The Innovation of Products and Services
The process of innovation includes different stages, according to which a small, medium-sized company or a large corporation can implement changes in the type or structure of their products or services. The benefits of innovation ideas are those that can be useful for customers. Therefore, companies should be able to predict demand and make decisions on the implementation of innovative ideas into practical use.
The choice of innovative ideas is extensive nowadays. However, not all of them can be practically implemented, mainly because of insufficient promotion measures or lack of technological facilities to produce innovation and bring it into practical use. Thus, innovative ideas have a low demand, and only 1-3% of them are known to be used and commercialized.
The process of commercialization of innovative ideas may be compared to the process of spreading the light from the light bulb. The energy is spreading via specific communication channels – through mass media and interpersonal communication as to what concerns innovation.
Therefore, the aim of this paper is to provide insight into the role of research and development (R&D) in the process of innovation through in-depth analysis of the background of innovation. Innovation as a term will be explained through the perspective of its benefits and usefulness for the customers. The experience of a travel agency will be used as an example in the context of applying new technology to the process of diffusion of innovation.
Initial Thoughts on Innovation
From the studies material, I have gained an understanding that innovation helps to motivate people to buy products or services. Moreover, it should be noted that the demand for the products is based on the desire of potential customers to be in line with technological advancement. However, being unfamiliar with the new product or service, people may be reluctant and careful when making a decision to try something new. At the same, innovative ideas run the world’s most important processes that can help to generate changes in the global map of products and services.
Without a doubt, the most efficient way to motivate and encourage the customers to buy something innovative is encountering their needs as those of major importance. For example, Hiskey (2015), in his popular magazine article “The Shocking Story Behind Plato’s Original Purpose”, tells the story of the popular soap-making instruments’ branding of PlayDoh. They started as s small-size company, but their innovative idea to name the product brought popularity to the endeavour. The suggestion of “Kutol’s Rainbow Modeling Compound” did not have success, thus, the title PlayDoh was used instead. Indeed, the fresh and catchy title brought a fresh note to the product, thus the company’s success.
I can compare the creativity of this kind to the technological Google team village creation when the inspiringly new creative solutions helped people to get joined into a team and generate the ideas that found their realization and wide popularity (Albert & Runco 1998). However, innovation can have success when all efforts are in progress. Thus, the principle of 4 Ps has become a valuable knowledge that I have gained. According to Francis & Bessant (2015), the combination of the four vital aspects is vital for the realization of innovation: “P1 innovation to introduce or improve products; P2 innovation to introduce or improve processes; P3 innovation to define or redefine the positioning of the firm or products; P4 innovation to define or redefine the dominant paradigm of the firm” (p. 172). At the same time, I need to note that innovation processes are more likely to succeed when the technological base is adjustable to the low-cost resources. As Utterback & Abernathy (1975) state, this can stimulate the innovation processes to overcome the barriers that inhibit progressive thinking and sharing of the innovative ideas From the other side, Anderson & Tushman (2020) focus on the technological constraints that may prevent innovative ideas from overcoming the barriers and being commercialized. Therefore, progressive ideas can be activated only if they are free from such constraints; but to be materialized, ideas should coincide with the hi-end manufacturing techniques.
In my opinion, the R&D techniques, in this relation, should go along with improvements in manufacturing standards that will help to promote the attitude to innovative ideas in terms of their commercializing. In this relation, the effect of the first mover has been traced with the difficulties that every innovation can face at various stages of R&D practical implementation (Lieberman & Montgomery 1988). However, the first mover advantage, in most cases, depends on the circumstances that impact the practical implementation of the innovative idea (Suarez & Lanzolla 2015). These are presented in Figure 3 (Suarez & Lanzolla 2015). From the above said, I can conclude that the applicability of the innovation idea depends on the space in which it has been moving to its practical implementation.
To make the innovation process realizable, there is the need to understand the possible options a company may use. According to Mohanbir (2016), there are 12 different ways for companies to innovate (Figure 2). They are focused on four aspects: offerings (products / services), customers and processes (how), and presence (where). In this regard, the process of innovation, if complicated and straightforward, starts from generating an idea and its spread through the potential and existing customers. Thus, I can state that customers are a crucial link in the implementation of an idea. A failure to meet their needs (as well as technological innovation of certain types) may cause the innovation failure (Christensen 2016). This issue is common both for small and medium-sized companies, as well as large multinational corporations.
To create a sustainable competitive environment for diffusion of innovation, a company should implement the so-called “blue ocean strategy.” If properly applied, it will help to “create uncontested market space; make the competition irrelevant; create and capture new demand; break the value / cost trade off” (Kim & Mauborgne 2020). This strategy can help to find the appropriate innovation solution that can be commercialized easily (Christensen & Raynor 2019). The experiences of Germany, India, and China are compared by Agarwal and Brem (2022) to address the major challenges that innovation in R&D perspectives may face regarding communication channels.
What is Innovation?
I have researched the term innovation, and it is a rather wide notion that encompasses research, development and implementation (R&D). However, in my opinion, innovation is not just a new technology, smart ideas, new products or R&D departments in highly developed global companies or private initiatives on developing new intentions. The term innovation cannot be simply related to the word “new”, nor is it identical to the term “invention”. The example of the difference between invention and innovation can be compared to the wheel and a car. The wheel had been invented before the car was, but Henry Ford was the one who succeeded in car innovation.
I find it interesting, however, that not all innovations pass the test of commercializing successfully. It is known that many of them are being stored in patent offices, and only 1-3% of innovations are to be implemented into commercial use. For these ideas to reach out to the customers, innovations should be relevant and timely within a specific niche in the market. However, it should be also noted that the deployment scenario for each innovation should be unique, as well as the need for innovation should be high among the targeted segment of customers. If invention is based on research interest, it is also driven by the need of customers. In this regard, I find the following example of well-distributed commercialization the most relevant. First of all, Steve Jobs (1955-2011) created the iOS unique operating systems for iPhones, iPads, Macs, iPods, and Apple TV. An outstanding design and stylistic requirements went along with the usable mouse control. A similar success was reached by Thomas Edison who created an innovative light system that brought commercial success. In overall, it depends on a company’s level of development; work with research institutions, and employee and customer care services deployment.
To my mind, the process of finding something unique is a valuable experience for R&D experts. There is a well-known story about Newton, who had been sitting under the apple-tree until the fruit fell on his head. Thus, the Universal Law of Gravitation was discovered in one moment. Archimedes experienced a similar happy feeling when he got the task from King Hiero II to check the solidity of his golden crown without the permission to crush it. Archimedes put the crown into the bucket with water and measured the differences between water levels before and after the crown placement. Further, a similar situation was created by Percy Spencer who turned to be the founder of the microwave oven. The R&D expert was working on the military radar-based equipment, and he suddenly noticed that his candy bar melted in front of the magnetic radar. Consequently, this idea was used for cooking facilities. It is interesting to mention that there are innovations caused by accident. It happened to Fleming when he discovered Penicillin. Also, periodically, many innovative ideas are generated and applied in the field of medicine.
Also, from the researched material, it is obvious that every innovation goes along with customer care as the first priority. Their needs are determined when developing and introducing innovation. Its commercialization depends on the price and usability of an item or technology that correspond to customers’ needs. Therefore, it is of particular importance to detect the group of target consumers and predict demand. If users have special needs, it can be used for commercialization.
I have to admit that being a pioneer in implementing innovative ideas is a risky and difficult venture. However, the advantages of the “first movers” are the higher price, sustainability in the market, the viability of the product, and higher recognition throughout the customers. The pioneer companies usually get higher profits and earn better positions in the market in terms of the market share and customer niche. The example is the innovative grooming instrument from Gillette – three-bladed Mach-3 (Special Report on Business Innovation 2020). It was recommended as a unique instrument aimed at facilitating grooming in daily life. Thus, based on such examples, I have gained an understanding of how innovations work to attract customers: they are recommended for purchase as unique in the market.
Diffusion of Innovation
The diffusion of innovation is the process of spreading something innovative via special channels to make it easily recognizable. The diffusion of light from the bulb source can be called the diffusion in its direct meaning. On the other hand, the diffusion of innovation presupposes its commercialization as a way for innovation to pass the barriers of recognition (Figure 4). In my opinion, diffusion of innovation has both advantages and disadvantages.
Advertising as a technique can help to spread innovation all across the globe, motivating people to buy goods. Prior to advertising, the diffusion of innovation was not that successful. For instance, it was in the 10th and 11th centuries that Chinese managed to make accurate clocks, and it was in 960 AD that they created a compass. Since Chinese invented paper, 1000 years has passed before this invention reached the West. Porcelain and gunpowder were also the inventions of the 10th century AD, and they were commercialized in the West by successful business persons.
The disadvantages that prevent diffusion of innovation from successful spreading are socio-political, socio-geographical, socio-economic processes. The changes of rulers and full or partial isolation from the rest of the world were the negative factors for China. They have been preventing the innovations from being shared with the West for a long time.
The term diffusion of innovation, in my opinion, is more efficiently applied in multinational companies that are usually regarded as those of better business capacity, higher net profits, better abilities to popularize and promote their products in mass communication channels. Rogers (2018), however, has added a new idea to this theory, reworking the concept in relevance to the economic stability and ability to roll up the diffusion of innovation, as related to the medium-sized enterprises (SMEs). According to Rogers (2018), they also should be ready to promote diffusion of innovation. The researcher identifies the four crucial elements in the opened-up analysis of innovation, such as (1) the innovation itself, (2) the innovation communication in terms of sharing the innovation between individuals, (3) innovation within a social system, and (4) innovation in the overtime categories. Thus, the process of diffusion of innovation is further clarified by Rogers (2018), “communication is the process by which participants create and share information with one another in order to reach a mutual understanding” (p. 18).
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In this relation, the channels of communication can contribute much to diffusion of innovation. In fact, Rogers (2018) states, “diffusion is a particular type of communication in which the message content that is exchanged is concerned with the new idea” (p. 18). The channels of communication may be either mass media or interpersonal. In the first case, the diffusion of innovation is to be transferred via radio, TV, newspapers, Internet sources, etc. It is how advertising can reach success using specific means of media impact on people.
However, interpersonal communication is even more effective, for it gives more possibilities to companies when their ideas are to be shared among friends, relatives, acquaintances, etc. The users of the regular type and lead users are in balance for the practical implementation of tech research solutions. Therefore, “since problem-solving activity has been shown to be motivated by expectations of economic benefit, and since lead users have been defined in part as users positioned to obtain high net benefit from a solution to their needs, it is reasonable that lead users may have made some investment solving the need at issue” (Hippel 1986).
Innovations in Travel Industry
However, even small firms (e.g. travel industry) can grow effectively when using the “strategy adopted to exploit global markets (…) to seek strategic partnerships” (Deakins & Freel 2019, p. 205). It is specifically important when a small or medium-sized travel company wants to expand its business through the relevant communication channels to boost up their profits and expand their customer base.
I think that to implement and stimulate its diffusion, it is crucial to update the technological base of the company so it can address the needs of its customers. For instance, mobile and smartphone applications can be used to boost sales. These innovative methods can be of much use as they can help to spread innovation through the distributive channels. For instance, an iPhone or iPad application can be useful to generate leads and grow sales, reaching out to the customers when they intend to buy a tour to an exotic destination. On the other hand, ordering the application can be costly for small or medium-sized travel companies. In such cases, it is better to hire freelance professionals who are ready to complete the ordered projects at the relatively low or close to the minimal price.
Travel industry, at the same time, should be opened to new strategic partnerships. For instance, when avia and bus tours are offered regularly, some discounts and holiday special offers can be a good solution. The growth of the business in such cases can be relative since companies may feel discomfort at low touristy seasons, in comparison to the rise of sales during hot seasons.
The diffusion of innovation may become very popular and well-spreading when the resources of innovation are of the low cost: ‘When the cost of high-quality resources for design and prototyping becomes very low (the trend we have described), these resources can be diffused very widely, and the allocation problem diminishes in significance” (Hippel 2019) as a result creating “a pattern of increasing democratization of product and service innovation – a pattern that will involve significant changes for both users and manufacturers” (Hippel 2019). In relevance to the experience of travel companies, the high cost of resources in application development may be very disturbing for diffusion of innovation. In such cases, it is extremely important to determine the needs of customers, informing them about new offers in tours to exotic countries. It is significant to pay particular attention to popular touristic destinations according to seasons. For example, during cold seasons, it may be profitable to offer tours to Southern countries (Africa, Asia, South America, etc.) while in summer, it would be more profitable to offer more tours to the Northern countries (Iceland, Norway, Denmark, etc.). The experience of travel agencies may turn positive since major development techniques applied can stimulate customers to buy travel services after advertising campaigns and huge promotion of innovation ideas.
However, I would like to emphasize that, in some cases, diffusion of innovation may be of huge harm for the environment. I think that the example is the tin mining usage in mobiles, smart phones, tablets, laptops, cars, works for devastation of the mineral resources of South Asia (Friends of the Earth Report 2015). Tin mining is needed for the production of innovative types of gadgets that are more appreciated than people living in those areas.
Conclusion
I would like to conclude that, based on the studied and researched material, the innovation process is a valuable experience for all companies that put high-quality service as their top priority. In the context of this paper, the experience of a travel company was used to highlight the benefits that innovation may bring towards increasing in ranks and profits. The base of customers, for instance, can be enriched via interpersonal and mass media communication channels. The stimulation of customer interest can be reached via mobile and smartphone applications.
In this paper, I have made an attempt to highlight both theoretical and practical experience that small and large companies may take into account when developing their businesses. The most important here is to predict the demand and meet the needs of customers so that innovation can be useful. The innovative idea should be commercialized only if there is the expectation of customers’ interest.
