Handout 8: Implications of innovation PowerPoint presentation Unit 320 (B&A 59): Principles of business Handout 8: Implications of innovation

Approaches to innovation Continuous improvement Introducing complementary products or services Product development Exploiting technology to create new or improve old How innovations is approached will depend on the size of an organisation, its financial health, how well it understands its market. Analysing trends in customer expectations and needs can help to identify changes to existing products that will add value for them, eg reducing salt content, or new products, eg a gluten-free range.

Benefits of introducing innovation Being the first in the field Improved competitiveness Increasing/widening market share Increasing productivity Reducing staff turnover Increasing staff morale Attracting new customers/clients

Risks associated with introducing innovation Leakage of ideas Failure – waste of resources Going over budget/risk of return Underestimating development time Over-/underestimation of demand May not be embraced by all customers Leakage of ideas – many ideas are easily and legally copied and having spent money on research and development, successful innovations are likely to be copied by other businesses. Staff involved should sign up to confidentiality agreements. Where possible, ideas should be patented. Failure - waste of resources – a high percentage of new products fail, meaning wastage of time, money and staff resources. Going over budget/risk of return – if the cost of development/implementation is underestimated, then the product/service may have to be priced beyond what the majority of customers are prepared to pay. Underestimating development time – if the development time takes too long then not only are costs increased but the window of opportunity may be missed, eg if the product is seasonal, or a competitor may get there first. Over-/under-estimation of demand – too high and estimated returns will not be achieved; too low means a missed opportunity for profit. May not be embraced by all customers – some customers may not like the new product/service, preferring the old one, or the product may not live up to expectations/hype.

Implications of introducing innovation and change Changed culture Effect on share price Staff training Staff skills gap Impact of change on staff morale

How change affects people Change can cause concern and anxiety to those it affects. Many people are resistant to it. Individuals will respond differently depending on their personalities. Introducing any sort of innovation is likely to impact on the staff of an organisation who will have to embrace the new ways of working.

Encouraging and using ideas from staff Customer-facing staff often the ones to see where improvements could be made. Staff more likely to respond positively to proposed innovations if they have had a hand in them. They will be convinced of benefits to organisation and to themselves. Sharing of ideas breaks down barriers and can be motivating. If team members feel that they are listened to and their ideas are valued, they will be more positive and enthusiastic in embracing innovations. There are many benefits to encouraging creative thinking amongst employees on better ways of working. Teams should be encouraged to be as creative as possible, with no suggestions being rejected out of hand.