1. Research stage

2. Stage of production

3. Stage of consumption

1. birth of innovation

2. development of innovation

3. innovation diffusion

4. routinization of innovation

Generation

Feasibility check

Creation of a prototype

Comprehensive testing and improvement of technical characteristics

Market sounding

Organization of large-scale production

Market expansion

Market needs analysis

Large Scale Marketing

First stage

Second phase

Third stage

Fourth stage

Fifth stage

Sixth stage

Organization of the innovation process

Figure: Dynamics of costs and benefits during implementation

T0 t1 t2 t3 t

Gross income

net income

- profit

- current costs associated with the production and sale of products

Figure: Staged Innovation Financing Mechanism

1. 2. 3. 4. 5. 6. time

1. - seed funding

2. - seed funding

3. - stage of initial expansion

4. - stage of rapid expansion

5. - preparatory stage

6. - the stage of ensuring the liquidity of risky investments

1. Pre-start financing implies financial support for carrying out work on the theoretical and practical substantiation of the commercial significance of your idea. At this stage, preliminary research and development is carried out, a potential market for new products is assessed, and a plan for the activities of the future organization is prepared. The stage can last from several months to one year and, on average, requires investors to new organization investments in the amount of up to 300 thousand dollars. This is the most risky investment, since there is practically no reliable information to determine the viability of the proposed project. As a rule, at the end of this stage, about 70% of new ideas are discarded. At the same time, the accepted ideas bring the highest profits to investors who enter the business at this stage.

2. At this stage, work on the organization of a new enterprise and the selection of key employees is almost completed, the development and testing of an innovation prototype, as well as the study of market needs, are nearing completion. The leaders of the organization already have a formal business plan that serves as the basis for negotiating with risk capital investors. The new organization needs funding in order to start producing and selling its products. In some cases, additional research and development costs are required. The stage takes about a year and usually costs investors up to $1 million. Due to the high degree of risk, joint investments by several venture investors are often practiced.

3. The initial expansion stage involves the transition of an innovative organization to practical activities for the commercial development of a new type of product or service. At this time, the organization needs advertising, strengthening its reputation with consumers, overcoming competition, creating a sales network for marketable products, organizing and improving production management. Profits from sales of products are not yet provided at this stage financial opportunities for further growth, paying current expenses and creating working capital. At the same time, the existing assets of the organization do not serve as a reliable guarantee for obtaining loans from banks. Thus, entrepreneurs again resort to the services of venture capital investors. The stage can take several years and requires several million dollars for the normal operation of the new organization. Therefore, several venture funds usually participate in the financing of innovations.

4. If the previous stage is successful, it is followed by a rapid expansion stage, in which the organization needs significant funds to increase production capacity, working capital, improve the marketing system, and to improve products.

5. After the organization has reached the stage of rapid expansion and has become profitable, the likelihood of its bankruptcy is significantly reduced. Now it can use borrowed funds from traditional sources of financing. Attracting new risk capital investors, as a rule, stops. Conditions are being prepared for the issuance of shares of the new organization to the market valuable papers. This work takes at least, three months and can cost about 300 thousand dollars or more.

6. At this stage, shares are issued and sold on the securities market.

The main part of risky investments (approximately 2/3) usually falls on the first three stages of financing. The duration of the full cycle of risky investments in one organization varies widely. However, in most cases this period is 5-10 years.

Thus, an indispensable condition for risky investments is the provision financial resources without paying interest and repaying the debt for a sufficiently long period of time. Therefore, risk funds prefer to follow the path joint investment, which significantly reduces the risk of individual depositors.

Topic 4. Innovative design and organization of R&D

Sources of innovative ideas

Drucker P. identifies seven sources of innovative ideas:

§ unexpected event for an organization or industry - unexpected success, unexpected failure, unexpected external event

§ incongruence - a discrepancy between reality (as it really is) and our ideas about it (what it should be)

§ innovations based on the needs of the process (under the need of the process one should mean those of its shortcomings and weaknesses that can and should be eliminated)

§ sudden changes in industry or market structure

§ demographic changes

§ changes in perceptions, moods and values

§ new knowledge (both scientific and non-scientific).

According to Drucker P., a systematic innovation process consists in a purposeful and organized search for changes and in a systematic analysis of these changes as a source of social and economic innovation. He refers to the first 4 sources of innovative ideas (areas of change) as internal, since they are within the organization, within the industry or service sector (such sources are available to those working in this organization or in this industry). The last three sources are external because they originate outside the organization or industry. However, there are no clear boundaries between all sources, and they can intersect mutually.

When choosing an innovative idea and deciding on the implementation of any innovation, you need to find out some points:

§ if we are talking about product innovation - does a particular product have a good chance in the market

§ if we are talking about any innovative project - real profit (the profit from the project should be much higher than the cost of its implementation) and real risk assessment (the risk associated with the project should be in the maximum allowable ratio with the profit from its implementation).

Thus, in order to achieve the intended goals and obtain monopoly excess profits from innovation, the organization must comply with certain conditions and meet certain requirements:

§ it is necessary to clearly represent the volume of demand of potential consumers for innovation, its economically expressed advantages over already existing ways meeting this need

§ it is necessary to identify resource constraints that arise during the creation, production and marketing of innovations, i.e. it is important to correctly make a comprehensive forecast of the economic potential of innovation

§ for the successful development of an innovative organization prerequisite is the compliance of the organization's personnel with certain requirements

§ With limited material and financial resources and market uncertainty, the quality of organization and management plays a significant role in the success of innovative organizations.

In connection with the foregoing, it is small innovative organizations that are most effective, since they are characterized by the absence of strictly formalized management structures, which ensures speed and flexibility in decision-making.

Innovation process

Conception, preparation and gradual implementation innovative change called the innovation process. The innovation process is a broader concept than innovation activity. It can be viewed from different perspectives and in varying degrees of detail:

Firstly, it can be viewed as a parallel-sequential implementation of research, scientific and technical, production activities and innovation;

Secondly, it can be considered as temporary stages of the innovation life cycle from the emergence of an idea to its development and implementation.

AT general view, the innovation process is a sequential chain of events during which innovation is realized from an idea to a specific product, technology or service and is distributed in economic practice. Moreover, the innovation process does not end with the so-called implementation, i.e. the first appearance on the market of a new product, service or bringing a new technology to its design capacity. The process is not interrupted because as it spreads in the economy, an innovation improves, becomes more efficient, acquires new consumer properties, which opens up new areas of application, new markets, and hence new consumers.

An important direction in the study of innovation processes is the identification of real factors that facilitate or hinder their implementation.

Table: Factors influencing the development of innovation processes

Group of factors	Factors hindering innovation activity	Factors contributing to innovation
Economic, technological	lack of funding innovative projects Weakness of the material and scientific and technical base and outdated technology, lack of reserve capacity Dominance of the interests of current production	Availability of a reserve of financial, material and technical means, progressive technologies Availability of the necessary economic and scientific and technical infrastructure Material incentives for innovative activity
Political, legal	Restrictions from antimonopoly, tax, depreciation, patent and licensing legislation	Legislative measures (especially incentives) that encourage innovation governmental support innovation
Organizational and managerial	Established organizational structure, excessive centralization, authoritarian style of management, predominance of vertical information flows Departmental isolation, difficulty in intersectoral and interorganizational interactions Rigidity in planning Focus on established markets Focus on short-term payback Difficulty in reconciling the interests of participants in innovation processes	Flexibility of the organizational structure, democratic management style, dominance of horizontal information flows, self-planning, allowance for adjustments Decentralization, autonomy, formation of target problem groups
Socio-psychological, cultural	resistance to change, which can cause such consequences as a change in status, the need to search new work, restructuring of established ways of activity, violation of stereotypes of behavior, established traditions fear of uncertainty, fear of punishment for failure resistance to everything new that comes from outside	moral encouragement, social recognition providing opportunities for self-realization, the release of creative work normal psychological climate in the workforce

The innovation creation process includes (innovation life cycle):

1. Research stage

§ fundamental research and development of a theoretical approach to solving a problem (fundamental research is a theoretical or experimental activity aimed at obtaining new knowledge about the basic patterns and properties of social and natural phenomena, about cause-and-effect relationships with respect to their specific application. There are theoretical and search fundamental research Theoretical research includes research - the task of which is new discoveries, the creation of new theories and the justification of new concepts and ideas. Exploratory research includes fundamental research - the task of which is the discovery of new principles for creating products and technologies, new, previously unknown, properties of materials and their compounds, methods of analysis and synthesis.In exploratory studies, the goal of the intended work is usually known, more or less clear theoretical basis but directions are not specified. In the course of such research, theoretical proposals and ideas are confirmed, rejected or revised. The positive output of fundamental research in world science is 5%.);

§ applied research and experimental models (applied/original research is aimed primarily at achieving a specific goal or task, at identifying ways practical application previously discovered phenomena and processes; research work of an applied nature aims to solve a technical problem, clarify unclear theoretical issues, obtaining specific scientific results that will be further used in experimental developments);

§ experimental development, determination of technical parameters, product design, manufacturing, testing, refinement (product development is the final stage of scientific research, characterized by the transition from laboratory conditions and experimental production to industrial production. The purpose of product development is to create / modernize samples of new technology that can be transferred after appropriate tests to mass production or directly to the consumer.At this stage, the final verification of the results of theoretical studies is carried out, the corresponding technical documentation is developed, a technical prototype or an experimental technological process is manufactured and tested.A technical prototype is a real-life sample of a product, system or process, demonstrating the suitability and compliance of performance with specifications and production requirements);

2. Stage of production

§ initial development and preparation of production (at this stage, a description of possible production methods is made, indicating the main materials and technological processes, conditions for operational and environmental safety. The stage of determining industrial applicability and preparation for production is the period during which the product must be prepared for release to market.The result is a prototype, a full-scale, working model designed and built to define the manufacturing requirements of a new product.The prototype fully complies with industrial design standards for a mass-produced final product. technical analysis and collection of information are the basis of a feasibility study containing a detailed assessment of the costs of creating and operating a production complex and the profit from selling the product on the market at competitive prices);

§ start-up and management of mastered production (full-scale production is the period during which New Product mastered in industrial production and optimized manufacturing process in accordance with market requirements);

3. Stage of consumption

§ delivery of products to the market and its consumption (at this stage, the strategy for promoting a new product to the market is specified, there is a direct consumption of new knowledge embodied in a new product. At the same time, the actual effectiveness of innovative activity is revealed.);

§ obsolescence of the product and the necessary elimination of obsolete production (this stage occurs when there is not only physical, but primarily moral depreciation of equipment caused by the rapid pace of development of new highly efficient models).

With regard to innovation, as a process of transferring innovation into the scope of application, the content of the life cycle is somewhat different and includes the following stages:

1. birth of innovation- awareness of the need and the possibility of changes, search and development of innovations;

2. development of innovation- implementation at the facility, experiment, implementation of production changes;

3. innovation diffusion- distribution, replication and multiple repetition at other objects (dissemination of innovation is an information process, the form and speed of which depend on the power of communication channels, the characteristics of the perception of information by economic entities, their abilities for the practical use of this information, etc. According to the theory of Schumpeter Y (diffusion of innovation is the process of cumulative increase in the number of imitators/followers who innovate after the innovator in anticipation of higher profits);

4. routinization of innovation- innovation is implemented in stable, permanently functioning elements of the relevant objects.

Thus, both life cycles are interconnected, interdependent and impossible one without the other. Both life cycles are covered general concept innovation process, and the main difference between them is that in one case there is a process of formation of new products, in the other - the process of its commercialization.

Figure: Innovation process

Generation

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In the practice of management, a lot of recommendations have been developed regarding the search for sources of new opportunities for the organization. The need for innovation arises for various reasons. However, a problem-driven approach to finding new ideas hinders the development of the organization. Therefore, managers must be able to find opportunities that lie in the combination of a new state of the external environment and the potential of the organization, i.e. work ahead.

Competitive advantages - characteristics of the enterprise, its products or services that provide it with certain advantages over competitors.

These benefits are due to various factors. The American specialist in the field of strategic management M. Porter considers the main among them:

New technologies;

New customer requests;

Emergence of a new market segment;

Change in the cost or availability of production components.

Considering the importance for the organization, its competitive advantages are divided into two types:

The advantages of low rank associated with the availability of sources of raw materials, the availability of cheap labor, obtaining temporary tax breaks etc. They are unstable because they can be copied by competitors.

The advantages of a high rank associated with the presence of qualified personnel in the enterprise, able to use modern technologies in all areas of activity, to conduct innovative search and create novelties, obtain patents, develop and improve the material and technical base of the enterprise, ensure high standards of its activities and form a positive image. These benefits are long lasting and provide the opportunity to achieve superior business performance.

Renowned management expert Peter Drucker highlighted seven main sources of innovation:

1. Unexpected event (success, failure, event in the external environment).

2. Discrepancy or discrepancy between reality and its reflection in our opinions and assessments.

3. The needs of the production process.

4. A change in the structure of the industry and the market, "taking everyone by surprise."

5. Demographic changes.

6. Changes in consumer perception and sentiment.

7. New knowledge (scientific and non-scientific).

Although these sources of innovation are only symptoms, they should nevertheless be considered reliable indicators of imminent change which managers and specialists should notice in a timely manner.

1. Unexpected event

The richest opportunities for effective innovation come from unexpected success (Table 1). At the same time, innovative opportunities are associated with a lower risk of obtaining a negative result, and the implementation of innovations is less laborious.

Table 1

The use of medicines intended for humans for the treatment of animals

Unexpected success to be seen, and it must be reflected in the information that the manager receives.

Unlike unexpected success failure rarely goes unnoticed, but as a symptom of new opportunities, it is perceived even less often. Most failures are the result of mistakes, incompetence in planning or execution. If the project is carefully prepared and executed in good faith, but fails, you should find out why this happened: perhaps the prerequisites of the project did not correspond to reality.

It should be borne in mind that favorable innovation opportunities are not created by any unexpected events, but only by those that allow the company to use the knowledge and experience available in the company in a slightly different environment. It's not about diversification, it's about expanding its field of activity.

2. Mismatch between what is and what should be

The discrepancy between reality and perception of it, as a rule, does not appear in the reports that are provided to managers. This phenomenon is more qualitative than quantitative, and can be expressed in the following situations.

· Discrepancy between economic indicators. Increasing demand for products and increasing production volumes should be matched by an increase in profits. The discrepancy between the dynamics of these indicators on the scale of the industry or its large sector indicates crisis situation. An innovator who notices this discrepancy and finds a new solution to the problem can expect a long period of success. Usually, large enterprises they do not soon realize that they have a new and serious competitor.

· The discrepancy between reality and the idea of it. This discrepancy arises when industry leaders rely on erroneous assumptions and misunderstand the real situation. Efforts are concentrated in areas where positive results do not exist. For example, the emergence of private clinics, document processing centers, private schools and kindergartens.

· Mismatch between the values of the buyer and the perceptions of their leaders. Leaders think they know everything, but in fact, something else is happening - this is a widespread phenomenon in the world, often due to the manifestation of intellectual arrogance. The Japanese radio manufacturers at one time were sure that the poor could not afford such a luxury as a television, and computer manufacturers did not imagine its use as a personal device.

Competitive advantage is always associated with the implementation of certain changes that affect all members of the organization. At the same time, changes, to one degree or another, are always associated with innovation.
For the first time, the term “innovation” appeared in the scientific studies of culturologists back in the 19th century and literally meant the introduction of some elements of one culture into another.
Only at the beginning of the 20th century began to study the patterns of technical innovations. In 1911, the Austrian economist Schumpeter J. in his work “Theory economic development” highlighted two sides economic life:
static (routine circulation is associated with constant repetition and resumption of production - the organizations participating in it know the principles of their behavior from their experience, it is easy for them to foresee the results of their actions and it is easy to make decisions, because the situation is clear);
· dynamic (innovative circulation means development - a special, distinguishable in practice and in the minds of people, a state that acts on them as an external force and does not occur in a situation of economic circulation).
Innovations in the economy are introduced, as a rule, not after the consumer spontaneously has new needs and reorientation of production takes place, but when the production itself accustoms the consumer to new needs.
To produce means to combine the resources available to the organization, and to produce something new means to create new combinations of changes in the development of production and the market. Schumpeter J. identified five typical changes:
1. changes due to the use of new technology, new technological processes and new market support for production;
2. changes due to the use of products with new properties;
3. changes due to the use of new raw materials;
4. changes in the organization of production and methods of its logistics;
5. changes due to the emergence of new markets.
In the 30s of the 20th century, Schumpeter J. first used the concept of “innovation”, meaning by this change in order to introduce and use new types consumer goods, new production means, markets and forms of organization in industry. At the same time, Schumpeter J. assigned the main role of the driving force of the economic development of society not to the nature of the struggle between capital and the proletariat (according to Marx K.), but to the introduction of innovations in the economy of the state.
In the course of the research, it also became clear that not only a change in prices and savings on current costs, but also a radical renewal and change in products can become a source of profit. The ability to ensure the competitiveness of the organization by changing prices or reducing costs is always short-term and has a marginal character. The innovative approach turns out to be more preferable, since the process of searching, accumulating and transforming scientific knowledge into physical reality is, in fact, unlimited.

Sources of innovative ideas

Drucker P. identifies seven sources of innovative ideas:
1. unexpected event for an organization or industry - unexpected success, unexpected failure, unexpected external event
2. non-congruence - a discrepancy between reality (as it really is) and our ideas about it (as it should be)
3. innovations based on the needs of the process (under the need of the process one should mean those of its shortcomings and weaknesses that can and should be eliminated)
4. sudden changes in industry or market structure
5. demographic changes
6. changes in perceptions, moods and values
7. new knowledge (both scientific and non-scientific).
According to Drucker P., a systematic innovation process consists in a purposeful and organized search for changes and in a systematic analysis of these changes as a source of social and economic innovation. He refers to the first 4 sources of innovative ideas (areas of change) as internal, since they are within the organization, within the industry or service sector (such sources are available to those working in this organization or in this industry). The last three sources are external because they originate outside the organization or industry. However, there are no clear boundaries between all sources, and they can intersect mutually.
When choosing an innovative idea and deciding on the implementation of any innovation, you need to find out some points:
§ if we are talking about product innovation - does this or that product have a good chance in the market
§ if we are talking about any innovative project - real profit (the profit from the project should be much higher than the cost of its implementation) and real risk assessment (the risk associated with the project should be in the maximum allowable ratio with the profit from its implementation).
Thus, in order to achieve the intended goals and obtain monopoly excess profits from innovation, the organization must comply with certain conditions and meet certain requirements:
§ it is necessary to clearly represent the volume of demand of potential consumers for innovation, its economically expressed advantages over existing methods of satisfying this need
§ it is necessary to identify resource constraints that arise during the creation, production and marketing of innovations, i.e. it is important to correctly make a comprehensive forecast of the economic potential of innovation
§ for the successful development of an innovative organization, a prerequisite is the compliance of the organization's personnel with certain requirements
§ With limited material and financial resources and market uncertainty, the quality of organization and management plays a significant role in the success of innovative organizations.
In connection with the foregoing, it is small innovative organizations that are most effective, since they are characterized by the absence of strictly formalized management structures, which ensures speed and flexibility in decision-making.

Innovation process

Formation of the idea, preparation and gradual implementation of innovative changes is called the innovation process. The innovation process is a broader concept than innovation activity. It can be viewed from different perspectives and in varying degrees of detail:
Firstly, it can be viewed as a parallel-sequential implementation of research, scientific, technical, industrial activities and innovations;
Secondly, it can be considered as temporary stages of the innovation life cycle from the emergence of an idea to its development and implementation.
In general terms, the innovation process is a sequential chain of events during which innovation is realized from an idea to a specific product, technology or service and is distributed in economic practice. Moreover, the innovation process does not end with the so-called implementation, i.e. the first appearance on the market of a new product, service or bringing a new technology to its design capacity. The process is not interrupted because as it spreads in the economy, an innovation improves, becomes more efficient, acquires new consumer properties, which opens up new areas of application, new markets, and hence new consumers.
An important direction in the study of innovation processes is the identification of real factors that facilitate or hinder their implementation.

Table: Factors influencing the development of innovation processes

Group of factors Factors hindering innovation activity Factors facilitating innovation activity
Economic, technological Lack of funds to finance innovative projects Weakness of the material and scientific and technical base and outdated technology, lack of reserve capacities Dominance of the interests of current production Availability of a reserve of financial, material and technical resources, advanced technologies Availability of the necessary economic and scientific technical infrastructure financial incentives for innovative activities
Political, legal Restrictions from antimonopoly, tax, amortization, patent and licensing legislation Legislative measures (especially benefits) that encourage innovation State support for innovation
Organizational and managerial Established organizational structure, excessive centralization, authoritarian style of management, predominance of vertical information flows Departmental isolation, difficulty of intersectoral and interorganizational interactions Rigidity in planning Orientation to established markets Orientation to short-term payback Difficulty in coordinating the interests of participants in innovative processes Flexibility organizational structures, democratic management style, dominance of horizontal information flows, self-planning, allowance for adjustments decentralization, autonomy, formation of target problem groups
Socio-psychological, cultural resistance to changes that can cause such consequences as a change in status, the need to look for a new job, the restructuring of established ways of activity, the violation of stereotypes of behavior, established traditions fear of uncertainty, fear of punishment for failure resistance to everything new that comes from the outside · moral encouragement, public recognition · provision of opportunities for self-realization, liberation of creative labor · normal psychological climate in the work team

The content of the innovation process covers the stages of creation, both innovation and innovation.
The innovation creation process includes (innovation life cycle):
1. Research stage
§ fundamental research and development of a theoretical approach to solving a problem (fundamental research is a theoretical or experimental activity aimed at obtaining new knowledge about the basic patterns and properties of social and natural phenomena, about cause-and-effect relationships with respect to their specific application. There are theoretical and search fundamental research Theoretical research includes research - the task of which is new discoveries, the creation of new theories and the justification of new concepts and ideas. Exploratory research includes fundamental research - the task of which is the discovery of new principles for creating products and technologies, new, previously unknown, properties of materials and their compounds, methods of analysis and synthesis.In exploratory studies, the purpose of the intended work is usually known, the theoretical foundations are more or less clear, but directions are not specified. I or revised theoretical proposals and ideas. The positive output of fundamental research in world science is 5%.);
§ applied research and experimental models (applied/original research is primarily aimed at achieving a specific goal or task, at identifying ways of practical application of previously discovered phenomena and processes; applied research work aims to solve a technical problem, clarify unclear theoretical questions, obtaining specific scientific results that will be further used in experimental developments);
§ experimental development, determination of technical parameters, product design, manufacturing, testing, refinement (product development is the final stage of scientific research, characterized by the transition from laboratory conditions and experimental production to industrial production. The purpose of product development is to create / modernize samples of new technology that can be transferred after appropriate tests to mass production or directly to the consumer.At this stage, the final verification of the results of theoretical studies is carried out, the corresponding technical documentation is developed, a technical prototype or an experimental technological process is manufactured and tested.A technical prototype is a real-life sample of a product, system or process, demonstrating the suitability and compliance of performance with specifications and production requirements);
2. Stage of production
§ initial development and preparation of production (at this stage, a description of possible production methods is made, indicating the main materials and technological processes, conditions for operational and environmental safety. The stage of determining industrial applicability and preparation for production is the period during which the product must be prepared for release to the market The result is a prototype, a full-scale working model designed and built to define the requirements for the production of a new product The prototype fully complies with the industrial design standards of the final product being mastered in mass production Technical analysis and information gathering data are the basis of the feasibility study containing a detailed assessment of the costs of creating and operating the production complex and the profit from selling the product on the market at competitive prices);
§ start-up and management of mastered production (full-scale production is the period during which a new product is mastered in industrial production and the production process is optimized in accordance with market requirements);
3. Stage of consumption
§ delivery of products to the market and its consumption (at this stage, the strategy for promoting a new product to the market is specified, there is a direct consumption of new knowledge embodied in a new product. At the same time, the actual effectiveness of innovative activity is revealed.);
§ obsolescence of the product and the necessary elimination of obsolete production (this stage occurs when there is not only physical, but primarily moral depreciation of equipment caused by the rapid pace of development of new highly efficient models).
With regard to innovation, as a process of transferring innovation into the scope of application, the content of the life cycle is somewhat different and includes the following stages:
1. the birth of innovation - awareness of the need and the possibility of change, search and development of innovations;
2. development of innovation - implementation at the facility, experiment, implementation of production changes;
3. diffusion of innovation - distribution, replication and multiple repetition at other objects (dissemination of innovation is an information process, the form and speed of which depend on the power of communication channels, the characteristics of the perception of information by business entities, their abilities for the practical use of this information, etc. According to J. Schumpeter's theory, diffusion of innovation is the process of a cumulative increase in the number of imitators/followers who innovate after the innovator in anticipation of higher profits);
4. routinization of innovation - innovation is implemented in stable, constantly functioning elements of the corresponding objects.
An innovation, as a process, cannot be considered fully completed if it stops at one of these stages. In turn, the life cycle of an innovation can stop at the stage of consumption if it does not close with the innovation.
Thus, both life cycles are interconnected, interdependent and impossible one without the other. Both life cycles are covered by the general concept of the innovation process, and the main difference between them is that in one case there is a process of formation of new products, in the other - the process of its commercialization.

Picture: Life cycle new product

STREAM The need for theoretical research The need for development in the development of applied research The need of the economy for the development of new equipment, technology and consumer goods
SCIENTIFIC Basic Research Applied Research Experimental developments Diffusion of innovations into production and consumption
IDEAS Discoveries Inventions Scientific and technological advances/developments Innovation

Figure: Innovation process

Idea generation Feasibility testing Prototyping Comprehensive testing and performance improvement Market sounding Large-scale production organization Market expansion
Market needs analysis Large-scale marketing
First stage Second stage Third stage Fourth stage Fifth stage Sixth stage
Organization of the innovation process
Let's look at the process of implementing innovation from a financial point of view.

Figure: Dynamics of costs and benefits during implementation
innovative project (according to Mikkelson H.)

Profit W

Gross income

net income

Profit

Current costs associated
with production and
sales of products

It is obvious that the early stages of this process are notoriously expensive, and the costs increase sharply as the innovation approaches the market (time t1). The segment t0-t1 corresponds to the first four stages of the innovation process. With the onset of the fifth stage, the organization begins to receive income from sales, which grows further with the expansion of the scale of production and sales (curve W on the segment t1-t3). Naturally, this happens only with the successful development of the innovation process. Curve V on the same segment characterizes the receipt of net income, starting from time t1. It is formed as a result of subtracting from the gross income W the current costs Q associated with the production and sale of marketable products. From a certain point in time t2>t1, net income compensates for the costs in the early stages of the innovation process and the organization begins to receive net profit (curve P on the segment t2-t3).
Net profit increases as long as the new marketable product is competitive and in demand among buyers.
However, life shows that under conditions market economy this happy period for entrepreneurs does not last long. Many others follow in the footsteps of the innovator organization, also striving to establish themselves in a new market niche. Some of them acquire a license to use the innovation legally. Others act by pirating methods, using technology developed by the first organization or releasing a new product without complying with all statutory requirements. Still others generally discredit innovations by organizing the underground production of low-quality and cheaper analogues under the brand name of the developer organization. Finally, the fourth - the most serious competitors in the market - independently improve the consumer or technological characteristics of the innovation, achieve significant results along this path, find loopholes in patent law and gradually fill new market niche spaces with their products.

Topic 1. Innovations as an object of innovation management

1.2. Factors that promote innovation

Favorable opportunities for innovation are created by changes in the internal and external market environment. Drucker P. identifies seven sources of innovative ideas:

Internal (located within the organization, within the industry or service sector (such sources are available to those working in this organization or in this industry):

unexpected event for an organization or industry - unexpected success, unexpected failure, unexpected external event.

incongruence - a discrepancy between reality (as it really is) and our ideas about it (as it should be).

innovations based on the needs of the process (under the need of the process one should mean those of its shortcomings and weaknesses that can and should be eliminated). In particular, the use of scientific and technological advances and the ability to manage large volumes of information allow companies to improve the way they meet the needs of consumers. Opportunities are emerging to create and deliver ever more effective products and services to consumers. New knowledge allows us to improve products and services, reduce the cost of products and improve their quality. sudden changes in industry or market structure Changes in the structure of industries offer enormous opportunities for innovation.

External (they have their origin outside the given organization or industry):

demographic and environmental changes.

changes in perceptions, moods and values.

new knowledge (both scientific and non-scientific).

The factors listed above can overlap in time, which means that at the same moment the company may well have the opportunity to choose several directions for applying forces at once.

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At least 1 year experience as a foreman. -Education: secondary / higher chemical (engineer-chemist-technologist

Drucker P. identifies seven sources of innovative ideas:

§ unexpected event for an organization or industry - unexpected success, unexpected failure, unexpected external event

§ incongruence - a discrepancy between reality (as it really is) and our ideas about it (what it should be)

§ innovations based on the needs of the process (under the need of the process one should mean those of its shortcomings and weaknesses that can and should be eliminated)

§ sudden changes in industry or market structure

§ demographic changes

§ changes in perceptions, moods and values

§ new knowledge (both scientific and non-scientific).

When choosing an innovative idea and deciding on the implementation of any innovation, you need to find out some points:

§ if we are talking about product innovation - does this or that product have a good chance in the market

Thus, in order to achieve the intended goals and obtain monopoly excess profits from innovation, the organization must comply with certain conditions and meet certain requirements:

§ it is necessary to clearly represent the volume of demand of potential consumers for innovation, its economically expressed advantages over existing methods of satisfying this need

§ for the successful development of an innovative organization, a prerequisite is the compliance of the organization's personnel with certain requirements

§ With limited material and financial resources and market uncertainty, the quality of organization and management plays a significant role in the success of innovative organizations.

Innovation process

Firstly, it can be viewed as a parallel-sequential implementation of research, scientific, technical, industrial activities and innovations;

Secondly, it can be considered as temporary stages of the innovation life cycle from the emergence of an idea to its development and implementation.

In general terms, the innovation process is a sequential chain of events during which innovation is realized from an idea to a specific product, technology or service and is distributed in economic practice. Moreover, the innovation process does not end with the so-called implementation, i.e. the first appearance on the market of a new product, service or bringing a new technology to its design capacity. The process is not interrupted because as it spreads in the economy, an innovation improves, becomes more efficient, acquires new consumer properties, which opens up new areas of application, new markets, and hence new consumers.

An important direction in the study of innovation processes is the identification of real factors that facilitate or hinder their implementation.

Table: Factors influencing the development of innovation processes

Group of factors	Factors hindering innovation activity	Factors contributing to innovation
Economic, technological	Lack of funds to finance innovative projects Weak material and scientific and technical base and outdated technology, lack of reserve capacity Dominance of the interests of current production	Availability of a reserve of financial, material and technical means, progressive technologies Availability of the necessary economic and scientific and technical infrastructure Material incentives for innovative activities
Political, legal	Restrictions from antimonopoly, tax, depreciation, patent and licensing legislation	Legislative measures (especially benefits) that encourage innovation State support for innovation
Organizational and managerial	Established organizational structure, excessive centralization, authoritarian style of management, predominance of vertical information flows Departmental isolation, difficulty in intersectoral and interorganizational interactions Rigidity in planning Focus on established markets Focus on short-term payback Difficulty in reconciling the interests of participants in innovation processes	Flexibility of the organizational structure, democratic management style, dominance of horizontal information flows, self-planning, allowance for adjustments Decentralization, autonomy, formation of target problem groups
Socio-psychological, cultural	resistance to change that can cause such consequences as a change in status, the need to look for a new job, the restructuring of established ways of activity, the violation of stereotypes of behavior, established traditions fear of uncertainty, fear of punishment for failure resistance to everything new that comes from outside	moral encouragement, social recognition providing opportunities for self-realization, the release of creative work normal psychological climate in the workforce

The innovation creation process includes (innovation life cycle):

1. Research stage

§ fundamental research and development of a theoretical approach to solving a problem (fundamental research is a theoretical or experimental activity aimed at obtaining new knowledge about the basic patterns and properties of social and natural phenomena, about cause-and-effect relationships with respect to their specific application. There are theoretical and search fundamental research Theoretical research includes research - the task of which is new discoveries, the creation of new theories and the justification of new concepts and ideas. Exploratory research includes fundamental research - the task of which is the discovery of new principles for creating products and technologies, new, previously unknown, properties of materials and their compounds, methods of analysis and synthesis.In exploratory studies, the purpose of the intended work is usually known, the theoretical foundations are more or less clear, but directions are not specified. I or revised theoretical proposals and ideas. The positive output of fundamental research in world science is 5%.);

§ applied research and experimental models (applied/original research is primarily aimed at achieving a specific goal or task, at identifying ways of practical application of previously discovered phenomena and processes; applied research work aims to solve a technical problem, clarify unclear theoretical questions, obtaining specific scientific results that will be further used in experimental developments);

2. Stage of production

§ initial development and preparation of production (at this stage, a description of possible production methods is made, indicating the main materials and technological processes, conditions for operational and environmental safety. The stage of determining industrial applicability and preparation for production is the period during which the product must be prepared for release to the market The result is a prototype, a full-scale working model designed and built to define the requirements for the production of a new product The prototype fully complies with the industrial design standards of the final product being mastered in mass production Technical analysis and information gathering data are the basis of the feasibility study containing a detailed assessment of the costs of creating and operating the production complex and the profit from selling the product on the market at competitive prices);

§ start-up and management of mastered production (full-scale production is the period during which a new product is mastered in industrial production and the production process is optimized in accordance with market requirements);

3. Stage of consumption

With regard to innovation, as a process of transferring innovation into the scope of application, the content of the life cycle is somewhat different and includes the following stages:

1. birth of innovation- awareness of the need and the possibility of changes, search and development of innovations;

2. development of innovation- implementation at the facility, experiment, implementation of production changes;

4. routinization of innovation- innovation is implemented in stable, permanently functioning elements of the relevant objects.

Thus, both life cycles are interconnected, interdependent and impossible one without the other. Both life cycles are covered by the general concept of the innovation process, and the main difference between them is that in one case there is a process of formation of new products, in the other - the process of its commercialization.

Figure: New product life cycle

P O T O K	Need for theoretical research	The need for development in the development of applied research	The need of the economy in the development of new equipment, technology and consumer goods
S A C H N Y X	Basic Research	Applied Research	Experimental developments	Diffusion of innovations into production and consumption
I D E Y	Discoveries	inventions	Scientific and technological achievements / developments	Innovation