What is Innovation?

Innovation is a new method, idea, product, etc. Innovation is the introduction of new ideas,
goods, services, and practices which are intended to be useful
In a business context, innovation is the ability to conceive, develop, deliver, and scale new
products, services, processes, and business models for customers.
Innovation as entrepreneurship is the manifestation of creativity into a usable product or
service. In the entrepreneurial context, innovation is any new idea, process, or product, or a
change to an existing product or process that adds value to that existing product or service.
Fintech innovations refer to technological advancements and creative ideas implemented in the
financial sector to improve and automate the delivery and use of financial services.
Is that enough? As technology is vast growing everyone of us is benefiting from technology
3 terms that often come up with the context of innovation.
 Invention – things that started from scratch (Blockchain Cryptocurrency) (creating new
ideas, proposing new method etc.
o Creation: Invention creates a brand-new product or device.
o First Occurrence: It marks the initial occurrence of an idea.
 Improvement – focused more on improving something that is already set up, it could be
process improvement, and enhancing performance.
 Innovation
As day by day, improvements and updations are made in technology, leading to new
inventions and innovations in every sphere of life. Invention refers to the creation of a
brand-new product or device. Conversely, innovation is an act of making changes to the
existing product or the process by introducing new ways or ideas. Introducing new
things, ideas, or ways of doing something
o Change and Application: Innovation involves making changes to existing products
or processes by introducing new ways or ideas.
o Doing Differently: It goes beyond improvement; it’s about doing something
entirely different
Remember, while invention sets the stage, innovation takes center stage by transforming ideas
into practical solutions.

In the next diagram it shows how and the three context of innovation would take place in a
commercial value.
In Invention you have these unsellable or yet to introduced commercially. It explains that there
is an overlap between the middle that is R&D phase. For it to have value and be recognizable for
consumer
Improvement in this diagram is already in the commercial value part, it is already but you must
think about how to add incremental value out of to enhance consumer satisfaction.
Innovation on the diagram is in between Invention and Improvement, it’s in the R&D. Because
Innovation is either you introduce new ways or ideas or changing the existing product or
process.

When and where does Innovation take place?

Types of Innovation where it happens.
 Product Innovation - refers to the creation of new products or the enhancement of
existing ones. It’s more noticeable to consumers and can be based on new technologies
or the fulfillment of novel consumer needs.
Examples:
1. E-Readers: E-Readers fall into both categories. They address an older
need (reading) in a new way by providing a digital solution. Additionally,
they cater to a new need—the desire to read “on the go” due to
urbanization and increased mobility.
2. Smartphones: The evolution from basic mobile phones to smartphones
with advanced features (such as touchscreens, cameras, and apps)
exemplifies product innovation.
3. Electric Cars: The shift from traditional gasoline-powered vehicles to
electric cars is a significant product innovation driven by environmental
concerns and technological advancements.
 Process innovation - focuses on improving the methods, systems, and technologies used
in production, delivery, and support of products and services. It’s less visible to
consumers but crucial for operational efficiency.
Examples:
1. Lean Manufacturing: Implementing lean principles to streamline production
processes, reduce waste, and enhance productivity.
2. Supply Chain Optimization: Innovations in logistics, inventory management,
and distribution networks to ensure timely delivery of goods.
3. Automated Customer Service: Using AI chatbots and automated systems to
handle customer inquiries efficiently.
In the diagram shows product innovation shapes what we consume, while process innovation
ensures how efficiently we produce and deliver it. Product innovation is introduced as new
while Process innovation is more found in an existing industry where they are trying to find
solutions to current issues or concerns.
Innovation can be classified based on impact:
 Revolutionary or Disruptive - a highly visible, high-impact invention
 Evolutionary or non-disruptive - a low visibility, gradual improvement on existing
products or processes
Disruptive innovation creates new markets and challenges the status quo, while sustaining
innovation focuses on gradual enhancements for existing customers.

In present market and technology is considered in innovation, looking at the matrix is a way
what kind of Innovation are we looking at especially at FinTech perspective.
 Incremental Innovation - can be described as making improvements to an existing
product or service. The improvements are based on using existing technology and are
directed at the existing market. Example is Mobile phone or car the changes they made
each year to the newest model.
 Disruptive Innovation - an innovation that conflicts with, and threatens to replace,
traditional approaches to competing within an industry. Disruptive innovations occur
when firms introduce offerings that are so unique and superior that they threaten to
replace traditional approaches. Example is replacing CD with downloadable digital media
and Cryptocurrencies like bitcoin and Ethereum or Blockchain.
 Architectural Innovation - occurs when new products or services use existing technology
to create new markets and/or new consumers that did not purchase that item before.
Typically, firms alter the architecture of the product to create a new product that opens
sales to new markets. Example is smart watches, changes or modifications in the
architecture of a product or system.
 Radical Innovation - When new products or services are developed using new
technology that opens new markets, the result is called radical innovation. Examples
include Airplanes, air pods wireless.
The Innovation Matrix help Identify the right type of strategy to solve a problem. Let’s now look
as to what are the types of problems solved by Innovation.
 Sustained Innovation - Most innovation happens here because most of the time we are
seeking to get better at what we’re already doing. We want to improve existing
capabilities in existing markets, and we have a clear idea of what problems need to be
solved and what skill domains are required to solve them.
 Breakthrough Innovation - tackles well-defined problems that are exceptionally difficult
to solve. It requires exploring unconventional skill domains. Ex. The use of Solar
panels/energy
 Disruptive Innovation – Involves technologies or business models that enable products
or services to be easier to use, more accessible, and available to a larger, non-targeted
audience. Example is Netflix, Grab, Tesla.
  Basic Research - Pathbreaking innovations never arrive fully formed. It involves exploring
uncharted territories, often without clear problem definitions or well-defined skills. By
applying innovative works, it could come into conclusions if it’s feasible and possible.
Common Sources of Innovation/Where do innovations come from?
 Employees – so it could be managers or members of the organization, R&D. By
suggesting how to enhance the process or suggesting ways to make new product.
 Customers - Customers might want to tell us what product or services they want.
 Business Competitors – sometimes it comes from business competitors seeing how it
was done by them then trying to innovate and offer a better service.
 Research and Development department - some specific businesses and industry sectors
that are dedicated to researching new ideas and ways of doing something.
What are the common barriers to Innovation?
 Owners or managers are not open to new ideas.
 Lack of time and resources
 Innovation can be too expensive for small businesses to get involved in
 Often, organizations lack direction in terms of innovation.
 People don't have freedom to be creative.
 Some organizations lack the ability to implement and commercialize new ideas.
What are the Benefits of Innovation?
Benefits of Innovation depend on the type of innovation. If it is gradual, or whether has a drastic
impact at all.
 Occasional and continuous improvements have a positive performance impact.
 Innovation (in addition to other improvements) has a greater overall impact on
performance.
 Innovations are a step change in value, impact and returns.
Abstract Benefits of Innovation
 Innovation and Value Creation – It is about offering value creation to customers then it
will eventually turn to us because they are willing to spend money resources.
 Creativity or Invention * Commercialization = Innovation– (matching of unmet consumer
needs with novel solutions) -
 Innovation * Organization = Value Creation– (organization of business assets to realize/
deliver innovation)
Overall benefits of Innovation would be the continuous improvement made and that’s what
catapults ahead in a competition and gives competitive edge in the industry.
Innovation plays a big role in economic development whether by introducing new product,
improvement in terms of process, technology and bringing change. This way of thinking is
described as an Entrepreneurial thinking key enabler of innovation. It the way how
entrepreneurs thinking that links innovation.
So, what are Entrepreneurs?
An entrepreneur is someone who creates a new business, bearing most of the risks and
enjoying most of the rewards. An entrepreneur is responsible for starting, managing, and
growing a business. An entrepreneur also seeks to make a profit or a difference in the world, or
both, by offering an innovative product or service.
Putting Failure into Perspective
What are the key things that standouts entrepreneur, Entrepreneurs are not put off by failure,
they excel on learning from that failure. They are trying to change their perspective.
Divergent Thinking
Entrepreneurs are divergent thinkers. Divergent thinkers mean they don’t focus on one
solution. They create ideas and explore many possible solutions. And the way they think and
gather their ideas it could came through experience, knowledge, and research.
Entrepreneurial Personality Characteristics or what kind of personality do entrepreneur has?
Using their experiences and ideas as opportunity to innovate, or create ideas.
Curiosity, Willingness to experiment, Adaptability, Decisiveness, self-awareness, Risk tolerance,
Comfort with failure and Persistence.
Needed Entrepreneurial skills & Must have
This is some of the needed entrepreneurial skills.
How do we apply these skills in FinTech Innovation?
A method used to identify challenges and opportunities is to do a PEST Analysis.
PEST analysis (political, economic, social, and technological) is a management method whereby
we can assess major external factors that influence its operation to become more competitive in
the market.
 Political - focuses on the areas in which government policy and/or changes in legislation
affect the economy.
 Economic - The economic portion of the analysis targets the key factors of interest and
exchange rates, economic growth, supply and demand, inflation, and recession.
 Society - analysis are demographics and age distribution, cultural attitudes, and
workplace and lifestyle trends.
 Technology - The technological component considers the specific role and development
of technologies within the sector and organization, as well as the wider uses, trends, and
changes in technology.
The Pest Analysis could help Identify driver and inhibitors in the field of FinTech.