93  Innovations in Business

93.1 Concept

Innovation = the introduction of new ideas, products, services, processes or business models that create value. Joseph Schumpeter (1934) distinguished invention (new idea) from innovation (commercialised idea). Peter Drucker in Innovation and Entrepreneurship (1985): “Innovation is the specific tool of entrepreneurs.”

93.2 Types of Innovation

TipTypes of innovation
Type Description Example
Product New / improved goods/services iPhone
Process New methods of production Toyota Production System
Marketing New marketing methods Direct-to-consumer
Organisational New structures / practices Holacracy
Business Model New value/revenue logic Netflix subscription
Service New customer experiences Airbnb
Open Innovation Cross-organisational P&G Connect+Develop
Frugal / Jugaad Resource-constrained Tata Nano, Mitticool
Reverse Emerging-to-developed GE health innovations from India

93.3 Schumpeter’s Five Types

TipSchumpeter’s 5 types of innovation
  1. New product.
  2. New method of production.
  3. New market.
  4. New source of supply.
  5. New organisation of industry.

93.4 Radical vs Incremental

TipRadical vs Incremental
  • Radical / Breakthrough — paradigm shift (electric vehicles, blockchain).
  • Incremental — small improvements (smartphone yearly).
  • Architectural — reconfigure existing components (Henderson-Clark).
  • Disruptive — Christensen (Topic 88).
  • Sustaining — improvement of existing.

93.5 Innovation Frameworks

TipInnovation frameworks
  • Doblin’s 10 Types of Innovation — Profit Model, Network, Structure, Process, Product Performance, Product System, Service, Channel, Brand, Customer Engagement.
  • Three Horizons (McKinsey) — Core (H1), Adjacent (H2), Transformational (H3).
  • Innovation Ambition Matrix.
  • Henderson-Clark (1990) — components × architecture.
  • Christensen Disruptive Innovation.
  • Blue Ocean Strategy — Kim-Mauborgne.
  • Design Thinking — IDEO, Stanford d.school.
  • Jobs-to-be-Done — Christensen.
  • Open Innovation — Chesbrough.
  • Triple Helix — university-industry-government.
  • Innovation Funnel / Stage-Gate — Robert Cooper.

93.6 Design Thinking

TipDesign thinking 5 stages (Stanford d.school)
  1. Empathise.
  2. Define.
  3. Ideate.
  4. Prototype.
  5. Test.

Also: Double Diamond (UK Design Council) — Discover · Define · Develop · Deliver.

93.7 Blue Ocean Strategy

TipBlue Ocean — Kim & Mauborgne (2005)

Create uncontested market space; ERRC Grid — Eliminate · Reduce · Raise · Create. Examples: Cirque du Soleil, Yellow Tail wine, Tata Nano.

93.8 Frugal / Jugaad Innovation

Jugaad = Hindi for “creative improvisation” — books: Navi Radjou, Jaideep Prabhu & Simone Ahuja’s “Jugaad Innovation” (2012). Frugal innovation = doing more with less. Examples: Tata Nano, Aravind Eye Care, Mitticool refrigerator, Jaipur Foot.

93.9 Reverse Innovation

Vijay Govindarajan (Tuck/Dartmouth) and Chris Trimble — innovations from emerging markets spreading to developed ones. Examples: GE Mac 400 ECG (developed in India), Tata Nano concept.

93.10 Indian Innovation Examples

TipIndian innovation cases
  • Tata Nano — frugal car.
  • Aravind Eye Care — service innovation.
  • Aadhaar — DPI.
  • UPI · ONDC — payments + commerce platforms.
  • Jio — disruption in telecom.
  • Mitticool — clay refrigerator (Mansukh Prajapati).
  • Jaipur Foot — Dr P.K. Sethi.
  • e-Choupal — ITC’s farmer platform.
  • Amul — milk cooperative.
  • Patanjali — Ayurveda mass market.
  • Decathlon-like — Decathlon in India.
  • Reliance Jio — telecom.
  • Indian R&D: ISRO Mars Orbiter (cheap), Mangalyaan, Chandrayaan-3 soft landing.

93.11 National Innovation System (India)

TipIndia NIS
  • Atal Innovation Mission (AIM) — NITI Aayog (2016).
  • Atal Tinkering Labs in schools.
  • Atal Incubation Centres.
  • India Innovation Index — NITI Aayog.
  • NIPER — pharma R&D.
  • NIT/IITs — research.
  • CSIR labs — 38 labs.
  • DRDO.
  • ISRO.
  • BIRAC — biotech industry research.
  • DST, DBT funding.
  • TIFAC — Technology Information Forecasting & Assessment Council.
  • MeitY’s TIDE 2.0.
  • National Research Foundation (NRF) — Anusandhan 2023.
  • India ranks 39th in Global Innovation Index 2024 (was 81st in 2015).

93.13 Practice Questions

Q 01SchumpeterMedium

Schumpeter (1934) listed how many types of innovation?

  • A5
  • B3
  • C10
  • D7
View solution
Correct Option: A
Product, process, market, supply, organisation.
Q 02DoblinHard

Doblin's framework identifies how many types?

  • A10
  • B5
  • C7
  • D12
View solution
Correct Option: A
10 types (Larry Keeley).
Q 03Blue OceanMedium

Blue Ocean Strategy is by:

  • AKim & Mauborgne
  • BChristensen
  • CPorter
  • DDrucker
View solution
Correct Option: A
W. Chan Kim & Renée Mauborgne (2005).
Q 04Design ThinkingMedium

Design Thinking has how many Stanford d.school stages?

  • A5
  • B3
  • C7
  • D4
View solution
Correct Option: A
Empathise, Define, Ideate, Prototype, Test.
Q 05JugaadMedium

"Jugaad Innovation" (2012) is by:

  • ARadjou, Prabhu & Ahuja
  • BChristensen
  • CGovindarajan
  • DPrahalad
View solution
Correct Option: A
Navi Radjou, Jaideep Prabhu, Simone Ahuja.
Q 06Henderson-ClarkHard

Architectural Innovation framework is by:

  • AHenderson & Clark
  • BDrucker
  • CChesbrough
  • DPorter
View solution
Correct Option: A
Rebecca Henderson & Kim Clark (1990).
Q 07Reverse InnovationHard

Reverse Innovation concept is by:

  • AVijay Govindarajan
  • BPrahalad
  • CChristensen
  • DMintzberg
View solution
Correct Option: A
Govindarajan-Trimble.
Q 08Stage-GateMedium

Stage-Gate process is by:

  • ARobert Cooper
  • BSchumpeter
  • CPorter
  • DDrucker
View solution
Correct Option: A
Cooper popularised Stage-Gate.
Q 09ERRCHard

ERRC grid in Blue Ocean stands for:

  • AEliminate-Reduce-Raise-Create
  • BExamine-Run-Re-launch-Close
  • CEnable-Re-design-Re-cost-Cancel
  • DEmpower-Re-engineer-Restructure-Create
View solution
Correct Option: A
Eliminate-Reduce-Raise-Create.
Q 10MangalyaanMedium

India's Mangalyaan stands out for:

  • AFrugal innovation
  • BFirst moon landing
  • CManned Mars
  • DSpace tourism
View solution
Correct Option: A
Mars Orbiter — at ~$75 m, cheaper than Hollywood film "Gravity".
Q 11AIMMedium

Atal Innovation Mission is under:

  • ANITI Aayog
  • BRBI
  • CDST
  • DMoSPI
View solution
Correct Option: A
NITI Aayog 2016.
Q 12GIIHard

Global Innovation Index is published by:

  • AWIPO with INSEAD/Cornell
  • BWTO
  • CIMF
  • DOECD
View solution
Correct Option: A
WIPO collaboration; India ranked 39th in 2024 (was 81st in 2015).
Q 13e-ChoupalMedium

e-Choupal is by:

  • AITC
  • BHUL
  • CTata
  • DReliance
View solution
Correct Option: A
ITC's farmer empowerment platform.
Q 14AravindHard

Aravind Eye Care is famous for:

  • AService / process innovation in eye surgery
  • BFDI
  • CPharma R&D
  • DGenome editing
View solution
Correct Option: A
Dr Venkataswamy; Madurai; assembly-line cataract surgery.
Q 15MatchHard

Match:

(i) Disruptive Innovation (a) Govindarajan
(ii) Reverse Innovation (b) Kim-Mauborgne
(iii) Blue Ocean (c) Christensen
(iv) Open Innovation (d) Chesbrough
  • A(i)-(c), (ii)-(a), (iii)-(b), (iv)-(d)
  • B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
  • C(i)-(b), (ii)-(c), (iii)-(d), (iv)-(a)
  • D(i)-(d), (ii)-(a), (iii)-(c), (iv)-(b)
View solution
Correct Option: A
Disruptive—Christensen; Reverse—Govindarajan; Blue Ocean—Kim-Mauborgne; Open—Chesbrough.

93.13.1 Advanced Format Questions

AR 1Assertion-ReasonHard

A: Blue Ocean Strategy creates uncontested market space.
R: ERRC grid eliminates, reduces, raises, and creates value-curve elements.

  • ABoth true; R explains A
  • BBoth true; R does not explain A
  • CA true, R false
  • DA false, R true
View solution
Correct Option: A
S 1Statement-basedMedium

Innovation types: (i) Product. (ii) Process. (iii) Business model. (iv) Open.

  • AAll four
  • B(i) and (ii) only
  • C(iii) and (iv) only
  • D(i) only
View solution
Correct Option: A
S 2Statement-basedHard

Design Thinking (Stanford d.school): (i) Empathise. (ii) Define. (iii) Ideate. (iv) Prototype. (v) Test.

  • AAll five
  • B(i), (ii), (iii) only
  • C(iv) and (v) only
  • D(i) only
View solution
Correct Option: A

93.14 Quick Recall

ImportantQuick recall
  • Innovation = commercialised invention (Schumpeter, Drucker 1985).
  • Schumpeter’s 5: Product · Process · Market · Supply · Organisation.
  • Types: Product · Process · Marketing · Organisational · Business Model · Service · Open · Frugal/Jugaad · Reverse.
  • Modes: Radical · Incremental · Architectural (Henderson-Clark 1990) · Disruptive (Christensen) · Sustaining.
  • Frameworks: Doblin 10 Types · McKinsey 3 Horizons / 70-20-10 · Ambition Matrix · Christensen Disruption · Blue Ocean (Kim-Mauborgne 2005) · Design Thinking (IDEO, Stanford d.school) · Jobs-to-be-Done · Open Innovation (Chesbrough) · Triple Helix · Stage-Gate (Cooper).
  • Design Thinking 5: Empathise · Define · Ideate · Prototype · Test; Double Diamond.
  • Blue Ocean: ERRC Eliminate-Reduce-Raise-Create.
  • Frugal/Jugaad — Radjou-Prabhu-Ahuja (2012); Reverse — Govindarajan.
  • India examples: Tata Nano · Aravind Eye Care · Aadhaar · UPI · ONDC · Jio · Mitticool · Jaipur Foot · e-Choupal · Amul · Patanjali · ISRO Mangalyaan/Chandrayaan-3.
  • India NIS: AIM (NITI 2016) · Atal Tinkering Labs · Atal Incubation · NIPER · IITs/NITs · CSIR (38 labs) · DRDO · ISRO · BIRAC · DST/DBT · TIFAC · TIDE 2.0 · NRF Anusandhan 2023 · STIP 2023 · India 39th in GII 2024.
  • Modern: Gen-AI design · ESG · Circular · Crowdsourced · Hackathons · Govt innovation labs · University-industry · Accelerators · Frugal+Tech Bharat · Quantum/Bio/Nano · AR/VR design.