Definition of innovation

Innovation involves producing new products and services, new business models, and new or improved methods for producing goods or services. Innovation is more than invention.  It feeds commercial success, normally boosting efficiency and/or profits.

Organisations can innovate in different ways: a manufacturing plant could improve its production efficiency; research and development could develop new technology for a product; the service operations department could find a better way of serving customers; and marketing could define a new business model. Some very successful companies combine these different types of innovation.

Example

Caterpillar, the US earth-moving equipment manufacturer, is famous for its innovative, well manufactured and robust equipment. However, the organisation’s after sales service is also legendary and innovative. The performance of Caterpillar equipment is monitored remotely, so that the company is able to deal with equipment problems before the customer is even aware of such issues. [1]