2.1 Definitions and types of innovation

Firstly, the broad definition of innovation that we have used as our starting point in this course is the widely used definition of innovation set out in the Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data (OECD, 2005). This definition comes from a wider tradition of research into the measurement of innovation. It is used by organisations such as the Organisation for Economic Co-operation and Development (OECD) and the Commission of the European Communities (CEC) to inform innovation policy. This sets out four main types of innovation (OECD, 2005):

• Product innovation – a good or service that is new or significantly improved. This is perhaps what we think of most often when we think of an innovation. Recent examples of product innovation would be ‘smart’ phones and tablet computers.
• Process innovation – a new or significantly improved production or delivery method. Innovations in the way things are made can critically effect, for example, how widely accessible they are. A recent, and widespread, example would be the shift in many retail sectors such as clothing, books and groceries to online sales and associated distribution.
• Marketing innovation – a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. The English football Premiership might be seen as an example of marketing innovation. The old First Division was replaced by a new organisation that sold broadcast rights via a new television provider, making the English Premiership perhaps the richest football league in the world. Essentially the same product was repackaged and made available via paid-for subscription satellite TV.
• Organisational innovation – a new organisational method in business practices, workplace organisation or external relations. Open source software is organised very differently from conventional software development and has become an important source of software such as the Linux and Android operating systems and a wide range of applications (including the Firefox browser and Zotero reference management system).

The OECD definition focuses on what is innovated – product, process, marketing or organisation – rather than how or why people or organisations choose to use an innovation, or how an innovation might be produced. In 2005, the inclusion of marketing and organisational innovation in the definition used in the 3rd edition of the Oslo Manual represented a broadening understanding of innovation and the recognition of the increasing significance of non-technical innovations. It is a particularly significant definition in that it is used to inform policy making at European and international levels.