Organization Innovation - Essay Example

?Organization Innovation: Lessons from Facebook “Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth” Peter Drucker Introduction: Organizations today are competing on a global platform and hence must rely on constant 'innovation' to sustain themselves in the fiercely competitive marketplace (Chesbrough, 2003; Desouza et al., 2009). Innovation is by far one of the most critical tools of competency for firms and has been the key element in steering organizations towards unprecedented success (Jaruzelski & Dehoff, 2010). Technology has played a key role in helping organizations innovate and excel in the contemporary world - a fact which is evident from the meteoric rise of organizations such as Google and a range of social networking sites such as Facebook, Myspace and Twitter among many others. This paper on Organization Innovation, discusses the rise and successes achieved by Facebook Inc., an organization which has become the poster child for most of innovative organizations within the social networking domain in particular and as a pioneer of innovation for a host of other companies in general. It also discusses the various strategies used by the management to attain and maintain a creative advantage; the various external and internal factors affecting innovation, and finally concludes with recommendations which may help in enhancing innovative behavior in the company. Company Background: Overview Facebook is the largest social networking site in the world (NY Times, 2010) with as many as 750 million users, and counting, worldwide as of July 2011 (NY Times, 2011). The company was founded by Mark Zuckerberg, in February 2004 with the sole aim of offering a common platform for social interaction for college students at Harvard. However, through constant innovation, use of exciting new ideas and creativity, the site soon attracted various users which catapulted the company into an overnight sensation. The company's history shows a passion for constant innovation and the same is reaffirmed through its mission, which states that its only aim is "to make the world more open and connected". The popularity of the social networking site, continues to grow which is evident from the billions of dollars earned by way of ad revenues. Facebook is generating profits at a rapid rate. In 2010, Facebook Inc., earned approximately $1.86 billion through advertisements (PC Mag, 2011), a figure which is likely to grow substantially to $4 billion during the year 2011. Furthermore, on the basis of the current trend, it is also estimated that facebook is likely to surpass Google, its strongest competitor in advertising revenues (techcrunch, 2011). Facebook has revolutionized the social media scene, and has posed a threat to its rivals, particularly Google; a position achieved merely on the basis of constant innovation and innovative ideas. Intrapreneurial strategies used to attain and sustain competitive advantage: Intrapreneurship refers to the active involvement of organizational employees in the management of the company. It is a concept which is slightly different than corporate entrepreneruship. According to Hammann (2006), corporate entrepreneurship is defined with regard to the entire organization in question, while intrapreneurship is defined with regard to individual levels (Pinchot, 1987). This notion has been derived from the concept of indpendent entrepreneurship, whereby the employees are encouraged to think independently and create new ideas which add value to the final product. According to Hisrich & Peters (2002) it refers to the process of "creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence’. Facebook is a privately owned company, which follows the intrapreneurship style of management within its organizations. It allows and encourages its employees to constantly innovate and generate novel ideas, in order to excel. One of the main objectives which the management team at Facebook has set for its employees is to achieve ground-breaking social changes. In order to achieve the same, the company encourages the employees, to deliver exceptional results for the organization. The concept of intrapreneurship has been defined differently by various authors. Some such definitions are mentioned below: According to Vesper (1984, in Sharma & Chrisman, 1999) the term Intrapreneurship refers to "employee initiative from below in the organization to undertake something new; an innovation which is created by subordinates without being asked, expected, or perhaps even given permission by higher management to do so” (Pp. 295). The management at Facebook, represents a culture of innovation, with a fair degree of openness to failure. The employees are required to work at a faster rate in order to deliver cutting-edge technological solutions, and at the same time, leaves scope for the employees to overcome failure. The management recognizes and acknowledges the fact that failure is an integral part of innovation, and is critical to success. Risks won't pay off, unless there is innovation, which entails failure. According to Antoncic and Hisrich (2003) Intrapreneurship refers to "emergent behavioural intentions and behaviours that are related to departures from the customary ways of doing business in existing organizations” (Pp. 20). The management at Facebook encourages an open and cordial environment, where communication is the key. This allows its employees to communicate freely with their bosses or subordinates, and leads them to be open and honest about their mistakes. Furthermore in order to encourage product development and innovation, the company often uses “lock downs”. Lock downs is referred to as a phase whereby the company employees who are actively engaged in the product delivery stage, are removed from the BAU (business as usual) and are given instructions to exclusively focus on creating innovative ideas, in order to achieve the desired outcome. During this stage (i.e. the lock down stage) the employees are allowed to work in total isolation, so that they are in a better position to focus on the jobs at hand, and provide them more freedom to innovate and generate new ideas, by taking their mind off of trivial company issues (NY Times, 2010). Such an approach helps the employees as well as the management to quickly come up with innovative ideas, in a short duration of time, and hence achieve excellence through innovation at a rapid pace, as compared to their rivals in the industry. The organizational management at Facebook represents a culture which encourages and endorses accessible leadership. The dynamic and innovative culture at Facebook Inc., comes across as starkly different as compared to other companies, in the sense that it adopts a fundamentally different and informal approach in managing its day to day operations. It focuses on leadership which is highly accessible, innovative and inspiring to others. It believes in leading by example, and doing. The phenomenal success of the company, in under a decade, and the unprecedented success achieved by it in such a short span of time, reinstates the fact. The employees at Facebook Inc., are given full freedom to take their own decisons and at the same time shoulder responsibility for the tasks assigned to them. The management assigns tasks to each individual employee along with a target, with no or minimal instructions. The individual employees, are then required to apply their skills, knowledge and experience to execute the tasks, and achieve the desired results. According to Zuckerberg, the main job of the leaders in his organization is to hire the right talent, set clear strategies for fulfillment of organizational objectives and let the employees decide how they want to achieve the said objectives. It does not believe in interfering in the work of their employees, since it tends to damage or disturb their routines / schedules. Such high degree of independence, allows the employees the freedom to freely create and innovate at their own pace, and yet manage to achieve the company targets. The company believes that innovation is the responsibility of every single individual working for the company, and not just the top management or leaders. In line with its thoughts, it organizes ‘hackathons’ – an event which encourages conceptualization and development of new ideas, which can be used to resolve any issues faced by the company. The event which was initially launched to involve only the engineers working at Facebook, has now spread to all the major departments, engaging talent across all its branches in a brainstorming session, in a bid to develop and innovate something highly substantial. According to Andrew Bosworth, the director of Engineering at Facebook, "several of the most innovative features run by social networks today, were pioneered during the company's regular internal hackathons, specifically the Think Chat, Video, and the Like button" (Social Times, 2011). External and internal factors affecting competitive advantage: Competitive advantage is the essence that determines the success or the lack thereof for any company. Hence, all organizations must strive to develop a key competitive advantage in order to sustain their positions in the marketplace. There are various factors which determine and affect the competitive advantage; some of them are discussed below: The external factors include political, economic, social and cultural, and technological while internal factors include: factors which are directly related to the company i.e. the resources, infrastructure, capabilities, etc., which are difficult for their competitors to imitate. Facebook has been mired in controversies, surrounding privacy issues of the data submitted by users. In one incident, Facebook's source code was made public accidentally, and was exposed to a small number of users, due to a bug in server. Such risks tend to threaten the realibility of the site, and might create apprehensions and fear among its users (CNET, 2007). Such technical glitches have been taken care of by the able and efficient engineering teams at Facebook, ever since. Today, with its innovative invention driven strategies such as Hackathons and lockdowns, the company has ensured that it stays at the top of its game, thus posing a severe threat to its greatest rival – Google. Recommendations: In order to sustain its competitive positioning in the industry, Facebook Inc., must continuously focus on innovation and creativity, as these are the only and most sought after tools for achieving success. The management must look at overcoming and curbing the costs, in order to afford more funds for reasearch and development based activities. The quality and customer satisfaction must be taken care of, since in case of a social networking site, the customers i.e. the users are the key. The team must focus and pay close attention to the grievances of its users online, and find best possible means to resolve the same. Mere provision of additional features that are hardly useful cannot and will not suffice. One of the key reasons for the unprecendented success of Facebook is its simplistic design / interface. The layout is quite neat which allows the users to be directed towards activities they love, in a hassle free manner. It is this, user friendliness of the site that retains users. The innovations must strive to retain the structure which is most favored among the users and develop new applications which would improve their quality of life in a significant manner. Social networking is here to stay, and although new entrants are few and far between, Facebook faces a challenge in the form of Google. In order to retain their competitive standing, the management at Facebook must continue to innovate and excel in their fields. References: Antoncic, B. & R.D. Hisrich (2003), Clarifying the intrapreneurship concept, Journal of Small Business and Enterprise Development, 10(1), 7-24. Chesbrough, H.(2003). Open Innovation: the new imperative for creating and profiting from technology. Harvard Business School Press. Desouza, K.C.,Dombrowski,C.,Awazu,Y.,Baloh,P.,Sangareddy,S.R.P.,Jha,S., & Kim,J.Y.(2009).Crafting Organizational Innovation Processes. Innovation: Management, Policy & Practice, 11(1), 6–33. Hammann, E.M. (2006), Decentralized leadership: Implementing a corporate entrepreneurship culture from outside in, paper presented at the Employee Entrepreneurship Workshop, MPI Jena, February 2-3. Hisrich, R.D. & M.P. 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