Step 1: Inventing:  Inventing is that step of the innovation process that establishes a new idea that could help the organization be more successful. The innovation process begins with the determination of some new idea. Consistent with the previous section of this appendix, creativity leads to such ideas within organizations. Such ideas naturally vary from organization to organization but usually fall into one of the following categories: technology, product, process, and management.27

• Technology ideas focus on invention that enhances the use of technology within organizations. Technology ideas can cover a wide array of topics and include ideas such as employing barcoding to better manage inventory or using videoconferencing to help organization members across the globe communicate more effectively.

• Product ideas focus on invention that develops new products or services or enhances existing products or services. Such ideas can include issues related to pricing products, promoting products in the marketplace, distributing products, packaging products, and advertising products.

• Process ideas focus on inventions that improve a manufacturing process. Examples of process ideas include incorporating robotics to make a manufacturing process more efficient and redesigning work stations to make workers more productive.

• Management ideas focus on invention relating to the way in which the organization is managed. These ideas involve management as a whole and center on improving human resource management, redesigning organizational structure, changing organizational leadership, or refining competitive strategy.

An interesting example of introducing a new product involves the distribution of television shows and movies.28 Netflix, a company that started in 1997 as a mail-order distributor of DVDs to consumers, progressed to deliver television shows and movies digitally through Internet streaming. Recently, Netflix started producing its own television shows available exclusively to Netflix subscribers. This production process has shown to be a new feat for Netflix, with House of Cards, one of its first shows, winning both critical acclaim and prominent awards.

Step 2: Developing.  Developing is that step of the innovation process that makes a new idea practical. After being established in step 1, an idea must next be developed, or made practical as a vehicle for enhancing organizational success. Some creative ideas defy practicality and should never be pursued.29 On the other hand, some ideas are practical and can be focused on diverse areas such as improving cell phone service to attract more customers,30 adding attractions to a theme park to make it more competitive,31 or better training to conquer the hurdle of getting professionals both comfortable and effective with operating newly purchased equipment.33

3M Company, formerly known as Minnesota Mining and Manufacturing Company, has become world famous for developing new ideas. Perhaps the most well-known 3M innovation is the Post-it note. 3M may very well have achieved this fame through its formal, simple, and well-established company policy that helps ensure that every idea that deserves to be developed is indeed developed. This policy encourages employees to see whether managers in other parts of the company will help develop a new idea after the employee’s immediate boss has rejected it.34

Netflix’s new idea for producing a new drama illustrates step 1 of the innovation process. Step 2 of the innovation process indicates that this new idea must now become practical. In essence, management must now determine feasible methods for producing the new dramatic series. In the case of Netflix, this process includes determining where the show will be filmed, which actors will star in the show, and who will direct the actors.

Step 3: Diffusing.  Diffusing is that step of the innovation process that puts a new idea to use by end users or customers. Step 3 of the innovation process takes place after an idea has been established (step 1) and developed (step 2). If the idea is for an improvement to an organizational process, organization members who would be affected by the idea would explore using the idea to test its utility and worth. If the idea is for establishing a new product, perhaps certain customers would be given a prototype to test the ultimate utility and worth of the product.

In the Netflix example, the idea for producing a new dramatic series was established, and the new series became practical in innovation process steps 1 and 2, respectively. In step 3, customers would actually be shown the first episodes of the series to determine the show’s utility and worth to customers. If customer feedback was negative at this point, Netflix might wish to discontinue the idea or take additional time to improve it. If customer feedback was positive, Netflix would probably proceed to the next step of the innovation process.

Step 4: Integrating.  Integrating is that step of the innovation process that establishes an invention as a permanent part of the organization. If the invention focuses on a new organizational process, for example, management takes steps to make the new process standard operating procedure within the organization. If the invention focuses on a new product, management takes steps to start manufacturing and selling the new product to the marketplace.

In the example of relating Netflix’s new dramatic series to the innovation process, the idea for the series has been established and developed or made practical, and customers have verified the desirable value and worth of the series. Now, in step 4, Netflix management integrates the idea or makes the dramatic series an established component of the company’s product line. In essence, management takes appropriate steps to allow customers to view the new show.

Step 5: Monitoring.  Monitoring is that step of the innovation process in which a newly implemented idea is tracked to determine if and when the idea should be improved or terminated. Management monitors newly implemented ideas to make sure that the contributions to organizational success generated by the ideas continue to accrue. As long as the implemented ideas continue to contribute to organizational success, the useful lives of those ideas will continue. When new ideas cease to make a contribution to organizational success, however, the ideas should be improved or terminated.

At this stage of the innovation process in the Netflix example, the idea for the camera was established, was made practical for use, customers endorsed the idea, and the show is now available for streaming. Now Netflix must monitor the contribution the show makes to organizational success and improve or discontinue it when the contribution becomes unacceptable. Figure A3.5 summarizes the major steps of the innovation process discussed here and shows how the Netflix example relates to each step.

This stage of the innovation process often includes reverse innovation, which involves taking a concept or a product created for a very specific use and extending it to a new, often larger, audience. For example, General Electric announced that it would introduce two of its medical devices, formerly sold only in emerging markets, in the United States. The company’s $1,000 handheld electrocardiogram device was originally created for physicians who practice in rural areas of India. Its portable, PC-based ultrasound machine was created for use in rural China. By selling these products in the United States, not only will GE will not only realize a profit but will also make health care more affordable.35