Why is product/process innovation an important driver of firm performance?

Product innovation is the introduction of a good or service that is new or has significantly improved characteristics or intended purposes while process innovation refers to implementation of a new or significantly enhanced production method. Product and process innovation affect a company's growth as well as its profitability. Excellent innovation projects results in customer desires and technology-based opportunities into product and process designs that operations managers can deliver reliably and efficiently. In order to come up with better product design decisions, managers are required to combine inputs from different functions and groups located within an organization and across its supply chain in particular, the groups play vital roles in the development of new product.