U3.15 — The Role of Innovation in Improving Products, Processes and Services
Overview
Dotpoint 15: the role of innovation in improving products, processes and services.
Innovation refers to the development or improvement of products, processes or services to create value for customers and improve business performance.
This dotpoint focuses on the role of innovation. This means the focus is on what innovation does inside a business, rather than only listing the benefits.
Innovation can improve a business in three main areas:
- products — what the business sells
- processes — how the business operates
- services — how the business supports and interacts with customers
The next dotpoint, U3.16, focuses more directly on the benefits of innovation.
📦 Products
Product innovation occurs when a business creates a new product or improves an existing product so that it better meets customer needs or market expectations.
How product innovation improves a business
The role of product innovation is to improve what the business sells. This can involve developing new products, updating existing products or adapting products to changes in the market.
Product innovation is not just about making a product “better”. It is about changing the product so it remains relevant to customers, technology, competitors and environmental expectations.
Improved customer value, differentiation and stronger competitiveness are the resulting benefits, but the role of product innovation is to develop, improve and adapt the actual product.
Three roles of product innovation
Develops new products
Creates entirely new products to meet emerging customer needs or address gaps in the market.
Improves existing products
Updates a product’s features, quality, design or functionality to keep it relevant and valuable.
Adapts products to market changes
Modifies products in response to changing customer preferences, technology, competition or environmental expectations.
Examples of product innovation
Atlassian
Atlassian can use product innovation by developing new software tools or improving existing platforms such as Jira and Confluence with new features, integrations and AI-assisted functions.
This reflects the role of product innovation because the business is changing the product itself to suit how modern teams work.
Cochlear
Cochlear uses product innovation by improving hearing implant technology, sound processors, battery life and connected features.
This reflects the role of product innovation because the business updates product quality, design and functionality to better meet user needs.
Canva
Canva can use product innovation by adding new design tools, AI image features, brand kits, templates and collaborative editing functions.
This reflects the role of product innovation because the business develops and improves digital products to stay relevant in a competitive design software market.
Example of how to write this in an exam
The role of innovation in improving products is to develop new products, improve existing products and adapt products to market changes. For example, Canva could add new AI design tools or improve its existing template and collaboration features. This means the actual product becomes more relevant to changing customer needs and technology trends. As a result, product innovation can lead to benefits such as improved customer value, differentiation and stronger competitiveness.
⚙️ Processes
Process innovation occurs when a business introduces or improves the way work is completed, products are produced or services are delivered.
How process innovation improves a business
The role of process innovation is to improve how the business operates. It focuses on the methods, systems and technologies used to complete work.
Process innovation often happens behind the scenes. Customers may not see the process itself, but they may notice the results through faster service, more reliable quality or fewer mistakes.
The benefits may include lower costs, greater efficiency, improved quality and higher productivity, but the role of process innovation is to introduce, improve, automate and streamline business activities.
Three roles of process innovation
Introduces new ways of operating
Develops new methods, technologies or systems for producing and delivering products.
Improves existing processes
Refines how work is completed to make operations faster, more accurate or more reliable.
Automates and streamlines activities
Uses technology to reduce unnecessary steps, manual tasks, delays and waste.
Examples of process innovation
Rio Tinto
Rio Tinto can use process innovation through autonomous haul trucks, remote operations centres and data systems in mining operations.
This reflects the role of process innovation because the business is changing how work is completed and how resources are moved.
Woolworths
Woolworths can use process innovation through inventory management systems, self-checkout technology and automated distribution centres.
This reflects the role of process innovation because the business is improving the systems used to move stock, serve customers and manage stores.
Australia Post
Australia Post can use process innovation through parcel sorting technology, tracking systems and digital delivery updates.
This reflects the role of process innovation because the business is streamlining how parcels are sorted, tracked and delivered.
Example of how to write this in an exam
The role of innovation in improving processes is to introduce new ways of operating, improve existing processes and automate or streamline activities. For example, Woolworths could use automated distribution technology and inventory systems to improve how products move from suppliers to stores. This means work can be completed faster, more accurately and with fewer unnecessary manual steps. As a result, process innovation can lead to benefits such as greater efficiency, lower costs and improved productivity.
🤝 Services
Service innovation occurs when a business develops or improves the way it supports, assists or delivers value to customers before, during or after a purchase.
How service innovation improves a business
The role of service innovation is to improve how customers interact with and receive support from the business.
Service innovation can involve new services, improved customer support, online assistance, mobile apps, self-service systems, personalisation or faster delivery methods.
Improved convenience, personalisation and customer experience are the resulting benefits, but the role of service innovation is to develop, improve or change the way services are delivered.
Three roles of service innovation
Develops new services
Creates new forms of support or assistance that add value for customers.
Improves existing services
Enhances the speed, convenience, quality or reliability of customer service.
Changes how services are delivered
Introduces new delivery methods, such as mobile apps, online support, self-service systems or personalised assistance.
Examples of service innovation
Qantas
Qantas can use service innovation through app check-in, digital boarding passes, flight notifications and customer support tools.
This reflects the role of service innovation because the business is changing how travel services are delivered and supported.
Commonwealth Bank
Commonwealth Bank can use service innovation through mobile banking, card controls, payment alerts, chat support and digital budgeting tools.
This reflects the role of service innovation because the business is improving the way customers access and manage banking services.
Telstra
Telstra can use service innovation through online troubleshooting, app-based account support, outage updates and personalised customer plans.
This reflects the role of service innovation because the business is changing how customers receive support and information.
Example of how to write this in an exam
The role of innovation in improving services is to develop new services, improve existing services and change how services are delivered. For example, Commonwealth Bank could add app-based budgeting tools, payment alerts and digital support features. This means customers can receive banking support more quickly and conveniently without always needing to visit a branch. As a result, service innovation can lead to benefits such as improved convenience, better customer experience and stronger customer loyalty.
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Biz Fact: Apple launches a new iPhone almost every year by improving the product with faster chips, better cameras and new features. (Product innovation)
Past Exam Questions
Use these past exam questions to practise explaining the role of innovation in improving products, processes and services.
Section 1 Questions
2023 — Section 1 — Question 3(a) — 2 marks
Context
Innovation is often important to the continued success of any business. It can refer to a new process, idea or product.
Question: Outline a role of innovation in improving processes. (2 marks)
Command term focus: Outline
Outline requires the main features of a role of innovation in improving processes.
See the full command term guide here: Command Terms.
Sample answer
One role of innovation in improving processes is to introduce new ways of operating. For example, a business may use technology or automation to change how products are produced, sorted or delivered. This improves processes because work can be completed in a more organised, reliable and efficient way.
Section 2 Questions
2017 — Section 2 — Question 7(b) — 6 marks
Case study / context
Case study not available.
Question: Explain the benefits Domino’s will experience from product and process innovation. (6 marks)
Command term focus: Explain
Explain requires what the innovation is, how it improves the business and the result. It needs clear cause and effect.
See the full command term guide here: Command Terms.
Sample answer
Product innovation: Domino’s can use product innovation by developing new menu items, improving existing pizzas or adapting products to changing customer preferences, such as demand for plant-based, premium or value options. This means Domino’s can keep its product range relevant in a competitive fast-food market. As a result, Domino’s may increase market share by attracting new customers and encouraging repeat purchases from existing customers.
Process innovation: Domino’s can use process innovation by improving online ordering, kitchen systems, delivery tracking and store workflows. This means orders can be received, prepared and delivered more accurately and efficiently. As a result, Domino’s may achieve financial gain through higher sales, lower waste, fewer errors and improved productivity across its stores.
2019 — Section 2 — Question 7(a) — 4 marks
Case study / context
Health and fitness is a multimillion dollar industry. More and more people are aware of the importance of healthy eating and daily exercise. People of all ages spend money on gym memberships, personal training and group fitness classes, books, clothing, sporting equipment and much more.
Jettaya is a triathlete with a degree in sports and rehabilitation science and wants to profit from this expanding industry. She has recently created an online fitness program, healthy eating diet plan and clothing line so she can tap into the industry.
Jettaya understands the importance of being innovative to differentiate her product and service in this heavily saturated market. She realises that technology is a powerful tool for creating a profile for herself and to market her products and services in Australia and overseas. Jettaya has also conducted market research and has decided to manufacture her clothing line in China due to the cheaper labour costs and materials and the fact that the free trade agreement between China and Australia brings many benefits.
Jettaya realises that she needs to create a strategic vision and be innovative and creative for her business to become a success. She has come to you to ask for some advice and tips about how to create a successful global business.
Question: Explain the role and benefits of innovation in improving products in relation to Jettaya’s business. (4 marks)
Command term focus: Explain
Explain requires a clear cause-and-effect link between innovation and how it improves Jettaya’s products.
See the full command term guide here: Command Terms.
Sample answer
The role of innovation in improving products is to develop new products, improve existing products and adapt products to market changes. For Jettaya, this could involve improving her clothing line with better materials, more suitable designs for triathletes or environmentally friendly fabrics. This means her products would better match the needs of health and fitness customers in a heavily saturated market.
Innovation could also help Jettaya improve her online fitness program and healthy eating diet plan by adding personalised plans for different fitness levels, goals and dietary needs. This means her products would become less generic and more targeted to different customer groups. As a result, Jettaya could differentiate her products, increase market share and support financial gain by attracting more customers in Australia and overseas.