Innovation and change - open innovation and strategy - Essay Example

?TABLE OF CONTENTS Executive Summary………………………………………………………………………2 Introduction…………………………………………………………………………….…3 Strengths of FedEx innovation management structure……………………………………4 Sourcing for innovative ideas at FedEx…………………………………………………...7 Lead user Innovation……………………………………………………………………...8 Open Innovation………………………………………………………………………..…9 Disruptive Innovation…………………………………………………………………….10 Innovation strategy at FedEx……………………………………………………………..10 A new innovation strategy for FedEx………………………………………………….....12 Challenges and Solutions………………………………………………………………....14 Monitoring the success of roadmapping…………………………………………………..16 Theoretical perspective……………………………………………………………………17 Conclusion……………………………………………………………………………..…..17 References………………………………………………………………………………….19 Executive Summary The paper seeks to address the concept of innovation as a major defining aspect towards the success of FedEx. It goes on to elucidate the strategies that the organization has always put into place to ensure that its innovation processes meet the demands in the market. Recognizing the need for change and strategic repositioning, various options for innovations are suggested as ways through which FedEx can better its position in the logistics industry across the world. This boils down to the elucidation of alternative innovation strategies that can provide solutions to the challenges facing organizations in the present business environment. As such, the paper is very illuminative in giving a thorough account of all the imperative aspects of innovation in the context of organizational setting. Introduction The imperatives of innovation in modern-day organizations cannot be overemphasized. Innovation is certainly the engine that drives progress and provides the platform through which organizations can effectively compete against each other in the race against resources and the competitive market environment realized in entirely all sectors. In this regard, most organizations are becoming much more involved and focused in their areas of innovation in order to enable them to sail through these challenging times. The major challenge realized from the outset is basically the difficulty in choosing the best innovation strategy to follow in an organization. It is imperative to realize that choosing a wrong strategy might doom the organization’s chances of progress hence the need to keenly address the aspects of innovation with utmost concern and sufficient resource allocation. In any case, there is not a single innovation strategy that can effectively address all the developmental needs of any organization. It only remains a matter of choosing amongst many options to get the best alternative. Indeed, in the service provision industry like logistics, the major strategic step is always the need to cultivate a sense of innovation in the organization through the engagement of talented people who can effectively address the organizational goals of innovation. In this regard, it has been realized that FedEx is always at the forefront in hiring very talented people who are then trained on the best ways to innovate in the organization. The culture of innovation is therefore seen to be part and parcel of FedEx and this can clearly explain why the organization has become a major brand in the logistics industry and has managed to sail through the hard economic times without much of the challenges realized by other organizations in the industry (Burns & Stalker, 1999). It is must be realized that the success of any organization with regards to innovation basically depends on the organization’s ability to handle and effectively manage its innovation process through efficient strategies. Often, it is realized that organizations fail to manage their innovations properly which are then adopted by other organization and developed to work against them. The process of instituting the strategies for innovation and their management should therefore be a major prerogative of the strategic management (Basch, 2003). Realizing this important need, FedEx has always championed the process of innovation at the organization right from the top level management. In this regard, any innovative idea or strategy in the organization is given maximum support and backing so as to enable its development and subsequently benefit the organization. Strengths of FedEx innovation management structure The management of innovation at FedEx is one of the most important preoccupations of the strategic management of the organization. At FedEx, innovation is perceived as a people-centered process that begins with imparting the need for innovation on the minds of the employees from the moment they are engaged in the organization. As a major strength in this process, FedEx has realized the important role played by technology and information in the organization. Over the years, the organization has generally been recognized with its culture of innovation that has enabled it to outperform its competitors in the industry. More importantly, the strengths of FedEx’s innovation ability lie in its focus on technological leadership and customer service. In the present business environment, a lead in technology certainly puts an organization far ahead of its competitors. In this regard, FedEx has always been at the forefront in coming up with ways through which technology can benefit the organization in terms of efficient service delivery (Birla, 2005). The tracking and routing technology used in the logistics industry was basically pioneered by FedEx in the 1980s. Thereafter, the organization managed to develop a very intricate and modern information and telecommunications system across the world. A major strength that accounts for much of FedEx’s success in innovation is the recognition of customers as major players in the organization. Indeed, FedEx is always ready to factor its customers throughout its operational activities as a way of getting in touch with what they actually need and thereby responding adequately. The customers of FedEx have always demonstrated one thing to the company: they want the organization to help them grow (Hill, 2010). In response, the organization does exactly that. It seeks to enable its customers to grow and expand their businesses through value added services engineered by efficient innovative processes. Certainly, such customer driven innovation is an asset to the organization in terms of providing the insight on what should be done and how it should be done in the organization. Any innovative process in the organization requites a lot of discipline and care in the execution process (LeIcuyer, 2006). In most cases organizations err by failing to effectively implement some of the best thought ideas that should benefit them. In other cases, ideas are implemented before sufficient evaluation is conducted hence many challenges thereby emerge. Recognition of this important need can effectively put the organization ahead of its competitors like FedEx has actually done. The organization exercises a lot of proper evaluation of the innovation ideas through a proper innovation management structure before such innovations are executed and implemented in the organization. An efficient innovation management process is therefore an asset to FedEx considering that a culture of innovation has been inculcated in the minds of the employees hence new ideas keep popping up in the organization at any instant. In this regard, it becomes imperative for the organization to effectively manage its innovation process in a very efficient and professional manner as presently realized. Despite the strengths of FedEx realized in its innovation management structure, several challenges still characterize the organization’s innovation management. The organization operates across the world where different cultures and legal environments present a lot of challenges in managing innovation through a centralized system. Considering the organization’s thousands of employees across the world, the management of innovations from such a large number proves quite a challenge to the organization. Similarly, the implementation of some of the innovations in the organization’s global structures is always very costly. At times, the implementation costs become too high to justify the execution of such processes. However, the organization is always addressing these challenges and making innovation a core agenda in the organization’s cardinal affairs. Sourcing for innovative ideas at FedEx As a way of getting new ideas and opinions that can enhance the growth of the organization, FedEx uses several strategies in order to harness some of these ideas from the employees and the customers and from the operational processes in the organization. Most importantly, the present innovative occupation in the organization leans much toward the development of efficient information technology processes within the organization. The top management of the organization realized the need of equipping its employees with the best arsenals to enable then serve the organization better. In this regard, Purple Pipeline Program was developed in the organization as a way of training some of the employees and improving their leadership skills in the organization. Every year, employees who have demonstrated a sense of leadership in the organization are selected and enrolled into a six-month program that focuses on leadership and metrics management. About 50 employees enter this program every year. In the second phase of the program, the chosen employees are then rotated in several areas of the organization where their leadership abilities are put to test. It is realized that such a program is very effective in enabling innovations in the organization since leadership skills become very important in whichever aspects of an employee’s performance. Research on the organization has demonstrated that the employees who enter the Pipeline program are normally very innovative and provide a lot of ideas for the organization. Considering that FedEx is a service provision organization, the employees are therefore the main agents who can bring positive changes in the organization. Through an efficient human resource management process, FedEx has ensured that the views and opinions raised by the employees with regard to the performance of the organization are effectively heard and addressed. This is certainly a good way of sourcing for innovative ideas. More importantly, the employees of the organization are always much confident that their suggestions and ideas will be implemented or at least heard. This enabling environment is certainly a good avenue through which the organization gets much information on how to improve and better its operations in the market. In order to have a center where innovation could effectively be instituted and experimented, FedEx established an institute of technology that is basically in charge of dealing with various innovative aspects of the organization. Through research and development, the center is a good ground through which the organization gets a lot of innovative ideas that helps it to sail through the market. The present approaches used in the organization for sourcing ideas are certainly some of the best in the market. However, some adjustments need to be made in order to make innovation at the organization even more productive. In this regard, the time used in the evaluation of the particular innovative ideas advanced by the employees and the clients should actually be reduced since it is presently too long. It is seen that the organization takes a lot of time in the evaluation process hence several innovative ideas are never implemented on time leading to their failure. Lead user Innovation From historical experience, most firms are normally very risk-averse and are not always willing to implement most of the ideas suggested by their lead users. However FedEx is always at the forefront in using such information to develop itself especially in relation to technological development in the organization. Similarly the organization realized the shortage that existed in the technology world with regard to the logistics industry and is therefore developing a host of technological facilities that could effectively address its needs in the market. Lead user innovation is therefore an important component in the strategies used by FedEx as a way of improving its operations in the market. Indeed, the challenge arises out of the fact that most logistics firms are normally very reluctant to invest in research and development in order to come up with products that can address their needs in the market. Such organizations therefore use the conventional options available in the market which might not really be effective. Open Innovation Indeed, in order to survive in the highly competitive business environment, firms should always look beyond their borders. New innovation and strategies for success in the organization can emerge from several areas within and outside the organization. FedEx is always willing to accept ideas both from inside ad outside the organization so long as they can bring a positive change into the organization. Presently firms cannot rely on closed innovation to survive. In the logistics industry firms need to open their doors and acquire new ideas through the buying of patents and utilization of other research conducted by outside organizations. For FedEx, open innovation has always been part and parcel of the organization although the organization is still skeptical on the functionality of some of the ideas sourced from outside the organization (Danneels, 2004). Disruptive Innovation Although not presently used in the organization, disruptive innovation can provide a good leeway through which the organization can venture into hitherto unknown markets (Chang, 2011). Experience across the world reveals that through disruptive innovation certain firms have managed to become leaders in markets which were initially dominated by other players of specific products. FedEx can therefore use disruptive innovation in order to gain entry into such sectors as passenger travel and other sectors dominated by other players. Innovation strategy at FedEx The innovation strategy at FedEx follows a series of steps before any idea is finally accepted and implemented in the organization. In this regard, several issues and aspects are evaluated in order to ensure that such ideas would be of use to the organization in case they are executed. It must be realized that innovation is not a matter of serendipity (Wetherbe, 2000). It is a process that kicks of through an effective process and is guided in order to bring the change that is sought. The large range of operations at FedEx and the huge number of employees at the organization provides a rich source of ideas for the management. However these ideas have to be filtered and reduced to manageable numbers which can easily be evaluated. The initial step involves the dropping of ideas which might seem totally impractical or unworkable given the conditions of the time. A concept team of about three people is normally in charge of filtering these ideas and remains with some of the best options that can be used to solve problems or create a positive change in the organization. After the concept team is done with the process, the filtered options are passed on to the core team which is normally a group of about nine competent people in the organization. The core team evaluates number of internal and external environmental factors in order to ensure the functionality of the particular options at hand. Eventually some of the ideas are dropped and the core team remains with some of the best innovative ideas that are the implemented in the origination with a view of improving performance. At its basic connotation, the innovation strategy at FedEx involves three major steps: generation, acceptance and implementation of the proposed ideas (APQC, 2008). The generation process involves sourcing and getting the ideas from the sources which might be the employees, customers or the management. Thereafter, the ideas are evaluated through specific benchmarks which are determined in advance. The evaluation process weeds out the impractical and leaves only the best options. Finally the implementation process is done after a careful environmental scanning in order to determine any challenges that might be realized in the process. The diagram below illustrates the process of innovation at FedEx. Innovation process at FedEx A new innovation strategy for FedEx Despite the relative success realized at FedEx in terms of its innovative efficiencies, the organization has the potential to perform even better through the adoption of an efficient innovation strategy that can eliminate the rigidities realized in the present innovation structure at the organization. In this regard, a proper innovation structure should be able to identify the gaps that exist in the market and come up with effective innovation that can respond in addressing these gaps in the market (Harman, 2001). Roadmapping is an effective way that offers the option of linking opportunities in the future with threats and resource requirements in developing a service in the market. In view of this process, road maps are normally formed with need of addressing market conditions before they actually manifest. Roadmapping creates the need for organizations to effectively institute ways through which they can address future risks without experiencing many challenges. The first step in the road map process involves developing an insight on what the future might appear to be. The objective in this regard is to enable the strategists to arrive at a position where the future is seen much clearer hence decisions can easily be made thereafter. The organization should seek to identify particular service features that should be incorporated in the main service. In the case of FedEx, the organization should then identify features that would be appropriate in the future in terms of addressing logistics concerns. Through a focus of these features, the organization is able to position itself well for the future and arm itself with the right arsenals needed to address the challenges that the future might bring. In order to develop the service solutions of addressing future needs of the market, FedEx would be required to apply a lot of expertise and knowhow in the process. R&D will therefore play a central role in providing the right environment for addressing these concerns in the organization. Roadmapping is a good innovative strategy because it is normally deeply embedded within the organization. Most innovation strategies flop because they are not always part and parcel of the organization. The internal structures of the organization should support such innovative processes in order to benefit from positive changes that might arise thereof. It therefore boils down to cultivating a proper innovative culture within the organization and making the employees to adopt and appreciate such a culture. FedEx has always been defined by its innovation processes which are keenly embedded into the organization and are therefore very operational in the organization (2012). The success of this innovation strategy basically relies much on the proper implementation and resource allocation. An innovation strategy can only be implemented in the organization if the whole organization is a creative stock. The concept of idea management should be very central to the organization. The roadmapping process requires a lot of joint consultation and management in order to succeed. In this regard, the organization should institute a very effective feedback system through which the strategy can be gauged and its efficiency determined. The implementation of the roadmapping strategy requires a lot of resources throughout all the stages. In this regard, the organization should provide the necessary resource allocation in order to enable smooth implementation. More importantly, the implementation process should take account of the very elements of time so that results of the strategy are realized as early as possible. Often, roadmaps will fluctuate depending on time and strategy. In the process of implementation, it is fundamental to realize that the organization seeks to use the strategy to develop itself and should therefore allocate maximum support and cooperation in the process (Price, 2006). The evaluation process basically involves putting the particular ideas that have passed through the evaluation process into action at the organization. Such ideas are normally applied at particular areas in the organization where changes need to be realized. For instance, if the ideas were formulated with a view of improving some aspect of marketing, it will therefore be experimented at a small marketing segment in order to ensure that it can be applied in the whole organization. Most of the challenges in the idea will always be identified in the experimental stage and addressed effectively. An idea that has successfully passed the core process does not really fully qualify for full implementation in the organization. Checks and balances are normally commonplace in the process and this will certainly refine the ideas so that the organization is fully assured of success in case of implementation. Challenges and Solutions One of the challenges often realized in the implementation of the roadmaps is the communication between the relevant parties in the organization. Communication is normally a very important aspect at all levels of the organization. The success of any strategy will also depend upon the full understanding of all the members through effective communication and information. In this regard, the organization should come up with a very open communication process in the organization. Information should be able to flow smoothly from the lowest levels of the organization to the top people in charge of decision making in the organization. Moreover, the communication process in the organization should provide a lot of room for adjustments through consultations and evaluation. The strategic management of the organization should be fully aware of all the operational aspects of these strategies in order that areas of need might be addressed in time. It is often realized that implementation of a strategy in the organization faces challenges relating to the awareness of the employees on the particular imperatives of the strategy. A new strategy might present challenges to the employees who might not be well conversant with its operations. In roadmapping, several issues of the ideas might appear bizarre to the employees in the organization (Shehabuddeen, 2007). In this regard, informational sessions should be conducted in the organization in order to inundate the employees with all the relevant operational aspects of the strategy. Moreover the organization should conduct training sessions with a view of imparting knowledge on the innovation strategy to the employees and all the relevant parties to the organization. This will include informing the customers and other stakeholders of the organization on how to deal and realize success from the new innovation strategy in the organization. Often, inadequate resource allocation becomes a major challenge in the implementation of innovative strategies in the organization. This is normally perceived to be a great challenge to most organizations especially if the innovation strategies require a lot of funding in the implementation process. However in the case of FedEx, the organization is normally quite aware of the need to provide sufficient resources to the implementation process (Ng & Farhoomand, 2000). Hence, inadequate funding might not really be a great challenge to the implementation of roadmap strategies. Nevertheless, the success of the innovation strategy basically lies in the full acceptance of the strategy by all the employees of the organization. Employees must be enthusiastic about need for positive change in the organization in order to better the operational aspects of the organization (Shehabuddeen, 2010). In this regard, it calls for a full understanding of the strategies and proper involvement of all the employees in the process of ideation or implementation of the strategies in the organization. Monitoring the success of roadmapping The success of roadmapping can be effectively monitored through a process of gauging the progress of the strategy against the laid down measures of performance. In most cases, it is realized that strategies fail to go in tandem with the projections about their success in the organization (2012). This is certainly true about the roadmapping strategy which would also depend on the various aspects of the operations. The success of the roadmap strategy will basically depend upon a careful follow up process that seeks to determine any flaws and challenges while addressing them effectively. Moreover, the cooperation of all the relevant parties coupled with management support can help to monitor the success of the strategy in the organization. In monitoring the success of a particular strategy, several aspects are put into focus. These include financial implications, the ease of employees coping with the strategy and the general efficiency of the innovation strategy as a comparison to the initial processes used in the organization. These parameters are normally put into much focus in the implementation process in order to determine the existence of a positive trend in the organization. The monitoring process will always help the organization to identify the areas of the innovation strategy that might require modifications or whether the strategy should be dropped from operations in the organization. In any case, it provides a clear way through which the organization can gauge its innovation performance against specific benchmarks. Theoretical perspective In retrospect, it becomes fundamental to realize that several innovative theories come into play in the innovative strategies of any organization. Innovation is a very important aspect in the organization that requires a lot of concerns and consideration. The imperative aspects of open innovation and change come into much focus in this perspective. In implementing the innovation strategy for an organization, such aspects of innovation like disruptive innovation should be taken into focus since they greatly determine the success of the organization. Innovation in this regard should be taken as an organizational prerogative and highly respected in the organization. As such, the theories of innovation and change should play well in creating this positive change. Conclusion On the total scorecard, it is realized that innovation is certainly an important aspect towards the success of FedEx as a player in the logistics industry. The success of the organization has always depended upon the proper innovative culture in the organization which was instituted right from its formation. However, innovation is always a continuous process that requires joint support and cooperation from all the parties. FedEx is certainly a market leader in the shipping industry and is therefore much concerned about maintaining that position. While challenges abound with regard to creating innovation strategies, it is imperative to come up with a much defined process that seeks to make innovation a central aspect in the operations of the organization. Similarly a new innovation strategy is imperative in the case of FedEx in order to enable the organization to address most of the challenges that often face it in the course of its operations. Without doubt, FedEx will certainly succeed in its innovation process owing to the proper strategies in place coupled with an efficient implementation and monitoring process. References Basch, M. D, (2003), Customer culture how FedEx and other great companies put the customer first every day, Upper Saddle River, NJ: Financial Times, Prentice Hall, Pearson Education. Birla, M. (2005). 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