Invention and Innovation
There is a subtle difference between these two words, but it is an important one for Business Studies students.
- Invention if the formulation of new ideas for products or processes
- Innovation is all about the practical application of new inventions into marketable products or services
Most of us have visions of mad inventors who come up with ideas with no practical use! Like everything else in Business Studies, we are interested in activities that actually help a firm meet its objectives, such as growth, profitability, increased market share or stability – so it is Innovation, rather than Invention, that really counts.
Innovations can fall into one of two categories:
Product (or service) innovation
As the name suggests, this is all about launching new or improved products (or services) on to the market.
Advantages might include (note links to marketing)
- ‘First mover advantage’ – which can include some of the following;
- Higher prices and profitability
- Added value
- Opportunity to build early customer loyalty
- Enhanced reputation as an innovative company
- Public Relations – e.g. news coverage
- Increased market share
This has to do with finding better or more efficient ways of
- producing existing products, or
- delivering existing services.
Advantages might include:
- Reduced costs
- Improved quality
- More responsive customer service
- Greater flexibility
- Loss of jobs, especially if work is outsourced
- Need for re-training of workers