Innovation Is NOT Invention


Today, innovation is about many more than new products. It is about reinventing business processes and building entirely new markets that meet untapped customers' needs. Most important, as the internet and globalization widen the pool of new ideas, it's about selecting and executing the right ideas and bringing them market in record time.

In 1990s, innovation was about technology and control of quality and cost. Today, it's about taking corporate organization built for efficiency and rewiring them for creativity and growth. “There are a lot of different thing that fall under the rubric of innovation” , says Vijay Govindarajan, a professor at Dartmouth college's tuck school of Business and author of ten rules for strategic innovators.

This assignment has been prepared by using information from journals, articles, book and websites. I choose the world famous innovative company of Toyota in the automobile industry for the purpose of doing this assignment.

Definition of Innovation

Before introducing the definition of the innovation, it is important to make the distinction between innovation and invention. It is important to be clear that innovation is NOT invention. An innovation is the extension of an invention. If an inventor discovers “the next big thing” but is unable to find anyone to produce it, then “the next big thing” remains undiscovered to the world.

Innovation is defined as the general organizational processes and procedures of generating, considering, and acting on novel and useful insights of leading to significant organizational improvements in terms of improved new business products, services, or internal processes (Wikipedia, 2006)

In the organizational context, innovation is generally understood as a introduction of new thing or method. Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes or services (Luecke and Katz, 2003). Organizational change designates a fundamental and radical reorientation in the way the organization operates (Mc Namara, 2001).

One of the strongest Characteristics of innovation is that Innovation is a continuous process.

Importance of innovation

For anyone to run a successful company that will serve their clients well, achieving great success and meeting targets along the way, they will need to be innovative. This means that they will need to be highly creative and capable of thinking through some of the most difficult problems. This is where innovations companies come into play, by helping people to achieve their true potential, where innovation could become natural. These kinds of companies allow people to be truly innovative in a way that could be hugely successful for their business. It will allow them to increase their revenue, demand and also win themselves awards.

Because those involved with innovations companies will have a lot of worthwhile experience in various different business situations they will be able to give good advice to their clients on how to increase their business performance. But it is not just related simply to the world of business. People of many different disciplines can benefit from innovations companies, from factories to those in various different scientific disciplines all around the world. It means that people from various different backgrounds can learn to be more creative and apply innovative thought to their work.

The people who work for innovations companies will be highly skilled, often very good public speakers who are capable of motivating people to a high level. Many of the companies have been around for a considerable amount of time, ensuring that their expertise is highly valued and highly sought after. This is because those companies that have used innovations companies to increase their creative thinking, have come out looking great, improving their business to a great degree.

The following benefits are achieved by an organisation by using innovation.

  • Increase profitability
  • Build new market
  • Generate employment
  • Lower cost of production
  • Increase market share and growth
  • Increase competitiveness

Types of innovation

Innovation varies in scope, time for completion and organisational and societal impact. Categorisation of any kind usually involves areas of duplication, where the lines between one category and another overlap. We will overview the main types of innovation and simplified classification. Innovation can be categorised into different categories by firms.

Organisational innovation

An organisational innovation is the implementation of a new organisational method in the firm's business practice, workplace, organisation or external relation. Organisational innovation can be intended to increase a firm's performance by reducing administrative costs or transaction costs, improving workplace satisfaction (and thus labour productivity), gaining access to non-tradable assets (such as non-codified external knowledge) or reducing costs of supplies. The distinguish features of an organisational innovation compared to other organisational changes in a firm is the implementation of an organisational method that has not been used before in the firm.

Examples: the first implementation of practices for employee development and improving worker retention, such as education and training systems; the first introduction of management systems for general production or supply operations such as supply chain management systems, business reengineering, lean production and quality-management systems.

Product innovation

A product innovation is the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses. This includes significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics.

Examples of product innovation: first portable MP3 player; introduction of ABS braking, GPS (Global Positioning System) navigational systems or other subsystem improvements in cars.

Process innovation

A process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, technology, equipment and/or software.

Examples of new production methods: are the implementations of new automation equipment on a production line or the implementation of computer-assisted design for product development. An example of a new delivery method is the introduction of a bar-coded or active RFID (Radio Frequency Identification) goods-tracking system.

Marketing Innovation

A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. Marketing innovation is aimed at better addressing customer needs, opening up new markets, or newly positioning a firm's product on the market, with the objective of increasing the firm's sales. The distinguishing feature of a marketing innovation compared to other changes in a firm's marketing instruments is the implementation of a marketing method not previously used by the firm. It must be part of a new marketing concept or strategy that represents a significant departure from the firm's existing marketing methods. New marketing methods can be implemented for both new and existing products.

For example, the first use of a significantly different media or technique - such as product placement in movies or television programmes - is a marketing innovation.

Automobile industry and Toyota Mortor Corporation

Auto mobile industry

Innovation is shown mostly in the automobile industry which includes various types of companies leading in the world. The auto mobile industry designs, develops, manufactures, markets, and sells the world's motor vehicles. In 2008, more than 70 million motor vehicles, including cars and commercial vehicles were produced worldwide

Toyota is the one of the leading innovative (product innovation) company in the automobile industry. Toyota produces the various models of cars which are IQ,AYGO, Yaris, Auris, Urban, Cruiser, Verso, Avensis, Prius, RAV4, Land Cruiser, Land Cruiser V8, Hilux, Hiace, and Dyna.

Toyota Motor Corporation

Toyota Motor Corporation commonly known simply as Toyota is a multinational corporation headquartered in Japan, and the world's largest automaker by sales. Toyota employs approximately 320,808 people worldwide.

Since its foundation, Toyota has continuously strived to contribute to the sustainable development of society through the manufacturing and provision of products and services that lead the times. The foundations of these endeavours are the Guiding Principles at Toyota and an explanation paper titled “Contribution toward Sustainable Development” that interprets the Guiding Principles at Toyota. In 2007, Toyota adopted the Global Vision 2020, which proposes the ideal stance to be adopted for the benefit of people, society and the global environment.

The Toyota Production System is now widely accepted as a proven approach to more resource effective, environmentally responsible production. The end result is a product of higher quality and lower cost, a combination that has allowed Toyota to increase its market share even in times of economic retrenchment. Of course, as the Toyota dictum puts it, “No process can ever be declared perfect”, which is why, for all of its hard-earned reputation for quality, durability and reliability, the company remains committed to fostering a culture of “continuous improvement” (Kaizen).

Guiding Principles at Toyota

  1. Honour the language and spirit of the law of every nation and undertake open and fair corporate activities to be a good corporate citizen of the world
  2. Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in the communities
  3. Dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through all our activities
  4. Create and develop advanced technologies and provide outstanding products and services that fulfil the needs of customers worldwide
  5. Foster a corporate culture that enhances individual creativity and teamwork value, while honouring mutual trust and respect between labour and management
  6. Pursue growth in harmony with the global community through innovative management
  7. Work with business partners in research and creation to achieve stable, long-term growth and mutual benefits, while keeping ourselves open to new partnerships

In 2007, Toyota adopted the Global Vision 2020, which is based on the Guiding Principles at Toyota. In order to achieve this vision, a medium- to long-term management plan was drafted and Toyota is working toward achieving the goals specified in the plan. In addition, the Toyota Way 2001 and Toyota Code of Conduct contain the values and methods that employees should adopt in putting the Guiding Principles at Toyota into practice and serve as guides for day-to-day activities.

Innovation in Toyta

Weekend's New York Times Magazine featured a great cover story on Toyota, which explained how the Japanese company has become the acknowledged leader in the global automobile industry. The latest product is the Toyota Tundra, a new full-size truck designed with Red State America in mind. With Toyota, small incremental innovations snowball over time into huge improvements in productivity, efficiency and output.

Toyota engineering and design teams actually make archaeological visits to truck graveyards in Michigan, where they examine the rusting hulks of old trucks: “With so many retired trucks in one place, they also gained a better sense of how trucks had evolved over the past 30 years - becoming larger, more various, more luxurious - and where they might go next.”

Toyota Optimal Drive

Toyota Optimal Drive is an entire range of new engines, design innovations and transmissions that is bringing in a step-change in fuel economy and emissions across the Toyota range. Toyota Optimal Drive offers an unrivalled combination of fuel economy and lower CO2, saving consumers' money without compromising performance. Here are just a few of the new innovations which are found in Toyota Optimal Drive.

Enhanced Performance, Lower C02, Better Fuel Economy

Toyota Optimal Drive is designed to save consumers' money, and reduce their carbon footprint. And the best bit? There's no compromise in performance.

Stop & Start

Specified with 1.33-litre VVT-i petrol Yaris, Auris and Urban Cruiser models, Stop & Start saves fuel and emissions in urban conditions by seamlessly stopping and restarting the engine at lights or in stationary traffic. This helps to boost combined fuel economy by up to 18 per cent.

New Engines

Reduced weight, lower internal friction, optimised valve control and greater rigidity are just a few of the improvements present in Toyota Optimal Drive engines. These innovations are applied differently across each model, but every engine offers a significant boost in terms of fuel economy and emissions, without sacrifice in power.

Improved Transmissions

The new 6-speed Manual transmission available with Yaris, Auris and Urban Cruiser is a showcase for Toyota Optimal Drive thinking. Its unique twin-shaft design makes changing gear easier and more satisfying, and the reduced size and number of components improves efficiency and torque capacity.

Gearshift Indicator

All Auris, Avensis and iQ models come equipped with gearshift timing indicators (manual transmission only), showing the optimum time for gear changes and in turn saving fuel and emissions.

Hybrid Synergy Drive

The synergy between two types of power sources -a1.81 petrol engine and two electronic motors- results in outstanding fuel efficiency of 72.4 mpg, low Co2, emissions of only 89 g/km and quiet operation. The system offers a total power output of 136 DIN hp for excellent driving performance.

Quiet & Smooth (Smart, eco-friendly & Quiet

Hybrid synergy drive allows the driver to select Ev mode only for speeds up to 31 mph. The stop & start system results in no engine noise at stand still.

Electric mode

The electric motor is remarkably quiet compared to petrol engine only driving energy from the battery. In this mode no fuel is consumed and the car provides zero emissions.

Dynamic performance (Easy to drive, easy to maintain)

The synergy of petrol engine and electric motors deliver seamless torque and acceleration.

Full hybrid, full satisfaction (The world's most advanced hybrid)

It is a high output battery and an ingenious energy generation system. This is the most dynamic and efficient hybrid yet.

Complete satisfaction (more than one million owners)

Winning award for superior quality and reliability for two years running, prius has the highest satisfaction rating of any other car on the road. The high power premium battery lasts the whole life cycle of the vehicle and is covered by a five-year /60,000 miles warranty.

Fuel & Co2 efficiencies (Drive more for less)

Prius gives family-size travel with the fuel economy of a small city car bringing you smooth and economic cruising for up to 716 miles. This means the prius achieves 72.4 mpg and emits as little as 89g/km of Co2.

Fast and start technology.

The stop and start feature lowers fuel consumption even further by switching off the petrol engine when stopping. At stand still the car releases zero emissions and provides a noticeable silence.

Recycling innovation

Innovations in materials

Development of TSOP

Resin materials to be used in automobiles must possess high rigidity and high impact resistance as well as superior recyclability. TSOP is currently used in a wide range of interior and exterior parts in new models.

Reduction in the use of PVC resin

Toyota is actively replacing polyvinyl chloride (PVC) with materials that are easier to recycle. Toyota has also developed a halogen-free wire harness that does not use any PVC resin of bromide-based fire retardant in the wire-harness shield. The new wire harness is now in use on Toyota new vehicles after 2002.

Adoption of Natural material kenaf

Kenaf, a natural material that is effective in preserving forest resources and sequestration of CO2, is used as the base material in the door trim of the SC300 and in the package tray trim of the Camry and other models.

Innovations in material composition

Interior plastic parts, such as console boxes, are made of composite materials consisting of a base material, a foam material, and an outer covering. By using the same type of thermoplastic resin to standardize these composite materials, Toyota is promoting the development of technologies that will simplify recycling by eliminating the need for separation and sorting during dismantling.

Innovations in the sorting process

In 1981, Toyota launched a material ID marking system to help identify materials used in resin parts. Currently, a marking system that conforms to international standards is used for resin and rubber parts.

The technology can prevent an accident in any situation and minimize the damage in an accident

Toyota has been developing various safety technologies by using variant means such as the Driving Simulator, which allows driving tests that are difficult to conduct even on test courses not to mention ordinary roads, and the THUMS technology, a virtual human model developed for computer collision analysis, in addition to the verification at the collision test centre that can reproduce many different types of accidents.

Acceptance and Resistance of innovation

A large number of factors can influence the acceptance of an innovation. An innovation may solve a serious, longstanding problem, but if the price tag is too high, the innovation will not be accepted. If users deem an innovation to be an invasion of privacy or an abridgment of their personal freedom, the innovation is likely to be resisted. If an organization is known to be unreceptive to change, individuals in that organization may show greater resistance to innovation than would otherwise be expected. If the innovation is difficult to use, acceptance will be less likely. A sophisticated, elegant innovation may fail in the marketplace because no one is aware of it. An inferior innovation may achieve wide acceptance or at least usage compliance if the users' incentives are structured appropriately. In some cases, an innovation is accepted or resisted because of a positive or negative value on a single dimension. More typically, some combination of costs and benefits, positives and negatives, across many dimensions determines the relative acceptance or rejection of an innovation.

If the new technology affords other competitive advantages, then the new technology is likely to be adopted by the organization. In making a business decision, projected savings may be based on directly measurable cost factors such as:

  • Fuel savings resulting from more efficient routing leading to less high-speed driving to maintain schedules.
  • Reduced maintenance costs because of lower mileage and less equipment abuse.
  • Better on-time delivery of perishable cargo resulting from tighter driver control.
  • Lower accident rates in an overall safer system.

Conclusion and recommendation

The results of “Car Innovation 2015” show that OEMs (Oliver Wyman ) as well as suppliers need more knowledge about customer acceptance of innovations. That knowledge is vital feedback for prioritizing innovations, for conducting realistic planning and for improving innovation marketing.

Customer research on innovation knowledge and acceptance can best be conducted by choice analysis, identifying the preferences and price sensitiveness of complex buying decisions. The many questions to be answered for different markets include:

  • How are innovations understood and valued in different markets?
  • Which market demands which serial configuration and which extras?
  • Which innovations highlight and strengthen the brand image? Which have the power to create differentiation in the market?
  • How can dealers be motivated and supported to actively sell innovations?

Ten success factors provided for car Innovation Company by the Oliver Wyman (leading global management consultancy).

Technological vision:

Top performers constantly scan their environment for trends in the market and in technologies. They develop a long-term innovation vision and stick to it, no matter what the short-term trends are.

Customer knowledge:

Understanding customer preferences enables companies to better focus their innovation efforts on relevant issues. Customer research need both a regional and a socio-demographic approach to be of value.

Strategy match:

Successful OEMs and suppliers match their R&D strategies at a very early stage, and very closely with the respective target OEM or supplier partner. This is especially true when the car architecture is affected, i.e. with module innovations.

Competence focus:

The best innovators closely match their R&D competencies with their R&D strategy. OEMs and bigger suppliers with a diversified product range must continuously recalibrate their competencies to their strategic R&D targets.

Strategic partners:

With their increasing complexity, R&D networks are becoming a crucial success factor. Currently, it is mostly OEMs that are forming such networks. In the future, supplier-supplier and supplier-institution collaborations will increase.

Investment focus:

R&D funding must be independent of current business needs. In the past, short-term changes in the R&D focus have often led to long-term problems. Catching up with past R&D cuts has often proven to be extremely expensive.

Trend focus:

Relying on megatrends contributes significantly to the soundness of R&D investments, as these trends are highly predictable. Interpreting these trends in terms of a company's own business model is a main conceptual challenge for automotive companies.

Cost focus:

Leaders in innovation always have a strong cost focus, with respect to R&D efficiency and effectiveness. Regardless whether it is a single component or an entire car, the reduction of unit costs is the center of their innovation efforts.

Outside-in strategy:

Top performers concentrate on innovations that the market needs and end low-value projects early. Processes that strengthen this ability are a common understanding of innovation aims within the company and a standard quality process.

People involvement:

Companies that involve people from all levels in their R&D are much more successful innovators.The keysto employeeinvolvement are easy and motivating communications, low hurdles for submission of ideas, and efficient and transparent filters for the incoming ideas.


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