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Chapter 2

Summary

The literature on the impacts of innovation has been reviewed, including the
precursors of innovation, and its influence on markets and industries. This chapter
has showed that:

• Large companies or small start-ups can generate innovations. For managers
  in existing organizations, the challenge is to maintain or increase innovation
  levels. For entrepreneurial managers in start-ups, the challenge is to
  generate an innovative idea that can dislodge the incumbents.
  
• Innovation has a major impact on the economy, it drives business cycles
  and employment levels.

• Economic cycles can make business conditions harder, but lead to opportunities
  for particular innovations.
• Diffusion theory showed that customers perceive an innovation positively
  or negatively in terms of five factors, such as the relative advantage of the
  innovation compared to the existing solution. Positive perceptions across
  all five factors raises the potential of an innovation.
  
• Most studies have focused on the manufacturing sector, and only in
  recent years has innovation research started to look at the service sector
  in detail.
• Even companies that have a very successful innovation need to avoid
  becoming complacent and to keep innovation alive, as shown by the issues
  faced by the Richardson’s kitchen knives company. Expertise in a particular
  technology can lead to inflexibility.
  Now that the meaning of innovation and the diverse issues facing managers
  have been introduced, Chapter 3 will look at the specific issues of managing
  service innovation.