Innovation is the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society
Due to its widespread effect, innovation is an important topic in the study of economics, business, entrepreneurship, design,technology, sociology, and engineering. In society, technological innovation aids in comfort, convenience, and efficiency in everyday life . It can also lead to negative effects such as pollution or exploitation. Innovation is the development of new value through solutions that meet new needs, or adding value to old customers by providing new ways of maximizing their current level of productivity. It is the catalyst to growth.
In business and economics, innovation is the catalyst to growth. With rapid advancements in transportation and communication over the past few decades, the old world concepts of factor endowments and comparative advantage, which focused on an area's unique inputs are outmoded for today's global economy.
In the organizational context, innovation may be linked to positive changes in efficiency, productivity, quality, competitiveness, market share, and others. However, recent research findings highlight the complementary role of organizational culture in enabling organizations to translate innovative activity into tangible performance improvements. All organizations including hospitals, universities, and local governments can innovate.
There are several sources of innovation. It can occur as a result of a focus effort by a range of different agents, by chance, or as a result of a major system failure. The general sources of innovations are different changes in industry structure, market structure,local and global demographics, human perception, mood and meaning, amount of already available scientific knowledge, etc.
In the original model, which comprises three phased process of Technological Change, the traditionally recognized source is manufacturer innovation. This is where an agent (person or business) innovates in order to sell the innovation.
Another source of innovation, only now becoming widely recognized, is end-user innovation. This is where an agent (person or company) develops an innovation for their own (personal or in-house) use because existing products do not meet their needs. Innovations require only three things:
1. A recognized need,
2. Competent people with relevant technology, and
3. Financial support.
However, innovation processes usually involve: identifying needs, developing competences, and finding financial support.