Introduction
Dr. Michael Porter of the Harvard Business School introduced the idea of innovation source. He believed that any company could choose between seven different sources of innovation in order to create new business opportunities and become more successful. These seven sources of innovation are known as the “Porter scale” and are divided into internal, external, and developmental sources.
Internal Innovation Sources
The first three sources of innovation are internal sources. These sources involve the organizations own resources, such as its personnel, processes, and technology. Internal sources of innovation can include process innovation such as re-engineering a process to improve quality or efficiency. They can also include product innovation such as creating a new product from existing components or modifying an existing product to appeal to a new customer segment.
External Innovation Sources
The fourth source of innovation is external sources. This source involves seeking external partners that can provide the resources, technology, or ideas to help the organization develop and introduce new products or solutions. An organization can form strategic partnerships with companies in other industries to gain access to new technologies or to form alliances with like-minded organizations to create new business opportunities.
Developmental Sources
The fifth source of innovation is developmental sources. This source involves looking outside of the organization to spur new ideas. This can include looking at new market trends, consumer needs, and competitive developments to identify new opportunities. It can also involve leveraging the national or global ecosystems in which the organization operates to find new sources of supply and collaboration.
Conclusion
The importance of innovation cannot be overstated. Organizations need to recognize that innovation involves more than just introducing new products to the marketplace. To be successful, an organization must be able to identify and embrace new sources of innovation. By following Porters seven sources of innovation, an organization can become more competitive, more agile, and more profitable.
References
Porter, M. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press.
Rothaermel, F. (2013). Strategic Management: Concepts. New York: McGraw-Hill Irwin.
Ahuja, G. (2000). Collaboration Networks, Structural Holes, and Innovation: A Longitudinal Study. Administrative Science Quarterly, 45(3), 425–455.
Hellman, N., S. Mezias, and S. Patacconi. (2013). Investors and Innovation: Complementarity and Crowding. Strategic Management Journal, 34(10) 1372–1387.
Xu, B. (2015). How Does Geography Affect Innovations: Evidence from the Chinese High-Tech Industry. Management Science, 61(12), 2908–2930.
