Operational strategies : innovation

innovation is a creation resulting from study and experimentation

the government department responsible for innovation is the Department for Innovation, Universities and Skills (DIUS). it defines a bus as innovation active if it is engaged in any of the following:

• intro of a new or improved product
• intro of a new process for making or supplying a product
• expenditure in areas such as R&D linked to innovation activities
• training or acquistition of external knowledge linked to innovation activites
• intro of new machinery and equipment for the purpose of innovation activities

benefites and purposes of innovation and R & D

• improve quality
• enter more markets
• increase value added
• increase product range
• reduce costs
• improve flexibility
• increase capacity
• meet regulation
• reduce environmental impact

problems of innovation and R&D

• uncertainty
• operational difficulties
• competition
• generic products

main factor limited innovation are:

• innovation costs
• economic risks
• cost of finance
• government regulation
• availability of finance
• market dominated by established businesses
• uncertain demand

to improve the likelihood of innovation and R&D:

• protection
• early planning
• developing a supportive culture
• maintaining secrecy
• remembering the consumer

implications of innovation on other functional areas:

• finace - carry out investment appraisal in order to assess the likely results of innovation
• maketing - market research will be needed to ascertain whether the innovation project is likely yo appeal to customers and is often linked to porduct life cycle, so innovation and marketing functions must cooperate
• HRM- recruit and train suitable employees. successful innovation can also lead to the growth of a bus and this may require additional recruitment and training

spending on innovation and R&D

the main factors influencing the need to innovation spending are:

• the nature of the product
• competition
• the market

factors determining how much is actually spent:

• company finance
• company culture
• chances of success
• efficiency of innovation