Unit -1

Innovation-The word “innovation” is derived from the Latin verb innovare, which means to
renew. Innovation is the creation, development and implementation of a new product, process or
service, with the aim of improving efficiency, effectiveness or competitive advantage.

Innovation means to improve or to replace something, for example, a process, a product, or a

service. ... Innovation is a process by which a domain, a product, or a service is renewed and
brought up to date by applying new processes, introducing new techniques, or establishing
successful ideas to create new value.

Why is innovation so important?

Organizations have several options to increase their competitiveness: they can strive for price
leadership or develop a strategy of differentiation. In both cases, innovation is essential.

 Companies that choose price leadership must secure their long-term competitiveness by
developing innovative, highly efficient processes. Process optimization and continuous
improvement in terms of costs are important for them.
 Companies that strive for a differentiation strategy need innovation to develop unique
distinguishing features to their competitors.
 Many start-ups launch their activities by developing an innovative product or service.

Continuous innovation is, therefore, crucial for all companies. The main difference is in the
focus of the innovation strategy, which varies considerably from company to company.
The Right Mindset for Innovation

Innovation requires more creativity and more willingness to take risks than the implementation
of typical projects. To successfully realize innovation projects, a different mindset is needed.

Break the rules!

With traditional approaches and conventional methods, you will often not get anywhere in the
field of innovation. Challenge the status quo consistently! And explore new paths off the beaten
track.
Collect ideas everywhere!
Innovation projects constantly need new ideas: To overcome obstacles, to change concepts, and
to optimize strategies.

Believe in the impossible!

Imagine how your innovation will look like in reality. And believe that you will be able to
overcome all obstacles on the way to realization.

Put together an innovation team of individuals with different perspectives and thinking
styles!
Innovation needs the diversity of various competencies and diverse ways of thinking.
 The Different Types of Innovation
In the context of businesses, there are different types of innovation:

Organizational Innovation

Organizational innovation refers to the development of a new organizational strategy that will
somehow change a company’s business practices, as well as the way its workplace is organized
and its relationship with external stakeholders.

 Examples of organizational innovations:

 The first companies adopting a four-day week working schedule of only 4 days per week
 The first companies that started to use the power of digital and allowing employees to skip the
office and work from home (depending on the role)

Process Innovation

Process innovation is about implementing a new or improved production or delivery approach,

including changes in operational methods, the techniques used and the equipment or software.

 Examples of process innovations: 

 The first firms betting on SaaS (software as a service) technology, and using, for instance, cloud
contact centers from Talkdesk, changed the way their customer support processes used to be
organized
 The first hotels that decided to make decisions based on big data using, for instance, insights
from the Climber Hotel, made changes on their decision-making approach

Product Innovation

Product innovation is the introduction of a new or improved good or service. These inventions or
changes may have to do with improving technical specifications, the materials or the software
used or even advancing on UX (user experience). However, product innovations don’t need to
improve all functions or performance specifications. An improvement to or addition of a new
function can also be merged with a loss of other functions or the downgrade of some other
specifications.
Moreover, a product innovation must add available to potential users but doesn’t necessarily
need to generate sales. Because if it did, then innovations with low demand or, for instance,
digital products like apps that are free would be excluded. At the same time, routine changes or
updates aren’t considered product innovations as they are only correcting errors or making some
seasonal changes.

 Examples of product innovations:

 Lego has been changing the materials of its famous bricks to biodegradable oil-based plastics
 The first electric vehicles introduced in the car’s market were also an innovation, and new
batteries with longer ranges that keep coming out are also an example of innovation
 Marketing Innovation

Marketing innovation means developing a new marketing strategy that produces changes
in, for instance, the way a product is designed or packed, or even other decisions regarding
price or promotion.

 Example of marketing innovation:

 Haagen Dazs’ new waste-free container

Eco-innovation And The Sustainability Approach: A 5th Type Of Innovation

Eco-innovation is an innovation resulting in significant progress towards the 2030
goals sustainable development established by the UN. In practice, it means reducing the
impacts of our production modes on the environment, improving nature’s resilience to
environmental stresses, or achieving a larger efficient and responsible use of natural resources.

it helps to address challenges such as climate change, resource scarcity.

Creativity

Creativity is defined as the tendency to generate or recognize ideas, alternatives, or possibilities

that may be useful in solving problems, communicating with others, and entertaining ourselves
and others.

Examples of creative thinking skills include: problem solving, writing, visual art,

communication skills, and open-mindedness. 

4 Types of Creativity

1) Deliberate and Cognitive creativity

People who possess deliberate and cognitive characteristics are purposeful. They have a great
amount of knowledge about a particular subject and combine their skills and capabilities to
prepare a course of action to achieve something. This type of creativity built when people work
for a very long time in a particular area.
2) Deliberate And Emotional Creativity

People who are categorized as deliberate and emotional let their work influenced by their state of
emotions. These types of creative people are very emotional and sensitive in nature.
These individuals prefer relatively quiet and personal time to reflect and they usually have a
habit of diary writing. However, they are equally logical and rational in decision making.

3) Spontaneous and Cognitive creativity

There are times when you spend a long time to crack a problem but can’t think of any solution.
For example, when you want to make a schedule for a month to get a job done, but you can’t
seem to think of any possible way and when you are watching television and having your relaxed
time and suddenly you think of a solution and everything falls in place. The same case happened
with the great scientist Isaac Newton. He got the idea about the law of gravity when an apple hit
his head while he was sitting under a tree and relaxing.

4) Spontaneous And Emotional Creativity

Spontaneous and emotional creativity takes place in the “amygdala” part of the human brain.
Amygdala is responsible for all emotional type of thinking in the human brain. Spontaneous
ideas and creativity happen when conscious and Prefrontal brain is resting. This type of
creativity is mostly found in a great artist such as musicians, painters, and writers etc.

2 Main Components of Creativity

1) Originality

The method or idea must be new and unique. It should not be the extension of something, which
already exists. However, one can take inspiration from the already existent methods and ideas to
fabricate something new and unique.

2) Functionality

Another important component of creativity is its functionality. A creative idea must work and
produce results, otherwise, the whole effort will be in vain.

Difference between Creativity & Innovation

Creativity goes hand in hand with innovation. And there is no innovation without creativity.

Creativity is the novel step of being the first to identify that something might be possible in
the first place. But innovation is the action of putting things into practical reality.

The main difference between creativity and innovation is the focus. Creativity is about

unleashing the potential of the mind to conceive new ideas. ... Innovation is about introducing
change into relatively stable systems. It's also concerned with the work required to make an idea
viable.

The primary difference between creativity and innovation is that the former refers to conceiving

a new idea while the latter involves converting that idea into a marketable commodity. 
 BASIS FOR
CREATIVITY INNOVATION
COMPARISON

Meaning Creativity is an act of creating Innovation is the introduction of

new ideas, imaginations and something new and effective into
possibilities. the market.

Process Imaginative Productive

Quantifiable No Yes

Related to Thinking something new Introducing something new

Money Consumption No Yes

Risk No Yes

Role of Creativity & Innovation in industry

Creativity and innovation can be the pathways for your business to reach new heights of
product value, process improvement, productivity, marketing success, and internal harmony.
The creative process can lead to novel ideas and concepts.

Creativity goes hand in hand with innovation. ... Encouraging the employees to think outside of
the box and giving them time and resources to explore new areas for innovative ideas is the key
to cost-effective business solutions. Creativity improves the process of solving problems.

Over the last decades, innovation and creativity have become critical skills for achieving success
in developed economies. The need for creative problem solving has arisen as more and more
management problems require creative insights in order to find suitable solutions.

Creativity and innovation within a well-run companies have always been recognized as a sure
path to success. Stimulating creativity and exploring completely new and unknown before
territories lead as result to increasing the productivity of the organisation. Encouraging the
employees to think outside of the box and giving them time and resources to explore new areas
for innovative ideas is the key to cost-effective business solutions.
Dynamics of creative thinking

Despite six decades of creative cognition research, measures of creative ideation have heavily
relied on divergent thinking tasks, which still suffer from conceptual, design, and psychometric
shortcomings. These shortcomings have greatly impeded the accurate study of creative ideation,
its dynamics, development, and integration as part of a comprehensive psychological assessment.
After a brief overview of the historical and current anchoring of creative ideation measurement,
overlooked challenges in its most common operationalization (i.e., divergent thinking tasks
framework) are discussed. They include (1) the reliance on a single stimulus as a starting point of
the creative ideation process (stimulus-dependency), (2) the analysis of response quality based
on a varying number of observations across test-takers (fluency-dependency), and (3) the
production of “static” cumulative performance indicators. 
Process of Design Thinking

1. Empathize

The Design Thinking process starts with empathy. In order to create desirable products and
services, you need to understand who your users are and what they need. What are their
expectations in relation to the product you’re designing? What challenges and pain-points do
they face within this context?

2. Define

In the second stage of the Design Thinking process, you’ll define the user problem that you
want to solve. First, you’ll gather all of your findings from the empathize phase and start piecing
them together. What common themes and patterns did you observe? What user needs and
challenges consistently came up?

3. Ideate

The third stage in the Design Thinking process consists of ideation—or generating
ideas. By this point, you know who your target users are and what they want from your product.
You also have a clear problem statement that you’re hoping to solve. Now it’s time to come up
with possible solutions.
 4. Prototype

In the fourth stage of the Design Thinking process, you’ll turn your ideas from stage three
into prototypes. A prototype is essentially a scaled-down version of a product or feature—be it a
simple paper model or a more interactive digital representation.

5. Test

The fifth step in the Design Thinking process is dedicated to testing: putting your
prototypes in front of real users and seeing how they get on. During the testing phase, you’ll
observe your target users—or representative users—as they interact with your prototype. You’ll
also gather feedback on how your users felt throughout the process.

Implementing Design Thinking Process to drive innovation

Design thinking is linked to creating an improved future and seeks to build ideas up – unlike
critical thinking, which breaks them down. ... Design thinking informs human-
centred innovation and begins with developing an understanding of customers' or users' unmet
or unarticulated needs.

4 Steps to Implementing Design Thinking at Your Organization

1. Focus on the problem. ...
2. Develop design thinking skills on your team. ...
3. Have (or start having) more debriefs. ...
4. Embrace the feedback loop.
Case Study

Design Thinking Applied - A Real-life Case Study

Intro: Project X

Some time ago, I found myself at a meeting with an entrepreneur, a few

managers, and many ideas flying around the room. Their direct competitor
had recently released a new application and the tension was palpable. The
company wanted to go out with something new on the market, to avoid losing
ground to their competitor.
They prepared a document with some requirements, a vague idea of what the
product should look like, and how much should it cost.

“We have to follow what others have done, with a lower price,” the Marketing
Director said. “We have to create a more usable system, which simplifies the
user journey,” added another manager. “We have to change the way we collect
information, simplify it and integrate our processes with third parties,” said
another. “It will take us months,” the technical manager shook his head, who
mentally translated all those requests into hundreds of hours of code to be
implemented.

While I can’t disclose all of the project details, I can disclose that the product
was hub communication software. This piece of software managed different
channels (email to SMS, fax to VoIP) and it was created for the web and
mobile platforms. The product was originally created a few years before, but
its usability was poor. At the time of the launch, the competitor was far ahead
in terms of user experience. Moreover, they had an excellent mobile app,
which was gaining ground in the mobile app store.

Company X was a traditional process driven company, familiar with

traditional projects. It had run a few Agile projects in the past, but it was new
to the idea of creating an MVP and testing it on the market. More notably, they
feared the unknown. What if the new MVP would have an undesirable or
unpredictable effect on their customer user base? This lack of control didn’t
inspire confidence.
The meeting described above and the following ones did not lead to a clear
definition of what the product to be achieved actually was. We only knew that
we had to hit the target as soon as possible.

However as the project progressed and a competitor was beginning to gain

traction, consent from the company was solidifying. Most agreed with the idea
that: “We cannot afford to launch a half-finished product, we need a product
that is working from the start.”

Despite some initial perplexity and fear, this was an opportunity to learn what
would bring real value to their user base and potentially attract more users by
making a streamlined lightweight product.

This prompted the company to look for approaches that they haven’t tried
before, in order to have a complete product built on time even if it’s going to
have only essential features at its launch. We decided to use the Design
Thinking process and focus on the things that would really bring value to the
end user and thus, beat the competition by bringing only what’s necessary to
the customer.
Solution:

Stage 1 - Empathize

Empathizing Phase: The goal of this phase is to understand your customer, by searching and
gathering information about their business. During this phase, we can use several different tools,
such as interviews, focus groups, observations, and surveys.

In the most literal sense, empathy is the ability to understand and share the emotions of others. In
design thinking, empathy is a “deep understanding of the problems and realities of the people
you are designing for.”
Our first step was to ensure that the Highest Paid Person’s Opinion (otherwise known as HiPPO)
was not ruling over everyone else’s. Therefore, together with managers and the founder, we have
compiled a list of possible stakeholders to be involved in the decision-making process.

In a day-long meeting, we compiled the first list of 30 names (between employees, functional
managers, and customers) that could be contacted directly and then we also picked a target
audience of 4000 customers (about 10% of their recurring customer user base).

We tried to “normalize” our target customer base as much as possible, by including diversity in
terms of gender distribution, industry, and other data points. To add an additional level of
complexity, the physical location of the sample to be interviewed were all divided into different
cities and in some cases countries. We now had points of contacts to carry out interviews and
questionnaires.

The group was organized to carry out the interviews remotely, following a scripted set of
questions and some basic rules:
  During the interview, try to use the “5 Whys” technique.
 Try to understand the main “What, How, Why” behind every behavior.

 Make sure the interviewee used a webcam and that there was sufficient distance from the
camera to be able to at least partially include the body language.

 Record all interviews, in case they need to be seen in the future.

We prepared our interview questions with the intention of understanding which main features
should be enhanced or eliminated, such that we could quickly build a new version that responded
to the needs of our users.

For the second group of users, we prepared a series of questions in a Google form. We opted for
multiple-choice questions, with some formulated open-ended questions to facilitate more
interaction from the users, including a question requiring the user to try the new version of the
product just available in closed beta.

To organize the entire information gathering process, we used remote tools that allowed the team
to collect information more easily, including Skype, Zoom, Google Forms, and a digital Kanban
Board where we put all of our activities and tracked their status.

Stage 2 - Define

In our case we wanted to define the following:

 our ideal customers

 their problems

 the solutions to their problems

  the needs and fears of our customers that we had to address

In the design thinking terms, the define phase is where you analyze your observations and
synthesize them into core problems that you have identified.
We had a sufficient database to understand what the real problems were. In addition to the
feedback received in the Empathize phase, it contained points that were highlighted by Company
X employees but had never been pointed out to management, as well as strengths, weaknesses,
and other problems that have never been taken into account.

The next action was to create our User Personas. During this brainstorming phase, we involved
the entire extended team. The brainstorming phase was always performed remotely, using video-
conferencing systems and tools to track the personas and their creation in real time.

For each Persona, we identified their biography, their approach to technology, their use of social
media, preferred brands, their needs, and ideas and speculated on what would have been their
Customer Journey.

After this, we had selected the common client User Personas and had a finished set of data
coming from interviews and surveys. This was the right time to get our hands dirty.

During the definition phase, we tried to transform a generic definition of a problem like, “We
need a product that will increase our sales by 10%,” into a more specific solution like: “Men and
adult women, between 35 and 45 years that are working in an office need to receive
communications that have a legal validity to be sure that the sender is actually who they say they
are.”
At this point in the project process, we had completed brainstorming sessions around our users,
hypothesized solutions, and kept an open mind to every possible innovation. “The only stupid
idea is the one never expressed” was the mantra.

In a short time, bearing in mind who our subjects were, we had a clear view of what was useful
to our users, along with what needs and fears we should address along the customer journey.

We then engaged in building a “User Story Map,” which allowed us to categorize the process of
users, mapping up to themes. For each of the personas, we defined the set of activities, stories,
and tasks that we assumed they must complete during the journey. In doing so, we could quickly
test our idea and understand if it met the core needs. If it did, we could bring it into the market
faster than everyone else which was essential as our competitor was becoming more successful
every day.

Stage 3 - Ideate

Ideation Phase: Using the above information, here the team ideates solutions. There are no silly
or wrong ideas! Everything must be expressed and documented.
One step further from the definition is the Ideation phase, where the key is forming real concepts
and solution, not just abstract definitions.

In design thinking terms, ideation is “the process where you generate ideas and solutions through
sessions such as Sketching, Prototyping, Brainstorming, Brainwriting, Worst Possible Idea, and a
wealth of other ideation techniques.”
Our team was completely remote so we decided to proceed to work in a Lean way when
producing materials and reviewing them. For example, designers and other members of the team
have agreed that to be as fast as possible, the best solution would be to start with drawings on
paper and to share photos of them in the group. Only then we would produce the most interesting
designs in Balsamiq or Axure.

For each sketch that was produced, we gathered information from users, we defined a set of
solutions and we came back to those users (whenever it was possible and as often as it was
possible) to test with them the process and the result.

Stage 4 - Prototype

Prototyping Phase:_ During this phase, something tangible is created, that will allow you to
verify your idea in real life. Don’t overcomplicate and create this MVP as quickly as possible. _

During the prototype phase, it was finally time to make our definitions and ideas come to life. A
prototype is the first, original model of a proposed product, and this is exactly what we set out to
build. By design thinking standards, the prototype stage is where you create an inexpensive,
scaled down versions of the real product to investigate solutions from the previous stages.

After almost 10 days from the beginning of our journey, we arrived at the crucial moment, a
meeting with a developer team where we had a chance to check our assumptions and estimations.
After a session of consultation and definition with the team of developers, we weighed the stories
and understood that the major effort of the development work will be in the development of the
back-end system and interfacing with the legacy systems currently in place. Alongside this, we
also realized that creating the front-end systems will be a much shorter exercise. Thus, we
decided to create a front-end prototype using the components which already existed in the system
to save time.
We had a time limit of 3 days to have a first version of the prototype ready. This prototype had to
reflect the product as much as possible and maintain the necessary functionality.

After 3 days we had our first version of the prototype ready. It had “fake” data which reflected
the behavior of the software we were aiming to create. Some accessory elements were missing,
but the software in that state visually represented a good percentage of total content planned.

At the end of two weeks of work, we had software that we could try and test with actual users.
We used user experience monitoring software to analyze heat maps and user attention, while
they were navigating our prototype.

Stage 5 - Test

Testing Phase - Verify your idea in real life with actual users. Get feedback. Ask questions on
how to improve it.
After a definition, ideation and a prototype phases it was finally time to see if our product
actually worked in real life. In design thinking terms, testing means putting the complete product
to trial using the best solutions created in the prototyping phase.

In our case, the testing phase did not only take place at the end, but it was a constant loop of
feedback and iteration whenever it was possible. At the end of each accomplished step, we tried
to get feedback from users or customers, before convincing ourselves to move on to the next
phase.

Once the prototype was completed, it was time to test it with the widest possible audience and
check with them how effectively it met their needs, understand their perception, and understand
if it accomplished their goals.
The testing phase specifically included a walkthrough prototype where users were able to see the
new workflow and perform actions, along with a few sessions where the team directly observed
users, while tracking their responses. A simple questionnaire was used to collect conversion rates
across specific features in the platform, where users were asked to score the process from 1-10.

The testing phase was later extended to the whole team and even to some individuals outside the
organization (customers and users) who during the earlier sessions, had willingly consented to
give their feedback on the implementation of the system.

The results of this testing were encouraging. The stakeholders of the Company X were able not
only to see the mockups but to try out and “touch” the product for the very first time. The
extended team had the opportunity to test and verify their assumptions and correct them over
time within the period of two weeks.

Now the final test was waiting: opening it to users and understanding what would happen next.

Stage 6 - Implement

Implementation Phase: This is the phase where all the collected knowledge gets translated into
a final product.
We had data, ideas, personas, and our first tangible prototype. It was time to roll up our sleeves
and start developing. We had a month and a half to implement our new system.

We defined a set of rules to get our MVP implemented in a short period of time:

 We will build only what we had defined, without adding new features.

 We will keep ourselves focus on the main business goal.

  We will use agile methodologies within teams to manage the workload.

To complete the project in time we have brought on a few new team members who had not been
involved in the project since the very early stages of the discovery phase.

We added frontend developers, backend developers, and designers. The new members of the
team were working remotely and it was not possible to bring them all in the same room for the
period of the project, so we made sure that we have the right tools for keeping the
communication going.

The process put in place to manage the work was an Agile one. We divided the remaining time
into several short sprints, with remote meetings every day and updates via Slack during the day
to exchange the ideas and to help each other to solve problems.

We didn’t have a full documentation stored somewhere, but mentally we all had a
comprehensive set of actions, a common shared vision, and goals amongst the team. We all
started to perceive the User Personas to be a real user, with his own needs and problems. Once
our team started to have an aligned vision, we moved onto defining what needed to be done and
when in order to finish the project on time.

The activities were outlined within a User Story Map, to maintain the original evidence of the
personas and the flow we want to give to the product.

The User Story maps were created via three clear steps: identifying the activities, identifying the
steps required to complete the activity, and the list of stories/tasks associated with each. We
sorted the stories according to priority (Must, Should, Could), which dictated what components
made it into the product.
The team was able to proceed in a fast pace since the very beginning of the implementation,
thanks to a clear vision shared by the team, and by the method we employed which enabled the
team to stay on track without direct steering from the management above. Everyone working in
the project had questions from the Design Thinking stages in mind:

 What action each user inside our platform should perform and what were they trying to
achieve?

 Which steps those users should take to reach the final goal?

 Which pain points they had before and how should we avoid them?

This allowed our team to make their own micro-decisions, and steer the product towards its final
goal.

We made two reviews of the work in progress at the end of each sprint and one final release
review at the end of the path, before the product was finally put into production. We used the last
sprint to prepare the infrastructure needed to run and launch the product.

Finally, the users who have used our old product were invited again to try out the new version.
Our product was released into production two months after the meeting in which the idea to
make it was expressed. The product worked, users started using it, and we progressively sent
more new users to this tool instead of the old one. A/B testing showed us that they preferred the
new product, and the project was accepted in the company as a great success.

More importantly, a Design Thinking methodology was finally accepted. We believe this will
have a good and long-lasting impact and will allow them to build better products in the future.

Conclusion
Throughout this case study, we have shown how Design Thinking methodology can be applied
to a real-life problem with a limited time and budget.

Instead of using more traditional approaches and producing things in sequential steps, we have
chosen to iterate through the six design thinking stages. Empathize. Define. Ideate. Prototype.
Test. Implement. This became our mantra and allowed us to produce a very well received
product.

Using Design Thinking has lead so to save time, and in turn, save costs spend on the project. We
were not working on millions of different features, but only on few, well thought through actions
that were clear to everybody in the team. Most importantly, we were able to deliver the product
and value that users needed.

Using Design Thinking process helped us in many different areas:

 From the project management perspective, it enabled us to clearly define the scope of the
project and prevent scope creep.

 From the business perspective, it allowed us to pick the features which bring the real
value to the business.

 From the development perspective, it helped us see the clear goal of what we have to
build before we even started building it.

 From the team perspective, it involved all team members and allowed them to effectively
work together and have their opinion heard in every part of the process.

When we started Design Thinking process was met with skepticism by the client, but when we
finished and got the feedback from our customers, it was immediately clear that the steps we
have laid out have helped us to achieve something that would have been very hard or impossible
otherwise. This was valued by the client and became their internal a flagship project for the
future challenges ahead.