Characteristics of Innovative Organisations - Term Paper Example

Innovative Organizations Evaluation Assignment Submitted BY; Executive Summary Innovation is the current buzz word in the business world today. According to Webster's dictionary innovation is defined as "introduction of something new" (Aaker, 2008). It is the introduction and use of a new method or idea. Therefore innovative organizations can be defined as the organizations that are constantly seeking new and creative ways to improve their existing practices and methods to cater for the needs of their customers. Business world today is marked by intense competition, increasing complexity and rapid change, more commonly known as the three Cs. To have innovation is becoming increasingly important for the organizations to survive in this intense competitive environment. To put it in the nutshell, innovation must be at the heart of every organization that wants to be successful in today's world. General characteristics of Innovative organization are that they are more commonly decentralized, mostly informal, usually minimally stratified, and generalized rather than having specialized tendencies. They most commonly have business cultures that promote independent thinking, reasonable risk taking and constant learning. Because of their risk taking nature they are more tolerant of failure than your average company. These innovative companies show more openness towards valuing diversity. Generally there is a constant reinforcement of open communication between all the employees' regardless of their areas of expertise in the company's business. This creates higher degree of trust and respect among the employees (Aaker, 2008). Introduction Organizations that have strong visions are more capable of appreciating and utilizing people's creative talents. With a strong vision comes a better focus on the long term outcome. This enables the company to devise different creative and innovative ways to reach that outcome. True vision is defined as the ability of the organization to create strong future from nothing. It is a fact that all the organizations have a past and a history. Strong vision enables the company to have a strong future irrespective of the past. That is why having visionaries are the most important feature of such innovative organizations (Donna, Prestwood & Schumann, 2003). Because they can crate such vision or redefine an old vision that can bring success to the organization. They are not dictated by the past and history of the organization but on the other hand that does not mean that they neglect this factor completely. They learn from the mistakes of the past and try to improve their methods and practices. Innovative organizations are constantly looking forward to re-inventing themselves in a very flexible manner but without losing the necessary focus. They are constantly driven by their vision of the future and they continually push forward to achieve this. They are very proactive in nature. They like to create their own future rather than react to the future dictated by others around them. Change towards the better is their first priority rather then the last as is the case with most of the organizations around the world (Donna, Prestwood & Schumann, 2003). Discussion CONSTANT LOOKOUT FOR NEW MARKET AND NEW PRODUCT: Innovative organizations try their very best to know their customers. They learn from the needs of their customers and often let this factor dictate their innovation. They increase their innovation and competitiveness to cater for the varying needs of their customers. They are constantly in the process of thinking about their products and changing them. On the other hand they are also continually engaged in the look out for different markets that can create new potential customers for their products in short; their main objective is to maintain intense and unyielding customer focus (Donna, Prestwood & Schumann, 2003). SUBSTANCE OVER FORM: It is one of the most important features of the innovative organizations. These organizations try to promote a more result oriented working culture. This culture promotes more creativity. They are more focused on the end product rather than the means of getting it. Traditional organizations that are more concerned with the rules and established procedures are becoming obsolete. Such organizations do not allow any creativity and innovation. Creativity and innovation is supposed to be present in every organizations culture theoretically. But these two attributes are present in their most effective forms in cultures that welcome new ideas and are eager to put them to test with necessary precaution rather than the cultures that are stuck with all the formal review processes. Therefore innovative organizations can be called to have a balance of the tight and loose. They are tight on getting the results right but loose on the ways and means of getting that right result. REWARDS: Whenever these innovative organizations are faced with a problem that needs a solution the first question they ask themselves is how we can solve this problem in the most creative manner. Their first priority in solving these problems is not the established procedures but the innovation and creativity. During such circumstances if an employee of such organization comes up with a creative solution he is encouraged and recognized by the managers. Such recognition is done publicly so that the concept can be engraved in the culture of the organization. Different motivating rewards are presented to such innovators within the organization. Different successful creative employees are portrayed as the role models for the other employees. The idea of creativity is promoted among all the employees and is not seen as the prerogative of a few talented personnel. The idea that every one can be creative is made common among the employees. OPEN AND FUN ENVIRONMENT: Open book management practices are commonly held in these innovative organizations. Open and general communication among all the employees is encouraged throughout the organization irrespective of different departments and areas of expertise. This helps the employees to see beyond their daily tasks and to view the achievements of the organization as a whole. Most of such organizations promote friendly interaction and random meetings among their employees and facilitate the process at different levels. Practices such as allowing different teams and departments being regularly informed about the successes and losses of other teams and departments are common. Feedback and evaluation at the end of project by other employees is also facilitated by such organizations. Most of the innovative organizations design their facility with a fun loving and easy going dcor to provide an almost playful environment to its employees. Regular informal gathering are held to allow the employees to bond beyond their daily work routine. Family members are encourages at such gathering to create a close knitted social group. All these activities help in bringing out the creativity and innovation of the average employee. CROSS FUNCTIONAL TEAMS: Incorporation of the organization in to cross functional teams is a very successful business strategy. It is a key attribute of innovative organizations. Teams are made comprising of all the required individuals with needed skills. The task is often solved as a project by each team. These cross functional teams are composed of designers, technicians, planners and marketing and management people. The teams are constantly evaluated and any required skill is filled up by adding a member to the team or through different training programs. With all the above discussed characteristic of innovative organizations there is the involvement of all the individuals of the company, from labor work force to the chief executive, to be engaged in the task of planning and implementing new and innovative ways to reach the goal of the organization. Nokia The name Nokia comes from a small river outside the city if Tampere in Finland. The company was started in 1865 as a producer of wood pulp and paper. Over their history the company has been a producer of different diversified products; from rubber boots, tires, television to generating electricity. It took them till 1960s to enter the market of telecommunications. In just 40 years the company has worked on the development of telecommunication technology with their main focus on mobile communications. Now they are the market leaders in the mobile communication industry and the brand Nokia is now the fifth most valuable brand in the world. The results of Nokia's success are: (as in the company report of 1st Quarter 2009) - Nokia net sales of EUR 9.3 billion, down 27% year on year and sequentially (down 24% and down 25% at constant currency). (This is a fair result owing to the current global financial crises) - Nokia operating cash flow of EUR 276 million. - Total cash and other liquid assets of EUR 8.1 billion at the end of Q1 2009. Now the question that arises is how Nokia has managed to stay successful in this competitive industry, while its competitors are finding it hard to survive. According to the famous telecom expert Andrew Tausz, this success is because of "superior processes, namely, processes that allow for and encourage innovation". Let us discuss few features of this company that supports creativity and innovation. Human Resource Acquisition Attracting the right and skillful human workforce is of vital importance for any technology based organization. Nokia has worked hard to create a favorable and productive culture at the company, therefore it not only needed skilled individuals with creative techniques but they also needed them to fit into the culture. Since Finland is a relatively small country, such a workforce was hard to come by. Therefore Nokia needed to attract its potential employees form all over the world. Nokia then introduced very attractive human resource management policies to engage the interest of the brightest in the field of telecom across the world. The company's human resource management was responsible for the implementation of a tough and comprehensive interviewing process to filter the best of individuals to work with. The work was done on done on team basis, and the remuneration of the employees depends on the success of each team. Culture and work environment of the company also plays a major part in attraction and retention of the best work force in the industry. The culture is friendly and open, environment encourages leaning and continuous training and team based work offers more focus to the employees. The result of these human resource management practices was success according to Dan Steinbock, author of the book that discusses the Nokia revolution in the mobile telecom industry. His outlook on the Nokia's workforce is: "the most technologically savvy individuals in all of Scandinavia". He further emphasized this and praised the creative environment, that encourages and keeps the more creative and innovative ideas alive, and termed it as the "best place to work" (Tradelis, 2007). Conclusion To survive in the competitive business world today, especially in technology based and high tech businesses you need to be innovative. But to promote innovation in growing organizations that are of a larger scale is very difficult. According to Nokia's senior vice-president for corporate communications Lauri Kivinen, 'You can't force people to be innovative; you can foster it, encourage it, nourish it, but you can't force it. It's a spirit of trying to think outside the box, trying to look around the corner, trying to imagine the outcome of a chain of developments'. He then talked about the company's formula for such success. He said that: 'It has to be something that is nurtured all the time; you allow mistakes, allow people to take bold moves, you try to spread energy' (Hyman, Mason & Mason, 1995). The company is responsible for the creation of NVO; Nokia Ventures Organization. It is the company's approach to formalize the process of innovation. NVO was created to research and develop new potential businesses for the company outside its regular business focus.NVO is responsible for the research of external projects as well as projects that are driven internally. The ideas provided by NVO were either moved forward into the business units of Nokia and if they were not relevant for the company then they were sold (Ibata-Arens, 2008). Difficulty for the Competitors: The innovative business processes were very difficult for the competitor to imitate and unique in their approach. The creation of NVO allowed the company to remain its focus on its regular business practices while at the same time developing innovative processes as a separate organization. Nokia can alter the working of NVO according to its requirements. If the company wants NVO to focus on the internal projects then the funds of the NVO are directed to create innovative ideas for the projects driven internally. Similarly the company can also direct funds to for external projects according to its requirements. Such flexibility is difficult to implement in a company of Nokia's scale (Hyman, Mason & Mason, 1995). Recommendation The lesson that we learn from companies like Nokia is that creative individuals and entrepreneurs who can build innovative organizational practices can create and maintain a distinct advantage over their more conservative competitors, either current or future. The practice of acquiring the most skilled individuals of the industry and maintaining a flexible innovative process allowed the companies like Nokia to be creative and agile, even as it grew to considerable size. Another lesson for the businesses is to create innovative strategies that are hard to imitate for the competitors and allow the organization to always stay a few steps ahead of its current and future competition. Bibliography Aaker, D. A. (2008). Design-Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean. Harvard Business School Press Books , 272. Donna, C. L., Prestwood, & Schumann, P. A. (2003). INNOVATION STRATEGIES. Retrieved April 29, 2008, from http://web.archive.org/web/20030506201140/www.glocalvantage.com/InnovationStrategies.pdf Hyman, J., Mason, B., & Mason, R. (1995). Managing Employee Involvement and Participation. Frankfurt: Sage Publications. Ibata-Arens, K. (July 2008). Comparing National Innovation Systems in Japan and the United States: Push, Pull, Drag and Jump Factors in the Development of New Technology. Asia Pacific Business Review , 315-338. Tadelis, S. (2007). The Innovative Organization: Creating Value Through Outsourcing Vol. 50 No. 1. California Management Review , 1-17. Read More