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Innovations achieve new products and profits

7 September, 2015 - 12:02

Second, innovations translate new knowledge into new products and profits, particularly for business (but also for organizations where performing efficiently is important). Even for governments, innovations can allow government to save money or do more with the same amount of funds. The radio, the television, the personal computer, the cell phone – all inventions we take for granted today, were innovations that had to be dreamed of, experimented with, tested, and refined before they could be products and produce profits for businesses. Innovations take time and courage to see an idea through to reality. For example, websites like Amazon.com or eBay.com were once innovative start-up companies with untested ideas. Their different innovative visions were believed by some, uncertain by several, and publicly dismissed as not possible by several (at the time).

Systems innovations can produce increased profits for an organization either by producing new products or by producing new ways of doing old activities. Should you accept the challenge of being a systems innovator, you need to be in love with not just the new and exciting, but also with understanding the current context and history upon your area of focus. Past and present events provide a context to find innovations.

It is the mid 1990s and you are a systems innovator. As a systems innovator, you know that historically most people have to go to a bookstore to buy a book. They have either to call or visit the bookstore to see if it has a particular book, and physical bookstores can only carry a limited number of books. For rare or unique books, chances are your local bookstore will not have the product. Equipped with this knowledge of past and present events, you might think about launching a company where people can visit a central website, search through millions of books, and order the book online and have it delivered to their home. Such an innovation became Amazon.com, and produced millions of dollars for its founding innovators.

Again, it is the mid 1990s, you are a systems innovator, and you see a trend where hard drives increasingly are getting physically smaller with more storage space. You also notice a new audio compression technology that allows entire songs to be compressed into small files (called MP3’s). Equipped with this knowledge of past and present events, you might think about building a device that would allow individuals to store MP3’s on a portable hard drive with a nice, friendly interface for people to search and find the songs they want to play on this portable device. Such an innovation was Apple’s iPod – which included not only a hardware device, but also an information system (a website, called iTunes.com) for people to find, purchase, and download the songs they would like to play on their iPods. This innovation also achieved both a new product and large profits for Apple and its Chief Executive Officer, Steve Jobs.