[MUSIC] Welcome to this module about Innovation in the European Agro-Food Sector. My name is Francesco Bimbo and I'm a researcher with the business economic group Wageningen University. This module is divided in three lessons which will explain the definitions and type of innovation, the models and the diffusion of innovation as well as drivers and barriers. Let's start with the lesson one. After completing the lesson that takes approximately 20 minutes. You should be able to define what an innovation is. Know the difference with it's related terms and understand and recognize the main types of innovation. Some of you are probably already familiar with the definition of innovation. One of the first and most popular definition of innovation dates back in 1924. It was provided by Joseph Schumpeter. You can see a picture of him on the slide. Schumpeter greatly influenced the theory of innovation in the early 90. According to Schumpeter, the economic development was driven by competition among firms to obtain new commodities, new technologies, new source of supplies, or to reach a new form of organization. The firm's goal then is to obtain a cost or a quality advantage to succeed in the market over its competitors. Shumpeter called creative destruction the process where new productive factor or new technological methods replace older ones. According to Shumpeter this process is at the foundation of the economic development. Up to now Shumpeter's definition of innovation is one of the most popular definition as well as the most widespread. However, scholars have also conduct a research on innovation and come up with their own definition to point out its main traits. Some of them described innovation as an idea put into practice with success. Some claim that a new idea turn into an innovation only if it’s widely adopted and prove its usefulness in practice. Or an innovation is the implementation of a new or significantly proven product, process, a marketing method, or a new organizational method in the business. These three definitions that are here point out important characteristics of an innovation. Next, we need to ask ourselves how does an invention related to innovation. The term invention can be defined as the act of creating, designing, or discovering a product, a method, a process that's not existed before. In final term, it's a novel scientific idea conceived through research and experimentation that turns into a tangible object. Instead, innovation can be defined as a change that adds value to the product or service. It's when something new is introduced into the market that fulfills the needs of the customer by delivering better products and service. The process of an innovation starts with an idea. Such idea turns into an innovation only when someone improves or makes a significant contribution to it or to something that already been invented. Thus an invention is only a part of an innovation. And not only inventions turns into innovation. An example of innovator for example was Steve Job with his iPod. Let's take the iPod as an example. It wasn't the first portable music device. Indeed Sony popularized the music anywhere, anytime concept 22 years earlier with the Walkman. Also, the iPod wasn't the first portable device that put hundred of song in your pocket. Dozen of manufacturers had mp3 device on the market when iPod was released in 2001 and Apple was actually late into this market. Further, when Apple started to provide an online music sharing platform, there were Napster and the other platforms that preceded iTunes. However, what made the iPod an innovation greater than just invention, was that it combined it all these three elements. Hundreds of songs always available for you in your pocket, a modern and ergonomic, design and it's easy of use. Everything in a single device that linked directly into a platform that effortlessly keeps the device update with music. Thus, it was something new that became very popular after a few years when iPod was released and it was very useful for consumers. What do we say so far, stresses the idea that an innovation in something new, widely adopted, improve its usefulness in practice. Three peculiar traits of an innovation that differentiate it from just an invention. Innovation can also take many different form. Now let's look at some examples. We have process innovation which are the implementation at the firm level of a new significant improvement in production or delivery methods. This includes significant change in production technique, equipment or software that decrease unitary cost of production for the products or alternatively increase the average quality of product produces. And example of production method is the implementation of a new automatized equipment at the product line level, as we can see in the picture, where it show a product storage with enhanced productivity by using a new automatized equipment. Instead we have also product innovation that refer to the market introduction of a good or service that is new or significantly improved with respect to its characteristic or intended uses. This includes significant improved in technical specifications, components and material which are or other functional characteristics. Product innovations can utilize new knowledge or technology or can also use a combination of existing knowledge or technology. New products differ significantly in their characteristic or intended uses from products previously produced by the firm. Example of product innovation can also be new functional foods with a health announced feature or new product with a low environmental impact. Other types of innovation are marketing and organizational innovation. A marketing innovation is the implementation of a new marketing method involving significant changes in product design, packaging, product placement, product promotion, or pricing. Marketing innovations are aimed at better addressing customer's need, opening up new market, or newly positioning a firm's product on the market with the objective of increasing the firm's sales. For example, in 2015, Pepsi launched a new marketing campaign to promote its product in the US during the Super Bowl season. Pepsi did this by adding a quad code on all color cans and consumer who downloaded a Pepsi app and scanned the quad code on the can received a picture of their favorite football player on the cell phone to use it as screen saver. Consumers liked this new feature, and during the Superbowl weeks a million of quad codes were scanned and Pepsi increased its sales by 50%, compared to the previous season when Pepsi used standard advertisement methods to promote its product in the same period. This is clearly an example of marketing innovation. Instead, organizational innovation refer to the implementation of a new organizational method in the firm's business practice, workplace organization, or external relation.
