Michael Chavira | What is Innovation and Give an Example?
According to Michael Chavira, Innovation is the application of novel, practical, and cost-effective ideas, creating new products, services, and value networks. The first example is the development of Amazon’s online book shop, a disruptive innovation that revolutionized the book-selling industry. Another example is the iPhone, which changed the smartphone industry by replacing the existing keyboard and mouse with a touchscreen and intuitive user interface.
Innovation is using new and beneficial ideas by Michael Chavira
Innovation is the process of developing and applying new ideas to improve an existing product, service, or process. While new products and services are the most obvious examples of innovation, innovations may also include new processes and organizational structures. Though innovation is often associated with creating new products and services, innovations can also be applied to old industries or even the entire world. Innovation is both a process and an outcome, and it can be the result of a breakthrough or a gradual development of an idea.
Companies must establish an internal definition of innovation to understand how to improve their performance. This definition should include the role of all employees and the measures and rewards for innovation. Innovation is the conversion of an invention into a scalable value. The value can be monetary, social, cultural, or any combination. While some companies confuse innovation with invention, it is necessary to define it in the context of a specific organization.
It results in the introduction of a new or improved good or service.
Michael Chavira pointed out that there are several definitions of innovation. Product innovation is the introduction of a new good or service and sometimes relies on existing technology. Process innovation, on the other hand, is implementing a new production method. This usually involves substantial changes in equipment or software, and marketing innovation refers to introducing a new marketing strategy. For example, changes in factor prices may affect the price of PCs. Another definition of innovation focuses on price, packaging, placement, promotion, and pricing changes.
Product innovation relates to improvements in an existing product. It may involve adding a new feature or improving a service, but the ultimate goal is to improve the overall experience of a product or service. The new feature or process will often improve the usability of the product or service. In other cases, process innovation involves making the supply chain more predictable or decreasing redundancy. However, process innovation is not always the most lucrative innovation. The risks are low, but the benefits may only be internal.
It reduces the costs of production more efficiently by Michael Chavira
Innovating in manufacturing can help manufacturers to lower the overall cost of production and better anticipate customer demands. Adaptive economies demonstrate innovation by shifting resources from lower-value-added activities to higher-value-added activities. While this may seem counterintuitive, a recent disruption to global supply chains has underscored the importance of unit cost of production. For example, the COVID-19 pandemic resulted in production delays and factory shut-downs in Asia, which led to massive shipping costs.
It creates new value networks by Michael Chavira
This concept of value networks explains how companies react to customers’ input and change their processes and goals based on this input. Disruptive innovations don’t appeal to existing customers, offer low profits, or are initially only marketable in emerging markets. To understand how this concept affects innovation, consider the examples of a disk drive and its parts. These examples provide a good starting point for understanding how value networks work and why they are essential.
Michael Chavira emphasized that disruptive innovations, on the other hand, disrupt existing markets. The established players prefer investing in higher-end value networks, where they can gain higher profits and added value. But new entrants are more efficient when they attack the lower value networks because their cost structure is minor. This is a fundamental difference between disruptive innovations and sustaining innovations. The latter is more likely to create new value networks. However, disruptive innovations are difficult to replicate and are not profitable for established companies.