Innovation is a change in the thought process for doing something, or the useful application of new inventions or discoveries.^[1] It may refer to an incremental emergent In philosophy, systems theory, science, and art, emergence is the way complex systems and patterns arise out of a multiplicity of relatively simple interactions. Emergence is central to the theories of integrative levels and of complex systems or radical and revolutionary changes in thinking, products, processes, or organizations. Following Schumpeter Joseph Alois Schumpeter was an economist and political scientist born in Moravia, then part of Austria-Hungary, now in the Czech Republic. He popularized the term "creative destruction" in economics (1934), contributors to the scholarly literature on innovation typically distinguish between invention, an idea made manifest, and innovation, ideas applied successfully in practice. In many fields, such as the arts The arts is a broad subdivision of culture, composed of many creative endeavors and disciplines. It is a broader term than "art," which as a description of a field usually means only the visual arts. The arts encompasses visual arts, literature and the performing arts - music, drama, dance and film, among others. This list is by no means, economics Economics is the social science that is concerned with the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek οἰκονομία from οἶκος (oikos, "house") + νόμος (nomos, "custom" or "law"), hence "rules of the house(hold)". Current and government policy The term may apply to government, private sector organizations and groups, and individuals. Presidential executive orders, corporate privacy policies, and parliamentary rules of order are all examples of policy. Policy differs from rules or law. While law can compel or prohibit behaviors policy merely guides actions toward those that are most, something new must be substantially different to be innovative. In economics the change must increase value The economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, and extend that definition to goods which can be exchanged. From this analysis came the concepts value in use and value in exchange, customer value, or producer value. The goal of innovation is positive change, to make someone or something better. Innovation leading to increased productivity Productivity is a measure of output from a production process, per unit of input. For example, labor productivity is typically measured as a ratio of output per labor-hour, an input. Productivity may be conceived of as a metric of the technical or engineering efficiency of production. As such, the emphasis is on quantitative metrics of input, and is the fundamental source of increasing wealth Wealth is the abundance of valuable resources or material possessions or the control of such assets. The word wealth is derived from the old English wela, which is from an Indo-European word stem. An individual, community, region or country that possesses an abundance of such possessions or resources is known as wealthy in an economy.

Innovation is an important topic in the study of economics Economics is the social science that is concerned with the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek οἰκονομία from οἶκος (oikos, "house") + νόμος (nomos, "custom" or "law"), hence "rules of the house(hold)". Current, business A business is a legally recognized organization designed to provide goods or services, or both, to consumers, businesses and governmental entities. Businesses are predominant in capitalist economies. Most businesses are privately owned. A business is typically formed to earn profit that will increase the wealth of its owners and grow the business, entrepreneurship Entrepreneurship is the act of being an entrepreneur, which is a French word meaning "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. The, design No generally-accepted definition of “design” exists, and the term has different connotations in different fields . Informally, “a design” (noun) refers to a plan for the construction of an object (as in architectural blueprints, circuit diagrams and sewing patterns) and “to design” (verb) refers to making this plan. However, one can, technology Technology is a term referring to whatever can be said at any particular historical period, concerning the state of the art in the whole general field of practical know-how and tool use. It therefore encompasses all that can be said about arts, crafts, professions, applied sciences, and skills. By extension it can also refer to any systems or, sociology Sociology is the study of society. It is a social science—a term with which it is sometimes synonymous—that uses various methods of empirical investigation and critical analysis to develop and refine a body of knowledge about human social activity, often with the goal of applying such knowledge to the pursuit of social welfare. Subject matter, and engineering Engineering is the discipline, art and profession of acquiring and applying technical, scientific, and mathematical knowledge to design and implement materials, structures, machines, devices, systems, and processes that safely realize a desired objective or invention. Colloquially, the word "innovation" is often synonymous with the output of the process. However, economists tend to focus on the process itself, from the origination of an idea to its transformation into something useful, to its implementation; and on the system within which the process of innovation unfolds. Since innovation is also considered a major driver of the economy, especially when it leads to new product categories or increasing productivity, the factors that lead to innovation are also considered to be critical to policy A policy is typically described as a principle or rule to guide decisions and achieve rational outcome. The term is not normally used to denote what is actually done, this is normally referred to as either procedure or protocol. Whereas a policy will contain the 'what' and the 'why', procedures or protocols contain the 'what', the 'how', the ' makers. In particular, followers of innovation economics Innovation economics is an economic doctrine that reformulates the traditional model of economic growth so that knowledge, technology, entrepreneurship, and innovation are positioned at the center of the model rather than seen as independent forces that are largely unaffected by policy. Innovation economics is based on two fundamental tenets: that stress using public policy to spur innovation and growth.

Those who are directly responsible for application of the innovation are often called pioneers in their field, whether they are individuals or organizations.

Introduction

In the organizational context, innovation may be linked to performance and growth through improvements in efficiency, productivity Productivity is a measure of output from a production process, per unit of input. For example, labor productivity is typically measured as a ratio of output per labor-hour, an input. Productivity may be conceived of as a metric of the technical or engineering efficiency of production. As such, the emphasis is on quantitative metrics of input, and, quality Quality in business, engineering and manufacturing has a pragmatic interpretation as the non-inferiority or superiority of something. Quality is a perceptual, conditional and somewhat subjective attribute and may be understood differently by different people. Consumers may focus on the specification quality of a product/service, or how it compares, competitive positioning, market share Market share, in strategic management and marketing is, according to Carlton O'Neal, the percentage or proportion of the total available market or market segment that is being serviced by a company. It can be expressed as a company's sales revenue divided by the total sales revenue available in that market. It can also be expressed as a company's, etc. All organizations can innovate, including for example hospitals, universities, and local governments.

While innovation typically adds value, innovation may also have a negative or destructive effect as new developments clear away or change old organizational forms and practices. Organizations that do not innovate effectively may be destroyed by those that do. Hence innovation typically involves risk. A key challenge in innovation is maintaining a balance between process and product innovations where process innovations tend to involve a business model A business model describes the rationale of how an organization creates, delivers, and captures value - economic, social, or other forms of value. The process of business model design is part of business strategy which may develop shareholder satisfaction through improved efficiencies while product innovations develop customer support however at the risk of costly R&D The phrase research and development , according to the Organization for Economic Co-operation and Development, refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications" that can erode shareholder return. Innovation can be described as the result of some amount of time and effort into researching an idea, plus some larger amount of time and effort into developing this idea, plus some very large amount of time and effort into commercializing this idea into a market place with customers.^{[citation needed]}

Innovation has been studied in a variety of contexts, including in relation to technology, commerce, social systems, economic development, and policy construction. There are, therefore, naturally a wide range of approaches to conceptualizing innovation in the scholarly literature.^[2]

Distinguishing from invention

Invention An invention is a new composition, device, or process. An invention may be derived from a pre-existing model or idea, or it could be independently conceived in which case it may be a radical breakthrough. In addition, there is cultural invention, which is an innovative set of useful social behaviors adopted by people and passed on to others is the embodiment of something new. While both invention and innovation have "uniqueness" implications, innovation also carries an undertone of profitability and market performance expectation.

An improvement on an existing form or embodiment, composition or processes might be an invention, an innovation, both or neither if it is not substantial enough. According to certain business literature , an idea, a change or an improvement is only an innovation when it is put to use and effectively causes a social or commercial reorganization.

In business, innovation can be easily distinguished from invention. Invention is the conversion of cash into ideas. Innovation is the conversion of ideas into cash. This is best described by comparing Thomas Edison with Nikola Tesla. Thomas Edison was an innovator because he made money from his ideas. Nikola Tesla was an inventor. Tesla spent money to create his inventions but was unable to monetize them. Innovators produce, market and profit from their innovations. Inventors may or may not profit from their work.

In organizations

A convenient definition of innovation from an organizational perspective is given by Luecke and Katz (2003), who wrote:

"Innovation . . . is generally understood as the successful introduction of a new thing or method . . . Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services.

A content analysis on the term "innovation" carried out by Baregheh et al. (2009) within the organizational context, defines innovation as:

"Innovation is the multi-stage process whereby organizations transform ideas into new/improved products, service or processes, in order to advance, compete and differentiate themselves successfully in their marketplace."^[3]

Innovation typically involves creativity Creativity is the ability to generate innovative ideas and manifest them from thought into reality. The process involves original thinking and then producing, but is not identical to it: innovation involves acting on the creative ideas to make some specific and tangible difference in the domain in which the innovation occurs. For example, Amabile et al. (1996) propose:

"All innovation begins with creative ideas . . . We define innovation as the successful implementation of creative ideas within an organization. In this view, creativity by individuals and teams is a starting point for innovation; the first is necessary but not sufficient condition for the second".

For innovation to occur, something more than the generation of a creative idea or insight is required: the insight must be put into action to make a genuine difference, resulting for example in new or altered business processes within the organization, or changes in the products and services provided.

"Innovation, like many business functions, is a management process that requires specific tools, rules, and discipline."

From this point of view emphasis is moved from the introduction of specific novel and useful ideas to the general organizational processes and procedures for generating, considering, and acting on such insights leading to significant organizational improvements in terms of improved or new business products, services, or internal processes.

Through these varieties of viewpoints, creativity is typically seen as the basis for innovation, and innovation as the successful implementation of creative ideas within an organization.

It should be noted, however, that the term 'innovation' is used by many authors rather interchangeably with the term 'creativity' when discussing individual and organizational creative activity.

Economic conceptions

Joseph Schumpeter Joseph Alois Schumpeter was an economist and political scientist born in Moravia, then Austria-Hungary, now Czech Republic. He popularized the term "creative destruction" in economics defined economic innovation in "Theorie der Wirtschaftlichen Entwicklung" (1912). (The Theory of Economic Development, 1934, Harvard University Press, Boston.)^[4]

1. The introduction of a new good — that is one with which consumers are not yet familiar — or of a new quality of a good.
2. The introduction of a new method of production, which need by no means be founded upon a discovery scientifically new, and can also exist in a new way of handling a commodity commercially.
3. The opening of a new market, that is a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before.
4. The conquest of a new source of supply of raw materials or half-manufactured goods, again irrespective of whether this source already exists or whether it has first to be created.
5. The carrying out of the new organization of any industry, like the creation of a monopoly position (for example through trustification) or the breaking up of a monopoly position

Schumpeter's focus on innovation is reflected in Neo-Schumpeterian economics, developed by such scholars as Christopher Freeman^[5] and Giovanni Dosi.^[6]

Innovation is also studied by economists in a variety of other contexts, for example in theories of entrepreneurship Entrepreneurship is the act of being an entrepreneur, which is a French word meaning "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. The or in Paul Romer Paul Michael Romer is an economist and Senior Fellow at Stanford University's Center for International Development and the Stanford Institute for Economic Policy Research. He is considered an expert on economic growth's New Growth Theory. In network theory Network theory is an area of computer science and network science and part of graph theory. It has application in many disciplines including particle physics, computer science, biology, economics, operations research, and sociology. Network theory concerns itself with the study of graphs as a representation of either symmetric relations or, more, innovation can be seen as "a new element introduced in the network which changes, even if momentarily, the costs of transactions between at least two actors, elements or nodes, in the network".^[7]

Market outcome

Market outcome from innovation can be studied from different lenses. The industrial organizational approach of market characterization according to the degree of competitive pressure and the consequent modelling of firm behavior often using sophisticated game theoretic tools, while permitting mathematical modelling, has shifted the ground away from the usual understanding of markets. The earlier visual framework in economics, of market demand and supply along price and quantity dimensions, has given way to powerful mathematical models which though intellectually satisfying has led policy makers and managers groping for more intuitive and less theoretical analyses to which they can relate to at a practical level.

In the management (strategy) From an academic point of view, there is often a divorce between industrial organisation theory and strategic management models. While many economists view management models as being too simplistic, strategic management consultants perceive academic economists as being too theoretical, and the analytical tools that they devise as too complex for managers to understand.

Innovation literature while rich in typologies and descriptions of innovation dynamics is mostly technology focused. Most research on innovation has been devoted to the process (technological) of innovation, or has otherwise taken a how to (innovate) approach.

Sources of innovation

There are several sources of innovation. In the linear model of innovation the traditionally recognized source is manufacturer innovation. This is where an agent (person or business) innovates in order to sell the innovation. Another source of innovation, only now becoming widely recognized, is end-user innovation. This is where an agent (person or company) develops an innovation for their own (personal or in-house) use because existing products do not meet their needs. Eric von Hippel has identified end-user innovation as, by far, the most important and critical in his classic book on the subject, Sources of Innovation.^[8]

Joseph F. Engelberger, paraphrasing the conclusion of the 1967 US DoD program "Project Hindsight", says that innovations require only three things:^[9] 1. A recognized need, 2. Competent people with relevant technology, and 3. Financial support.

Innovation by businesses is achieved in many ways, with much attention now given to formal research and development New product design and development is more often than not a crucial factor in the survival of a company. In an industry that is fast changing, firms must continually revise their design and range of products. This is necessary due to continuous technology change and development as well as other competitors and the changing preference of customers for "breakthrough innovations." But innovations may be developed by less formal on-the-job modifications of practice, through exchange and combination of professional experience and by many other routes. The more radical and revolutionary innovations tend to emerge from R&D, while more incremental innovations may emerge from practice – but there are many exceptions to each of these trends. accelerated radical innovation is another buzzword topping radical innovation expressing the target to move things quicker than by relying on the ideas flowing in from inventors. User as customers buying products or using services are an important factor in innovation. Firms may incorporate users in focus groups (user centred approach), work closely with so called lead users (lead user approach)or users might adapt their products them selves ^[10]. Regarding this user innovation User innovation refers to innovation by consumers and end users, rather than suppliers. Eric von Hippel of MIT and others observed that many products and services are actually developed or at least refined, by users, at the site of implementation and use. These ideas are then moved back into the supply network. This is because products are, a great deal of innovation is done by those actually implementing and using technologies and products as part of their normal activities. In most of the times user innovators have some personal record motivating them. Sometimes user-innovators may become entrepreneurs An entrepreneur is a person who has possession of a new enterprise, venture or idea and assumes significant accountability for the inherent risks and the outcome.[note 1] The term is originally a loanword from French and was first defined by the Irish economist Richard Cantillon. Entrepreneur in English is a term applied to the type of personality, selling their product, they may choose to trade their innovation in exchange for other innovations, or they may be adopted by their suppliers. Nowadays, they may also choose to freely reveal their innovations, using methods like open source Open source describes practices in production and development that promote access to the end product's source materials. Some consider open source a philosophy, others consider it a pragmatic methodology. Before the term open source became widely adopted, developers and producers used a variety of phrases to describe the concept; open source. In such networks of innovation the users or communities of users can further develop technologies and reinvent their social meaning.^[11]

Whether innovation is mainly supply-pushed (based on new technological possibilities) or demand-led (based on social needs and market requirements) has been a hotly debated topic. Similarly, what exactly drives innovation in organizations and economies remains an open question.

More recent theoretical work moves beyond this simple dualistic problem, and through empirical work shows that innovation does not just happen within the industrial supply-side, or as a result of the articulation of user demand, but through a complex set of processes that links many different players together – not only developers and users, but a wide variety of intermediary organisations such as consultancies, standards bodies etc. Work on social networks suggests that much of the most successful innovation occurs at the boundaries of organisations and industries where the problems and needs of users, and the potential of technologies can be linked together in a creative process that challenges both.

Value of experimentation

When an innovative idea requires a new business model, or radically redesigns the delivery of value to focus on the customer, a real world experimentation approach increases the chances of market success. New business models and customer experiences can't be tested through traditional market research methods. Pilot programs for new innovations set the path in stone too early thus increasing the costs of failure. On the other hand, the good news is that recent years have seen considerable progress in identifying important key factors/principles or variables that affect the probability of success in innovation. Of course, building successful businesses is such a complicated process, involving subtle interdependencies among so many variables in dynamic systems, that it is unlikely to ever be made perfectly predictable. But the more business can master the variables and experiment, the more they will be able to create new companies, products, processes and services that achieve what they hope to achieve.^[12][13]

Diffusion

Once innovation occurs, innovations may be spread from the innovator to other individuals and groups. This process has been proposed that the life cycle of innovations can be described using the 's-curve Many natural processes and complex system learning curves display a history dependent progression from small beginnings that accelerates and approaches a climax over time. For lack of complex descriptions a sigmoid function is often used. A sigmoid curve is produced by a mathematical function having an "S" shape. Often, sigmoid function' or diffusion curve Diffusion of Innovations is a theory of how, why, and at what rate new ideas and technology spread through cultures. The concept was first studied by the French sociologist Gabriel Tarde and by German and Austrian anthropologists such as Friedrich Ratzel or Leo Frobenius. Its basic epidemiological or internal-influence form was described by H. The s-curve maps growth of revenue or productivity against time. In the early stage of a particular innovation, growth is relatively slow as the new product establishes itself. At some point customers begin to demand and the product growth increases more rapidly. New incremental innovations or changes to the product allow growth to continue. Towards the end of its life cycle growth slows and may even begin to decline. In the later stages, no amount of new investment in that product will yield a normal rate of return.

The s-curve derives from an assumption that new products are likely to have "product Life". i.e. a start-up phase, a rapid increase in revenue and eventual decline. In fact the great majority of innovations never get off the bottom of the curve, and never produce normal returns.

Innovative companies will typically be working on new innovations that will eventually replace older ones. Successive s-curves will come along to replace older ones and continue to drive growth upwards. In the figure above the first curve shows a current technology. The second shows an emerging technology In the history of technology, emerging technologies, the character of which comprise cutting-edge developments, represent contemporary advances and innovation around the 21st century in various fields of technology. Various converging technologies have emerged in the technological convergence of different systems which evolving towards performing that current yields lower growth but will eventually overtake current technology and lead to even greater levels of growth. The length of life will depend on many factors.

Goals

Programs of organizational innovation are typically tightly linked to organizational goals and objectives, to the business plan, and to market competitive positioning. One driver for innovation programs in corporations is to achieve growth objectives. As Davila et al. (2006) note,

"Companies cannot grow through cost reduction and reengineering alone... Innovation is the key element in providing aggressive top-line growth, and for increasing bottom-line results" (p.6)

In general, business organisations spend a significant amount of their turnover on innovation, such as making changes to their established products, processes and services. The amount of investment can vary from as low as a half a percent of turnover for organisations with a low rate of change to anything over twenty percent of turnover for organisations with a high rate of change.

The average investment across all types of organizations is four percent. For an organisation with a turnover of one billion currency units, this would represent an investment of forty million units. This budget will typically be spread across various functions including marketing, product design, information systems, manufacturing systems and quality assurance. The investment may vary by industry and by market positioning.

One survey^{[citation needed]} across a large number of manufacturing and services organisations found, ranked in decreasing order of popularity, that systematic programs of organizational innovation are most frequently driven by:

1. Improved quality
2. Creation of new markets
3. Extension of the product range
4. Reduced labour costs
5. Improved production processes
6. Reduced materials
7. Reduced environmental damage
8. Replacement of products/services
9. Reduced energy consumption
10. Conformance to regulations

These goals vary between improvements to products, processes and services and dispel a popular myth that innovation deals mainly with new product development. Most of the goals could apply to any organisation be it a manufacturing facility, marketing firm, hospital or local government. Whether innovation goals are successfully achieved or otherwise depends greatly on the environment prevailing in the firm.^[14]

Failure

Research findings vary, ranging from fifty to ninety percent of innovation projects judged to have made little or no contribution to organizational goals. One survey regarding product innovation quotes that out of three thousand ideas for new products, only one becomes a success in the marketplace.^{[citation needed]} Failure is an inevitable part of the innovation process, and most successful organisations factor in an appropriate level of risk. Perhaps it is because all organisations experience failure that many choose not to monitor the level of failure very closely. The impact of failure goes beyond the simple loss of investment. Failure can also lead to loss of morale among employees, an increase in cynicism and even higher resistance to change in the future.

Innovations that fail are often potentially good ideas but have been rejected or postponed due to budgetary constraints, lack of skills or poor fit with current goals. Failures should be identified and screened out as early in the process as possible. Early screening avoids unsuitable ideas devouring scarce resources that are needed to progress more beneficial ones. Organizations can learn how to avoid failure when it is openly discussed and debated. The lessons learned from failure often reside longer in the organisational consciousness than lessons learned from success. While learning is important, high failure rates throughout the innovation process are wasteful and a threat to the organisation's future.

The causes of failure have been widely researched and can vary considerably. Some causes will be external to the organisation and outside its influence of control. Others will be internal and ultimately within the control of the organisation. Internal causes of failure can be divided into causes associated with the cultural infrastructure and causes associated with the innovation process itself. Failure in the cultural infrastructure varies between organizations but the following are common across all organisations at some stage in their life cycle (O'Sullivan, 2002):

1. Poor Leadership
2. Poor Organization
3. Poor Communication
4. Poor Empowerment
5. Poor Knowledge Management

Common causes of failure within the innovation process in most organisations can be distilled into five types:

1. Poor goal definition
2. Poor alignment of actions to goals
3. Poor participation in teams
4. Poor monitoring of results
5. Poor communication and access to information

Effective goal definition requires that organisations state explicitly what their goals are in terms understandable to everyone involved in the innovation process. This often involves stating goals in a number of ways. Effective alignment of actions to goals should link explicit actions such as ideas and projects to specific goals. It also implies effective management of action portfolios. Participation in teams refers to the behaviour of individuals in and of teams, and each individual should have an explicitly allocated responsibility regarding their role in goals and actions and the payment and rewards systems that link them to goal attainment. Finally, effective monitoring of results requires the monitoring of all goals, actions and teams involved in the innovation process.

Innovation can fail if seen as an organisational process whose success stems from a mechanistic approach i.e. 'pull lever obtain result'. While 'driving' change has an emphasis on control, enforcement and structure it is only a partial truth in achieving innovation. Organisational gatekeepers frame the organisational environment that "Enables" innovation; however innovation is "Enacted" – recognised, developed, applied and adopted – through individuals.

Individuals are the 'atom' of the organisation close to the minutiae of daily activities. Within individuals gritty appreciation of the small detail combines with a sense of desired organisational objectives to deliver (and innovate for) a product/service offer.

From this perspective innovation succeeds from strategic structures that engage the individual to the organisation's benefit. Innovation pivots on intrinsically motivated individuals, within a supportive culture, informed by a broad sense of the future.

Innovation, implies change, and can be counter to an organisation's orthodoxy. Space for fair hearing of innovative ideas is required to balance the potential autoimmune exclusion that quells an infant innovative culture.

Measures

There are two fundamentally different types of measures for innovation: the organizational level and the political level. The measure of innovation at the organizational level relates to individuals, team-level assessments, private companies from the smallest to the largest. Measure of innovation for organizations can be conducted by surveys, workshops, consultants or internal benchmarking. There is today no established general way to measure organizational innovation. Corporate measurements are generally structured around balanced scorecards The balanced scorecard is a strategic performance management tool - a semi-standard structured report supported by proven design methods and automation tools that can be used by managers to keep track of the execution of activities by staff within their control and monitor the consequences arising from these actions. It is perhaps the best known which cover several aspects of innovation such as business measures related to finances, innovation process efficiency, employees' contribution and motivation, as well benefits for customers. Measured values will vary widely between businesses, covering for example new product revenue, spending in R&D, time to market, customer and employee perception & satisfaction, number of patents, additional sales resulting from past innovations. For the political level, measures of innovation are more focussing on a country or region competitive advantage through innovation. In this context, organizational capabilities can be evaluated through various evaluation frameworks, such as those of the European Foundation for Quality Management. The OECD The Organisation for Economic Co-operation and Development is an international economic organisation of 32 countries. It defines itself as a forum of countries committed to democracy and the market economy, providing a setting to compare policy experiences, seeking answers to common problems, identifying good practices, and co-ordinating domestic Oslo Manual (1995) suggests standard guidelines on measuring technological product and process innovation. Some people consider the Oslo Manual complementary to the Frascati Manual from 1963. The new Oslo manual from 2005 takes a wider perspective to innovation, and includes marketing and organizational innovation. These standards are used for example in the European Community Innovation Surveys.

Other ways of measuring innovation have traditionally been expenditure, for example, investment in R&D (Research and Development) as percentage of GNP (Gross National Product). Whether this is a good measurement of Innovation has been widely discussed and the Oslo Manual has incorporated some of the critique against earlier methods of measuring. This being said, the traditional methods of measuring still inform many policy decisions. The EU Lisbon Strategy The Lisbon Strategy, also known as the Lisbon Agenda or Lisbon Process, is an action and development plan for the European Union. Its aim is to make the EU "the most dynamic and competitive knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the has set as a goal that their average expenditure on R&D should be 3 % of GNP.

The Oslo Manual is focused on North America, Europe, and other rich economies. In 2001 for Latin America and the Caribbean countries it was created the Bogota Manual

Many scholars claim that there is a great bias towards the "science and technology mode" (S&T-mode or STI-mode), while the "learning by doing, using and interacting mode" (DUI-mode) is widely ignored. For an example, that means you can have the better high tech or software, but there are also crucial learning tasks important for innovation. But these measurements and research are rarely done.

A common industry view (unsupported by empirical evidence) is that comparative cost-effectiveness Cost-effectiveness analysis is a form of economic analysis that compares the relative costs and outcomes (effects) of two or more courses of action. Cost-effectiveness analysis is distinct from cost-benefit analysis, which assigns a monetary value to the measure of effect. Cost-effectiveness analysis is often used in the field of health services, research (CER) is a form of price control which, by reducing returns to industry, limits R&D expenditure, stifles future innovation and compromises new products access to markets.^[15] Some academics claim the CER is a valuable value-based measure of innovation which accords truly significant advances in therapy (those that provide 'health gain') higher prices than free market mechanisms.^[16] Such value-based pricing has been viewed as a means of indicating to industry the type of innovation that should be rewarded from the public purse.^[17] The Australian For at least 40,000 years before European settlement in the late 18th century, Australia was inhabited by indigenous Australians, who belonged to one or more of the roughly 250 language groups. After sporadic visits by fishermen from the immediate north and discovery by Dutch explorers in 1606, Australia's eastern half was claimed by the British academic Thomas Alured Faunce Thomas Alured Faunce is an Associate Professor jointly in the College of Law and Medical School at the Australian National University (ANU) at Canberra Australia has developed the case that national comparative cost-effectiveness Cost-effectiveness analysis is a form of economic analysis that compares the relative costs and outcomes (effects) of two or more courses of action. Cost-effectiveness analysis is distinct from cost-benefit analysis, which assigns a monetary value to the measure of effect. Cost-effectiveness analysis is often used in the field of health services, assessment systems should be viewed as measuring 'health innovation' as an evidence-based concept distinct from valuing innovation through the operation of competitive markets (a method which requires strong anti-trust Competition law, known in the United States as antitrust law, are laws that promote or maintain market competition by regulating anti-competitive conduct laws to be effective) on the basis that both methods of assessing innovation in pharmaceuticals A pharmaceutical drug, also referred to as medicine, medication or medicament, can be loosely defined as any chemical substance intended for use in the medical diagnosis, cure, treatment, or prevention of disease are mentioned in annex 2C.1 of the AUSFTA.^[18][19][20]

Political Level Studies

There are several international benchmarking studies of the innovation performance of countries ( above called the political level), Global Innovation Index (below) being one. Other examples are Richard Florida´s index for the Creative Class and the Innovation Capacity Index (ICI)[2] published by a large number of international professors working in a collaborative fashion. The top scorers of ICI 2009-2010 being:1.Sweden 82.2, 2. Finland 77.8, 3. United States 3 77.5.

The Global Innovation Index is a global index measuring the level of innovation of a country, produced jointly by The Boston Consulting Group (BCG), the National Association of Manufacturers The National Association of Manufacturers is a lobbying group founded in Cincinnati, Ohio in 1895. It is headquartered in Washington, D.C. with 11 additional offices across the country. It is the nation’s largest industrial trade association, representing small and large manufacturers in every industrial sector and in all 50 states.[citation (NAM), and The Manufacturing Institute (MI), the NAM's nonpartisan research affiliate. NAM describes it as the "largest and most comprehensive global index of its kind".^[21]

The International Innovation Index is part of a large research study that looked at both the business outcomes of innovation and government's ability to encourage and support innovation through public policy. The study comprised a survey of more than 1,000 senior executives from NAM member companies across all industries; in-depth interviews with 30 of the executives; and a comparison of the "innovation friendliness" of 110 countries and all 50 U.S. states. The findings are published in the report, "The Innovation Imperative in Manufacturing: How the United States Can Restore Its Edge."^[22]

The report discusses not only country performance but also what companies are doing and should be doing to spur innovation. It looks at new policy indicators for innovation, including tax incentives and policies for immigration Immigration is the introduction of new people into a habitat or population. It is a biological concept and is important in population ecology, differentiated from emigration and migration, education Education in the largest sense is any act or experience that has a formative effect on the mind, character or physical ability of an individual. In its technical sense, education is the process by which society deliberately transmits its accumulated knowledge, skills and values from one generation to another and intellectual property Intellectual property is a term referring to a number of distinct types of creations of the mind for which property rights are recognised--and the corresponding fields of law. Under intellectual property law, owners are granted certain exclusive rights to a variety of intangible assets, such as musical, literary, and artistic works; discoveries.

The latest index was published in March 2009.^[23] To rank the countries, the study measured both innovation inputs and outputs. Innovation inputs included government and fiscal policy Fiscal policy can be contrasted with the other main type of macroeconomic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the supply of money. The two main instruments of fiscal policy are government expenditure and taxation. Changes in the level and composition of taxation and government spending, education policy and the innovation environment. Outputs included patents, technology transfer, and other R&D results; business performance, such as labor productivity and total shareholder returns; and the impact of innovation on business migration and economic growth. The following is a list of the twenty largest countries (as measured by GDP) by the International Innovation Index:

Public awareness

Public awareness of innovation is an important part of the innovation process. This is further discussed in the emerging fields of innovation journalism and innovation communication.

See also

• Commercial Operations Management
• Creative destruction
• Creative problem solving
• Theories of technology
• Deployment
• Diffusion (anthropology)
• Ecoinnovation
• Emerging technologies
• List of emerging technologies
• List of Russian inventors
• Hype cycle
• Individual capital
• Induced innovation
• Information revolution
• Ingenuity
• Invention
• Innovation Economics
• Innovation Saturation
• Innovation system
• International Innovation Index
• Knowledge economy
• Open Innovation
• Patent
• Public domain
• Research
• Technology Life Cycle
• Technological innovation system
• Timeline of historic inventions
• Toolkits for User Innovation
• User innovation
• Value network

References

• Barras, R. (1984). "Towards a theory of innovation in services". Research Policy 15: 161–73. doi:10.1016/0048-7333(86)90012-0.
• Byrd, Jacqueline (2003). The Innovation Equation – Building Creativity & Risk Taking in your Organization. San Francisco, CA: Jossey-Bass/Pfeiffer – Aprint. ISBN 0-7879-6250-3.
• Cabral, Regis (1998). "Refining the Cabral-Dahab Science Park Management Paradigm". Int. J. Technology Management 16 (8): 813–818. doi:10.1504/IJTM.1998.002694. .
• Cabral, Regis (2003). "Development, Science and". in Heilbron, J.. The Oxford Companion to The History of Modern Science. New York: Oxford University Press. pp. 205–207.
• Chakravorti, Bhaskar (2003). The Slow Pace of Fast Change: Bringing Innovations to Market in a Connected World. Boston, MA: Harvard Business School Press.
• Chesbrough, Henry William (2003). Open Innovation: The New Imperative for Creating and Profiting from Technology. Boston, MA: Harvard Business School Press.. ISBN 1-57851-837-7.
• Christensen, Clayton M. (1997). The Innovator's Dilemma. Boston, MA: Harvard Business School Press. ISBN 0-06-052199-6.
• Christensen, Clayton M. (2002). "The Rules of Innovation". Technology Review 105 (5): 32–38.
• Davila, Tony; Marc J. Epstein and Robert Shelton (2006). Making Innovation Work: How to Manage It, Measure It, and Profit from It. Upper Saddle River: Wharton School Publishing. ISBN 0-13-149786-3.
• Mckeown, Max (2008). The Truth About Innovation. London: Prentice Hall. ISBN 978-0273719120.
• Dosi, Giovanni (1982). "Technological paradigms and technological trajectories". Research Policy 11 (3): 147–162.
• Ettlie, John E. (2006). Managing Innovation (2nd ed.). Butterworth-Heineman, an imprint of Elsevier. ISBN 0-7506-7895-X.
• Evangelista, Rinaldo (2000). "Sectoral patterns of technological change in services, economics of innovation". Economics of Innovation and New Technology 9: 183–221. doi:10.1080/10438590000000008.
• Fagerberg, Jan (2004). "Innovation: A Guide to the Literature". in Fagerberg, Jan, David C. Mowery and Richard R. Nelson. The Oxford Handbook of Innovations. Oxford University Press. pp. 1–26. ISBN 0-19-926455-4.
• Freeman, Chris (1984). "Prometheus Unbound". Futures 16 (5): 494–507.. doi:10.1016/0016-3287(84)90080-6.
• Freeman, Chris (1982). The Economics of Industrial Innovation. Frances Pinter, London.
• Hesselbein, Frances, Marshall Goldsmith, and Iain Sommerville, ed (2002). Leading for Innovation: And organizing for results. Jossey-Bass. ISBN 0–7879–5359–8.
• Hitcher, Waldo (2006). Innovation Paradigm Replaced. Wiley.
• Luecke, Richard; Ralph Katz (2003). Managing Creativity and Innovation. Boston, MA: Harvard Business School Press. ISBN 1-59139-112-1.
• Mansfield, Edwin (1985). "How Rapidly Does New Industrial Technology Leak Out?". Journal of Industrial Economics (The Journal of Industrial Economics, Vol. 34, No. 2) 34 (2): 217–223.. doi:10.2307/2098683. http://jstor.org/stable/2098683.
• Miles, Ian (2000). "Services Innovation: Coming of Age in the Knowledge Based Economy". International Journal of Innovation Management 14 (4): 371–389.. doi:10.1016/S1363-9196(00)00020-2.
• Miles, Ian (2004). "Innovation in Services". in Fagerberg, Jan, David C. Mowery and Richard R. Nelson. The Oxford Handbook of Innovations. Oxford University Press. pp. 433–458. ISBN 0–19–926455–4.
• Nelson, Richard; Winter, S (1977). "In search of a useful theory of Innovation". Research Policy 6 (1): 36–76. doi:10.1016/0048-7333(77)90029-4.
• OECD The Measurement of Scientific and Technological Activities. Proposed Guidelines for Collecting and Interpreting Technological Innovation Data. Oslo Manual. 2nd edition, DSTI, OECD / European Commission Eurostat, Paris 31 Dec 1995.
• O'Sullivan, David (2002). "Framework for Managing Development in the Networked Organisations". Journal of Computers in Industry (Elsevier Science Publishers B. V.) 47 (1): 77–88. doi:10.1016/S0166-3615(01)00135-X. ISSN 0166–3615.
• Rogers, Everett M. (1962). Diffusion of Innovation. New York, NY: Free Press.
• Rosenberg, Nathan (1975). Perspectives on Technology. Cambridge, London and N.Y.: Cambridge University Press.
• Sarkar, Soumodip (2007). Innovation, Market Archetypes and Outcome- An Integrated Framework. Springer Verlag. ISBN 379081945X.
• Schumpeter, Joseph (1934). The Theory of Economic Development. Cambridge, MA: Harvard University Press.
• Scotchmer, Suzanne (2004). Innovation and Incentives. Cambridge, MA: MIT Press.
• Silvestre, Bruno dos Santos; Dalcol, Paulo Roberto Tavares. "Geographical proximity and innovation: Evidences from the Campos Basin oil & gas industrial agglomeration—Brazil". Technovation (Elsevier) 29 (8): 546–561. doi:10.1016/j.technovation.2009.01.003. ISSN 0166-4972.
• Stein, Morris (1974). Stimulating creativity. New York: Academic Press.
• Utterback, James M.; Fernando F. Suarez. (1993). "Innovation, Competition, and Industry Structure". Research Policy 22 (1): 1–21. doi:10.1016/0048-7333(93)90030-L.
• Veneris, Yannis (1984). The Informational Revolution, Cybernetics and Urban Modelling, PhD Thesis. University of Newcastle upon Tyne, UK.
• Veneris, Yannis (1990). "Modeling the transition from the Industrial to the Informational Revolution". Environment and Planning A 22 (3): 399–416. doi:10.1068/a220399.
• von Hippel, Eric (2005). Democratizing Innovation. MIT Press. ISBN 0-262-22074-1.
• Woodman, Richard .W.; John E. Sawyer, Ricky W. Griffin (1993). "Toward a theory of organizational creativity". Academy of Management Review (The Academy of Management Review, Vol. 18, No. 2) 18 (2): 293–321. doi:10.2307/258761. http://jstor.org/stable/258761.
• Wolpert, John (2002). "Breaking Out of the Innovation Box". Harvard Business Review August.

Inline references

1. ^ McKeown, Max (2008). The Truth About Innovation. London, UK: Prentice Hall. ISBN 0273719122.
2. ^ Fagerberg et al. (2004).
3. ^ Baregheh A, Rowley J and Sambrook S.(2009) Towards a multidisciplinary definition of innovation, Management decision, vol. 47, no. 8, pp. 1323–1339
4. ^ Schumpeter, Joseph (1934). The Theory of Economic Development. Harvard University Press, Boston.
5. ^ Freeman, Christopher (1982). The Economics of Industrial Innovation. Frances Pinter, London..
6. ^ Dosi, Giovanni (1982). "Technological paradigms and technological trajectories". Research Policy 11 (3): 147–162.
7. ^ Regis Cabral (1998, 2003)
8. ^ von Hippel, Eric (1988). The Sources of Innovation. Oxford University Press. ISBN 0–19–509422–0.
9. ^ "Robotics in practice: Future capabilities" by Joseph F. Engelberger.: in "Electronic Servicing & Technology" magazine 1982 August
10. ^ http://www.u-stir.eu
11. ^ Tuomi, Ilkka (2002). Networks of Innovation. Oxford University Press. ISBN 978-0-19-925698-3.
12. ^ Christensen, Clayton (2002). "The Rules of Innovation". Technology Review 105 (5): 32–38.
13. ^ Thomke, Stefan H. (2003) Experimentation Matters: Unlocking the Potential of New Technologies for Innovation. Harvard Business School Press. ISBN 1578517508. [1]
14. ^ Khan, Arshad M.; V. Manopichetwattana (1989). "Innovative and Noninnovative Small Firms: Types and Characteristics". Management Science 35 (5): 597–606.. doi:10.1287/mnsc.35.5.597.
15. ^ Chalkidou K, Tunis S, Lopert R, Rochaix L, Sawicki PT, Nasser M, Xerri B. Comparative Effectiveness research and Evidence-Based Health Policy: Experience from Four Countries. The Milbank Quarterly 2009; 87(2): 339-367 at 362-363.
16. ^ Roughead E, Lopert R and Sansom L. Prices for innovative pharmaceutical products that provide health gain: a comparison between Australia and the United States Value in Health 2007;10:514-20
17. ^ Hughes B. Payers Growing Influence on R&D Decision Making. Nature Reviews Drugs Discovery 2008; 7: 876-78.
18. ^ Faunce T, Bai J and Nguyen D. Impact of the Australia-US Free Trade Agreement on Australian medicines regulation and prices. Journal of Generic Medicines 2010; 7(1): 18-29
19. ^ Faunce TA. Global intellectual property protection of “innovative” pharmaceuticals:Challenges for bioethics and health law in B Bennett and G Tomossy (eds) Globalization and Health Springer 2006 http://law.anu.edu.au/StaffUploads/236-Ch%20Globalisation%20and%20Health%20Fau.pdf . Retrieved 18 June 2009.
20. ^ Faunce TA. Reference pricing for pharmaceuticals: is the Australia-United States Free Trade Agreement affecting Australia's Pharmaceutical Benefits Scheme? Medical Journal of Australia. 2007 Aug 20;187(4):240-2.
21. ^ "America Ranks #8 In New Global Innovation Index". Nam.org. http://www.nam.org/NewsFromtheNAM.aspx?DID={8D10F9A6-28AE-456D-97EA-340146144190}. Retrieved 2009-08-28.
22. ^ "U.S. Ranks #8 In Global Innovation Index". Industryweek.com. 2009-03-10. http://www.industryweek.com/articles/u-s-_ranks_8_in_global_innovation_index_18638.aspx. Retrieved 2009-08-28.
23. ^ "The Innovation Imperative in Manufacturing: How the United States Can Restore Its Edge" (PDF). http://www.nam.org/innovationreport.pdf. Retrieved 2009-08-28.

External links

• Academic article on Being a Systems Innovator on SSRN
• "Communication on Innovation policy: updating the Union's approach in the context of the Lisbon strategy" – The European Commission.
• Commission proposes 2009 to become European Year of Creativity and Innovation – The European Commission.
• PRO-INNO Europe - Innovation policy analysis and development throughout Europe (Initiative of the European Commission).
• Innova Pulse non profit/non commercial org promoting strategic innovation – Articles and resources.
• 12 Innovations that Changed the World

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