innovation

Creating something new. Process innovation is a new way of doing something, and product innovation is the introduction of a new product or the modification of an existing one. Product innovation often brings competitive advantage in product markets that are relatively static, such as the ‘air’ training shoe developed by Nike that transformed the training shoe from sports accessory to mainstream street fashion. Process innovation, such as the development of production line manufacturing, can lead to significant cost reductions and licensing opportunities.

Innovation needs to be protected to have economic value and this is done by obtaining a patent. The practice of reverse engineering (taking an existing product and deconstructing it to learn how to build a similar product) has reduced the timescale in which the benefits of innovation can be enjoyed.