolved into an extremely abstract science, which, in many cases makes it very difficult to be understood by future innovators and entrepreneurs.
I therefore, took the liberty to use and adapt definitions according to my practical experience after testing and register innovation concepts during the last 15 years.
In this blog I will start with simple definitions and after I will go deeper into them while progressing in each particular subject.
Let's begin:
Anchoring or Infatuation of Own Ideas: The belief, present in most beginners innovators/ entrepreneurs, consisting of their ideas, besides being the best are the only, which causes major problems in finding the approach required to develop the new business. But if a beginner can survive to anchoring, he may take his project forward.
Innovation: Creating or modifying a product or service and its introduction into the market. The most relevant characteristics of the innovation process are:
a. Uncertainty: In the innovative processes nothing is certain no matter how much time and money are invested to planning, the reality will be different.
b.Ambiguity: Everything understood or any belief about an innovation process can be validated or not depending on their results in reality, in other words, you should have an open mind and willingness to change if it is required by reality .
c. Constant presence of error: Error will always be present in the innovation process, the problem is not to make mistakes, the problem is not to have methodologies to register their causes, to learn from them and solve them.
d. Excessive optimism or pessimism: All innovators, from my point of view, are overly optimistic, and in very specific cases will be very pessimistic. The only way to control these extreme states is to think objectively about what is real and separate from what is not, and to be careful with technological, marketing or business expectations. It sounds complex, but necessary.
Invention: Creating a product or service that did not exist before.
Radical Innovation (RI): Development of products/servieces that were not known before and market them. To market RI the following is required: Technological development, market development and business development .All stages require a large investment of time, money and other resources to covert an idea into a profitable business.
Radical innovations have been rare in the history of mankind, but once arrived generated hundreds of new business. I.e; Automotive and complementary business (fuel, tires, insurance, etc).
Incremental innovation (ININ): is to make improvements or changes to an existing product. While it requires significant efforts to new design improvement , these are much smaller than radical innovations and in the same way are the marketing costs and business development. These innovations are more common in many industries since the existing information from the original product on the market is used, which represents a lower technological, market and business risk. Ej. Changes in packaging made on a product in order to reach new market segments.
Entrepreneurship: Is the action taken by people to develop a project. Usually it is accompanied by risk taking, hard work, perseverance, resilience to errors and failures, open mind, and ability to learn from good and overall callenging circumstances. Great ability to execute plans, to exercise foresight, to review results and make changes where needed. Resistance to social pressures, financial problems and market challenges, etc.
Market: Environment, place or social organization in which business are made.
Business: Exchange value between people occurs within the market.
Value: Although this concept has many deep definitions. The working definition in the topic of interest may be: The desire or need for a specific group of people, under certain circumstances and in a defined period for a specific product within a market. An example: The value of diamonds is high, since the product has some very unique features desired by certain groups of people; to get them is costly and the supply does not exceed demand so their price is also high. In the diamond business the most frequent value exchange is: diamonds for money.
Price: Manifestation of the monetary value of a product.
Business Plan: A document that seeks to show the technological, market and business potential of a new project, usually done to get resources for business development.
Patent of Invention: It is a right that a state gives it an inventor to use his own inventions for profit exclusively for a limited time.
Product Patents: Protect developed products.
Process Patents: Protect manufacturing processes that enable a competitive advantage in an existing or new product.
Trade Secret: Any knowledge on industrial products and processes that keep in reserve allows the holder a competitive advantage. Trade secrets are another way to protect products and processes without resorting patents.
Seed Capital: Funds required in the earliest stages of the development of an innovative project. Usually comes from friends, family and the entrepreneur himself.
Venture Capital in Innovation: Monetary resources needed to develop a new project. In this case the novelty of the project is the main cause of the risk. In practice venture capital are all resources, primarily economic, the entrepreneur does not have and that he believes is necessary for the development of his new project. When funds belonging to individuals or organizations that specialize in managing money for others to generate the highest possible return in the shortest time possible, while minimizing the risk is known as risk capital.
Angel capital: Resources that come from a very special investor, who decides to support new projects in exchange for an ownership equity, profit or personal satisfaction. They can provide management advice, contacts, expertise to the new proyect. The literature defines them as affluent people who can provide resources for StarUps.
Star Ups: These are new projects in its earliest stage. By definition such good ideas are those that arouse interest and enthusiasm, but are fraught with uncertainties.
Tactics: Short-term actions that should be part of the process to carry out a strategy. Are so easy to be confused with strategy. Business tactics without strategy only generate profits in the short term and are very effective to "putting out fires", the interesting thing is : many successful companies make their money just "puttin out fires" . The main confusion between tactics and strategies is present when managers ask vendors to define "sales strategies", freeing managers to structure "business strategies".
Strategy: These are actions that seek long-term complex and deep goals. Confused with tactics very often. An example: When a football coach is leading a match, he is running high complexity tactics . But when the managers of a football team are planning a long-term goals and the resources to achieve them, that's strategy. If the comparison is allowed, most sellers are actually tactical implementers and managers, in some cases, are strategic planners. The great challenge of the strategy is to formulate the objective and keep it in time despite all the problems or correct if is required, in other words not to lose your way.
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