Entrepreneurship and Innovation - The Process and Techniques of Innovation - Research Paper Example

? Entrepreneurship and Innovation Table of Contents Introduction 3 Assessment and reflection on the process and techniques of innovation 3 Process ofinnovation 5 Clusters 6 Analysis of the strategy followed for innovation management in Omantel 7 Recommendations to improve innovation management 9 Establishment of innovative environment within Omantel 11 Strategic Implications 12 Conclusion 13 Reference List 14 Andrews, J. and Smith, D. C. 1996. In search of the marketing imagination: factors affecting the creativity of marketing programmes for mature products. Journal of Marketing Research, 33(2), pp.174-187. 14 Introduction The process of innovation is a step by step process. There is no fast forward way of attaining innovation in any process or technology. Rather the journey is strewn with intermittent success and failures and long periods of stagnation. Innovation has occurred in all spheres of activity starting from the development of products to the development of services. In the last 70 or 80 years the Information Technology industry witnessed the highest degree of innovation. The innovation of the Information Technology industry and the electronics hardware industry were followed with equivalent degree of innovation in the telecommunication industry (Achrol, 2011). The process of innovation of Omantel is discussed in this research study. For a better comprehension of the research methodology, the whole research is divided into 4 parts. In the first part of the discussion the process and technique of innovation is assessed and analysed. The strategy followed for managing the innovation of Omantel is discussed. The latter parts of the discussion are about the company establishes an innovative environment within its organisation and the strategic implications for Omantel based in Oman. Assessment and reflection on the process and techniques of innovation Schumpeter’s Theories of Innovation is discussed in this section along with other related theories. Some of the important points of Schumpeter’s Theories are that the existing resources can be used in order to develop the economy. Innovation is the main key which helps to transform the economies (Allan and Michael, 2010). This innovation can be produced by new forms and entrepreneurs. In order to bring innovation the entrepreneurs need to access capital and resources. Innovation and price competition are sides of two different coins, where one negates the other. If firms compete on the basis of price then only price classification occurs with no or little innovation. In order to make sure that the correct path is taken which will lead to innovation, it is absolute necessary to control the process applied. Whereas, if only inputs are considered as the most important entity rather than the process of innovation itself, then more time is wasted before innovation is finally achieved. Innovations as well as developments are non exogenous in nature. This means that innovation can occur, by simply using the internal factors present in the economic system. Fig 1: Cycle of innovation Source: (Andrews and Smith, 1996) Some of the most important factors that lead to the excellent growth of innovation are entrepreneurship and in-house capability to conduct the research and developments. Entrepreneurship still remains to be the most important factor among all the other factors. Instead of going for a competitive pricing strategy, a simple method of pricing is followed (Bajaj, 2001). The base price is fixed by taking into consideration the high quality of the integrated components. For example, the organisations which decided to simply add features to their previous models of products or services were outsold by those organisations that considered innovation rather than mere up gradations. Organisations like Nokia focused on innovation, while Sony and Motorola focused on up gradation only. As a result Nokia outperformed and outsmarted the other two organisations significantly which focused more on pricing strategy (Benner and Sandstrom, 2012). Those products that are planned to remain popular for a longer period of time are not priced competitively. While the firms that assumed that the popularity is only for a short period adopted competitive pricing. That way the balance between effective pricing for higher revenue and establishing innovation for maintaining leadership in innovation are in the right proportion. For innovation to take place smoothly and within the required time, a platform is required. The platform offer a smooth phase of transmission. The platform discussed in the paper is Web 2. With the advent of Web 2, the gaming industry witnessed a paradigm shift. This not only helped the providers of the service and products with a means to cut down cost, but also offered the users of the service and products a means to develop their own content, services and the products (Bonaccorsi and Daraio, 2009). Innovation and price competition does not go hand in hand, since a trade off is always necessary between the two. Although with the high influx of the competitors or new entrants the organisations had to resort to the price cutting strategies. This is done to stop customer from switching brand. Process of innovation The process of innovation involves three distinct and different phases, which are conception, implementation and marketing. The conception involves the analysis of the requirement, generation of idea, evaluation of idea and planning of the project (Chiefele, 2012). The implementation phase includes development and construction, development of prototype, testing of the pilot project. The third and last step is marketing stage, which includes production, market launch and penetration. Fig 2: The process of innovation Source: (Clark and Mathur, 2011) Clusters The process of innovation is fastened up if the companies from the same sector are present in a centralized area. This gives rise to centralised competition. The gatherings of the same kind of industries are called clustering. Cluster of industries, which are creative in nature, gives rise to the conditions that are necessary for the generation of the sense to excel through innovation (Cravens, 2010). Clusters can also arise due to historical circumstances, demands which are sophisticated in nature, presence of suppliers related to the industry or the sense of urgency raised by other major companies. Two types of knowledge generally arise from the formation of clusters, which are tacit knowledge and codified knowledge. The tacit knowledge involves the establishment of trust between individuals. While codified knowledge is sent from one place to another using books and manuals. This indicates that the companies need to be located close to each other or in other words geographical proximity is necessary to facilitate the transfer of codified and tacit knowledge. Thus, clusters are not just a congregation of firms that have similar lines of product, but the firms that share similar vision for the future and have similar codes of conduct. Some of the places of great innovations have started out as cluster of similar kind of firms that have flourished into big cities or districts (Das, Quelch and Swartz, 2000). The clusters of firms that come to stay together have to strike the right balance between the process of innovation and productivity. Some of the main factors that lead to generation of innovation from the clusters are the multi spot configuration, the configuration for the gate keeper, internal coordination of the local clusters and maintenance of the proximity, but only for temporary period. The presences of the firms in close proximity are not necessary in all occasions (David, James and Arthur, 2011). Studies indicate that the co-allocation is not required for good cooperation. Studies also indicate that most of the exchanges that are inter-firm in nature happen to take place outside the cluster. The firms are able to get hold of information regarding the technologies adopted by the competitors through such temporary proximities. In this way the firms share knowledge, trust and slowly progresses towards the generation of innovation. Fig 3: The phases of innovation Source: (David, 2010) Analysis of the strategy followed for innovation management in Omantel The strategy followed for the innovation management at Omantel is simple push and pull strategy. In the push strategy the firm places the product and services for the customer to see it and use it. While in the pull strategy the customers are given the freedom to choose the products and services that are suitable for the customer. The application of the push and pull strategy is dependent upon the product and service type (Flint, Woodruff and Gardial, 2002). Omantel uses the push strategy while promoting and marketing the fixed land line services. This is because of the reason that that the fixed land line services has less customer base. Although in the recent years different kinds of innovations are incorporated into the fixed land line services. While in the delivery of the mobile services or services that are not associated with fixed land lines are delivered using the pull strategy (Flint, Woodruff and Gardial, 2007). Fig 4: Technology Push vs. Market Pull Source: (Harvey, Smith and Wilkinson, 2007) The PSTN infrastructure was based on the technologies that were phased out in most of the developed countries. The old telecommunication system supported the transportation of data and voice over the fixed lines that ran across vast distances. The company decided to do away with the use of the coaxial cable fibres over long distances and instead introduced the wireless connectivity. This innovation gave the fixed land lines services a facelift, which in turn also increased the number of new subscribers as well as retention the old customers (Gabriele and Peter, 1992). Another part of the innovation was the introduction of value added services to the land line users. Through a phased plan the old telephone sets used by the customers were exchanged for new sets. The new sets were developed with the help of research and development team of Omantel. Apart from the set of innovations brought in the fixed line category, the mobile telecommunication also witnessed other set of innovations. Omantel realized that the rate at which the mobile base is increasing, the present band width will not be able to accommodate the heavy demand of the 2G and the 3G networks. For this reason the Omantel is introducing the 4G services. Omantel invested significantly in the development of the 4G telecommunication network. The development of the 4G services took place in a phased manner starting with the development of telecommunication infrastructure and backbone. In order to sustain the process of innovation the 4 G services were rolled out in a phased manner. The 4G services were introduced in those areas of Oman first, which have high chance of acceptance. These constituted the long term changes in the innovation process of Omantel. While the short term changes in the innovation process included innovation in products and services like online services, services for travellers and developing services that meet specific needs of the business (Garrick, 2011). The discussion of innovation management of Omantel indicates that the company applied the classic push and pull strategy to develop the process of innovation. The dissatisfaction of the customers with the present products and services are made the focal point of innovation in order to overcome and decrease the market pull. Recommendations to improve innovation management The recommendations to improve innovation management are stated by taking into consideration the organisational context and the environmental context and how the push and pull strategy can be applied in the present contexts. Apart from that, the recommendations also take into account the effects of the internal and external change agents. Omantel recently introduced the 4G services in Oman (Gebrekidan and Awuah, 2003). The company can structure a number of services that are associated with the 4G services. The process of innovation will be an exhaustive one. An agenda will be chosen, like the company can form partnerships with premium and reputed universities. The agenda will be facilitating the process of education with the help of the 4G services (George, 1993). The 4G services will be available as dedicated service in the laptops and the tablets. Since both laptop and tablet are used mostly for imparting education in the university level so this presents another reason for the Omantel to venture into the manufacturer and assemblers of hardware products like the laptops and the tablets. Thus, an agenda set for using the 4G services for the betterment of education gives rise to the generation of another set of opportunities. The company can use its own set of research and development team to create the set of laptops and tablets that will be distributed to the universities and colleges. The advanced nature of the 4G services makes it impossible to bring further innovation in the technology itself (Ger, 2000). The other kind of innovations that can developed are combo plans for the subscribers which provides seamless connectivity and facilitates in establishing crystal clear conference and video call facilities, superfast internet services facility. The idea of using the 4G services for the betterment of education facilities are just part of setting the agenda. The next set will be the linking of the idea. In this phase of innovation, Omantel will take the agenda and try to apply it in the real world. This phase will generally constitute the evaluating the morality or the social implications of the agenda (Gina, 2013). Or in other words the agenda will be analyzed to find out if it has any negative outcome over the society. In the next step, the idea from the previous stage will be evaluated by applying it in the real world. This is usually done by applying the idea in a pilot project phase. The pilot project helps to understand what factors need to be considered before finally letting the idea float in the real world. Establishment of innovative environment within Omantel Any process of change or as a matter of fact innovation is related to the encouragement of new ideas. The encouragement of new ideas will not be enough. The management should be open-minded to accept new ideas and incorporate it in the present system. The sole responsibility of bringing in innovation is on research and development team of Omantel. For this reason it is absolutely necessary to make sure that the research and development team is equipped with the necessary resources like man power, capital and technical knowhow as well as state of the art technologies to carry out the intensive research (Gulbrandsen and Smeby, 2008). Innovation is not domain specific, for this reason the management needs to find out the areas where innovation can be brought in. For example, the separate research and development teams can be formed in areas like supply and distribution, in the areas of product and service development as well as in the areas of human resource development. Separate research and development teams for each one of the above areas will help to increase the pace of innovation. This kind of change in the organisational structure will help to put the proper functioning bodies and departments in the organisation but the functioning of the bodies is dependent upon the inherent culture of the organisation (Gummesson, 2010). The inherent organisational cultures emanate from the leadership qualities of the management. Thus, the management has to come up with ideas that facilitate the creation or the generation of the idea. The management can make further changes in the organisational structure by incorporating Special Programmes. These programmes will be conducted in honour and recognition of the most distinguished persons from the fields of research and development. Apart from that the persons who will be honoured with the most distinguished recognitions are also going to receive cash prizes and other non monetary privileges. The kind of monetary and non monetary gifts and recognitions are going to motivate the employees find ways to come up with new innovations. Strategic Implications The strategic implications discussed here are related to the development and furthering the progress of innovation. Omantel needs to adopt two very specific objectives. One is the temporary cluster and another one is the adoption of technology pushes and market pull to push forward the process of innovation. Through clusters Omantel can either form long term strategic partnerships or even short term partnerships. As discussed already that clusters does not necessitate co-location (Hakim, 2010). So Omantel can partner with competitors or can even partner with suppliers of hardware. This kind of partnerships will help the firms share knowledge and resources. It will also help to bring standardisations in the process or excellence in the service or product delivered. Studies indicate that small and medium scale enterprises which have formed strategic alliance and shared resources, knowledge and technical knowhow were able to spear-ahead in the field of research and development (Harvey, Smith and Wilkinson, 2007). Through clustering Omantel can reduce the cost of research and development by significant margin. If co-location becomes necessary then Omantel needs to create an amiable environment through political and technological collusion that will foster the development of clusters in the areas from where it operates (Hakim, 2010). Apart from the formation of the clusters, Omantel can also adopt the technology push and market pull strategies. Technology push is adopted for the less productive services and products. While for the products and services which are more productive in nature, Omantel can adopt the market pull strategies. Among these strategies, the market pull strategy will be more effective in nature. This is because of the reason that the marker pull helps to incorporate the features in the products and services that are deemed important by the customers and this will help Omantel to bring innovation in the products and services (Hamel and Prahalad, 2005). Conclusion Innovation mainly involves three important phases which are conception, implementation and marketing. Omatel is one of the pioneer companies in the field of telecommunication in Oman. The company has diversified range of products as well as services. A conglomerate s has several ranges of products and services but at some point of time it runs out if ideas. Omantel has also faced similar situation with huge product range but due to lack of innovation there was no improvement in the products and services. In order to overcome the phase of stagnation in its innovation process, two specific strategies are discussed. One is the adoption of the clustering strategy and the other one is push and pull strategy. Depending on the type of product and services the appropriate strategies will be adopted. The mere adoption of the strategies will not be advantageous if the company is not able to imbibe the need and urgency of innovation, to pursue the cause of innovation, in the organisational itself. So for this reason the company will adopt two specific strategies which will help to inject the sense to innovate and excel in the culture of the organisation. The decision is to make separate departments in areas of operations, marketing, technological development as well as human resource development. The functional bodies will be provided with yearly fixed budgets as well as technical know-how and state of the art equipments to pursue the researches and further the progress of innovation. Apart from that, Omantel will also try to bring a vast change in the organisational culture by improving the leadership qualities of the management. Reference List Achrol, R. S., 2011. Evolution of the marketing organization: New forms for turbulent environments. Journal of Marketing, 5(5), pp. 77 – 93. Allan, B. and Michael S., 2010. Toward an emerging global culture and the effects of globalisation on obsolescing national cultures. Journal of International Management, 2(6), pp. 395–407. 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