How Does the Oslo Manual Define 'Practical Utility' in Innovation?

The Oslo Manual defines ‘practical utility’ in innovation as a key component that differentiates innovation from mere invention.

According to the manual, an innovation must be implemented, meaning it must be put into use or made available for others to use.

Main Criteria to show utility

This practical utility is demonstrated through two main criteria:

For product innovations: The innovation must be “made available to potential users”[4]. This means that new or improved products need to be introduced to the market to qualify as innovations.
For process innovations: The innovation must be “brought into use by the unit”[4]. This implies that new or improved processes must be actually implemented in the firm’s operations.

The manual emphasizes that innovation should have measurable impact or improvement that is significant enough to be quantified or observed[1]. This focus on measurability is essential for distinguishing genuine innovations from minor changes or adjustments.

Furthermore, the Oslo Manual recognizes practical utility in terms of value creation or preservation as a presumed goal of innovation[1].

This can manifest in various ways, such as:

Improved quality or technical specifications
Enhanced reliability or durability
Increased economic efficiency or affordability
Greater convenience or user-friendliness

It’s worth noting that an innovation doesn’t need to improve all functional characteristics. An improvement in one area can be combined with a decline in others, as long as the overall change is significant and provides practical benefits to users[1].

Innovation Framework

An innovation is a new or improved product or process (or combination thereof) that differs significantly from previous products or processes and has been introduced on the market or brought into use by the firm.

• Product innovation: A new or improved good or service introduced to the market.
• Business process innovation: A new or improved business process implemented within the firm.

Innovation can and should be measured.

Knowledge is a basis for innovation.

An innovation must be new or significantly improved compared to what was previously available.

An innovation must have potential utility or actual use.

Value creation or preservation are the goal of innovation.

An innovation MUST be implemented, which differentiates it from concepts like invention.

The manual provides a taxonomy of business functions that can be subject to innovation.

All developmental, financial, and commercial activities undertaken by a firm intended to innovate.

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