Innovation and Technology Management - Essay Example

Innovation & Technology Management Contents Contents 2 Part I Introduction 3 Part 2 Literature Review 5 Innovation 5 Drivers of Innovation 6 Barriersto Innovation 7 Part 3 Market Research and Example of Companies 8 Global innovation 9 Success or failure of companies implementing innovation 9 Part 4 Critical Analysis 11 Part 5 Conclusion 12 Part 6 Recommendation 13 Reference List 14 Bibliography 16 Part I Introduction Innovation refers to the creation of effective products, processes and ideas which can help a business to succeed (Adler, 2010, pp. 1-15). Innovation takes place when any product or services fulfills the required demand of a market and generates value to the consumers. Innovation forms an essential part of business without which it is difficult for a company to survive and sustain in the market. The necessity for a company to innovate is increasing with the increase in the level of competition present in a business. Since the past few decades it can be witnessed that the success of companies hugely depends on innovation. Innovation done in a cost effective manner can lead to greater competitive advantage for business. Companies that fail to innovative themselves can suffer and face huge losses. Rapid innovation in a cost effective manner is needed for all the companies that intends to sustain in the market in the long run (Baregheh, Hemsworth and Rowley, 2014, pp. 147-158). Figure 1: Types of innovation (Source: Abernathy and Clark, 2008, pp. 3-22) Marketing, incremental, radical and technological innovations are primarily four types of innovation which can be a beneficial to a company. Marketing innovation refers to the innovation in the research, strategy, communication, analysis and operations of a business (Amores-Salvadó, Castro and Navas-López, 2014, pp. 32). Innovation in marketing can take the form of development of new products or applying fresh advertising strategies that can result into the increase in the sales of a product. Incremental innovation refers to measures taken by company to reduce the cost of the products or innovating the goods and services offered to the consumers. Incremental innovation can be carried out through suitable improvements in the existing technology or business frameworks. Radical innovation on the other hand relates to the exploration of fresh technologies. The game changing new innovations can bring in more growth and launch a company in new market as compared to the improvements in the existing business technologies. Radical innovations lead to greater performance and cost saving in a business. Technological innovations relates to the constant invention, innovation and up-gradation in business technologies to increase the margins of profit, competitiveness, value from consumers and decrease excess cost. Technological innovations can be carried out radically or incrementally by a company to earn maximum benefit in the long run. The successful companies like Google, Apple, Samsung, IBM, Microsoft and Toyota understood the need for innovation in order to remain leader in the market. These companies kept their market standards high through constant innovation in their products and business models. Bloomberg Business Week placed these companies in the top five positions in the list of 25 Most Innovative Companies in 2010 (Cooper and Kleinschmidt, 2004, pp. 3). Innovation is the factors which lead to the major growth of various companies. Innovation is considered as the most important factor for growth of companies as stated in a survey conducted by Pricewaterhouse Coopers in association with World Economic Forum. As per the results of the survey innovation has about 25% of contribution on the future growth of companies (Baden-Fuller and Morgan, 2010, pp. 156-171). With globalization and liberalization in the trade rules there is constant entry of new companies therefore necessitating the existing companies to bring in innovations in the business models and technologies to sustain in the market. Part 2 Literature Review The literature review provides a deep insight into the use of technological innovation as a strategy by firms to gain competitive advantage. The importance of technological innovation to the companies is discussed thoroughly in this segment of the paper. The examples of companies’ that incorporated technological innovation and those who failed to integrate the same are presented for further understanding on the topic. Discussions on the barriers to innovation and the way it can be overcome are explained in details in the project. Innovation Innovation in a business can be incorporated in a number of ways. A business can bring in innovation through the technological up gradation so that the products and services are produced in the most suitable manner. Likewise, innovations in the business framework as a whole can equally be incorporated by companies to sustain in the future market. Therefore innovation can be a reflection of positive changes integrated in the services, process, products as well as business models (Amit and Zott, 2001, 24-55). Innovation in the products and process is necessary for the bringing in more flexibility into the operations of a company. It is difficult to imagine a business without innovation in the modern world. As per Chrisman, et al., (2014, pp. 235) innovation in service are of major importance in the industries. Consequently, service innovation remains a subject of investigations and studies. The increased specialization in various industrial sectors and distributed value chain can be cited as a corollary of service innovation. The elevated complexity in the products and services necessitates the change in the innovation structure. Large multinational corporations have therefore started adapting these practices and ideas as part of their worldwide research and innovation efforts. The key features in the service innovation are multi stakeholder cross industry association and user engagement. The idea of innovation in the service is to create an environment whereby knowledge and ideas move freely. Drivers of Innovation According to Kanter (2003, pp. 122-133), innovation in a given area of the business model of an organization can be fruitful for a company in the long run. Hence, sustainability can be cited as one of the major drivers of innovation. The pace of fresh technological appearances, are forcing companies to search for competitive advantages not only in the products and services but also leverage on the existing processes such as value chain, customer bases, distribution channels, as well as customer engagement for sustaining in the competitive position. The author stated that business model innovation is more challenging than process or product innovation. Besides that, innovations in the business models can deliver superior returns to a company. The author also mentioned that business model innovators achieve an average of premium from the average total shareholders that is much more than that of a product innovator. Business model development provides return that is sustainable even after several years. Changes in the model of a business can outperform the innovations of the products and processes of the competitors. For instance it can be noted that Apple first brought in innovations in the business model and then in the products. As per Christensen, Olesen and Kjaer (2005, pp. 1533-1549), product centric innovation is the most vital form of innovation. The majority of the innovations in an organization can easily fit into this category. Innovation in the product addresses the aspects of feature, value and quality in the products offered by an enterprise. Product innovation can further be subdivided into disruptive and incremental innovation. While disruptive innovation can be utilized to design new products, incremental innovation can be utilized to extend the lines of existing products. He also mentioned that product innovation allows firms to grow and sustain in the long run. Hence, it can be stated that innovation is the primary idea which is shaping the corporate life and supporting organizations to adapt several strategic options. Barriers to Innovation External Barriers: The external barriers to innovation are as follows: Market barriers- The major market related blockade is the barrier to entry. The competitors present in a market segment always try to continue on with their monopoly powers and supernormal profit. Hence they constantly innovate to retain the goodwill in the market. Price and product competitiveness are maintained by the top companies present in market. These qualities help companies to grow and survive in hugely competitive markets. Besides that, innovation in the products and services always restrains new competitors from taking over the market from the existing players (Menguc, Auh, S. and Yannopoulos, 2014, pp.313-328). Government policies- Government forbids any innovation that harms the society and the environment. There are a number of regulatory frameworks created by the government to prevent any innovations which hampers the environment. These rules are needed to be followed by the organizations of every nation. The laws set by government sometimes acts as a major barrier to innovation for the companies (Mohr, Sengupta and Slater, 2010, pp. 4). Internal Barriers: The internal barriers to innovation are as follows: Structure- Maintaining appropriate structure of the organization is vital for the process of innovation. The organizations that have an informal and decentralized structure can better adapt to the technological innovations (Morris, Kuratko and Covin, 2010, pp. 23). Part 3 Market Research and Example of Companies According to Burns and Stalker (2000, pp. 24), innovation can rightly be referred to as a positive change in the product, processes, business models and services. They stated that in order to grow and achieve newer heights, improvements in the competitive positioning, market share and innovation needs to be continuously done by companies. Companies that fail to invest in the research and development of new products and processes fails to compete with competitors present in the market. There are a number of companies which could not maintain innovation activities within the business due to the lack of the initiatives of the management. Besides that, the business models of the companies are also not renewed and innovated time and again. These companies suffered in the long run and failed to survive in the excessive complex and competitive market place. Global innovation The changes in the business and technology in the modern world is dynamic. Innovations in the business model, products and processes are an inseparable part of the modern world of business. All the top companies across the world, tries to fully utilize the capacities and business opportunities available to them to attain maximum growth and sustainability (Baker, et al., 2014, pp. 4). The global challenges are met by the several organizations through constant innovation in the research and development. Several companies succeeded with their innovation activities and few failed to maintain growth and sustainability even after innovation. In spite of all the factors it is mostly seen that the progress of companies are directly linked to innovations. Success or failure of companies implementing innovation The South American manufacturing company Semco can be cited as an example of success through innovation in the business. Semco has consistently grown since the last twenty years (Kotabe, Mol and Ketkar, 2008, pp. 65-94). Semco faced various failures yet managed to keep the standard of the business intact. The transformation of the company is a result of a very simple business philosophy which states that the employees need to be given the required freedom which will ultimately result into their success more than the failure. The employees of the organization are allowed to propose new business ideas. The proposals are then reviewed by the executive board where all the employees are equally allowed to participate. The company makes sure that all the innovations made in the business needs to fulfill two major criteria’s. The first criterion is based on the fact that the business should always deliver premium products and services. The second criteria states that the products and service needs to be complex in nature and requires sharp engineering skills and high barriers to entry. The proposals that meet all the criterions are launched with the manufacturing organization, Semco. The company made constant technological innovations through the production of several products. The moist important product of the company is the marine pumps. Diversification also supported the company to grow and sustain in the industry (Lorente, Dewhurstand Dale, 2008, pp. 12-19). The South Korean company Samsung is example of another organization which experienced rapid success within the last few years. The origin of the company was not related to electronics but several other products. Samsung Electronics came into existence in 1969 (Cuevas‐Rodríguez, Cabello‐Medina and Carmona‐Lavado, 2014, pp. 266-284). The success can be attributed primarily to the development of the most technologically advanced smart phones and television. The company turned out to be the leader in the handset industry with the best quality of android enabled smart phones (Michell, 2010, pp. 23). The success of the company in the cellular industry can be attributed to the innovation of the android technology in the smart phones. The handsets offered by Samsung are easy to access, most advance and suited to the needs of the consumers. The growing success of the Samsung is therefore a result of effective technological innovation (King, 2013). The company that failed to innovate is General Motors. The company collapsed gradually after 101 years of existence due to the lack of innovation within the business (General Motors, 2014). General Motors failed to sustain in the market due to lack of innovation in the product, processes and the business model. While the competitors of the company such as the Toyota, maintained continuous innovation of the business, General Motors failed to incorporate the same. The vehicles produced by the organization were not technologically upgraded more often. Lack of innovation made it difficult for General Motors to sustain and grow in the industry. Motorola The multinational company, Motorola is another significant example of business failure due to lack of innovation. After the introduction off the Razr handsets, the company botched to introduce new handsets through technological innovations (Liao and Cheng, 2014, pp. 2919-2925). The company could not compete successfully with the top contenders of the handset industry, Apple and Blackberry. Continuous inability of the company to develop new cellular phones with upgraded technology resulted into the drastic failure of Motorola. The enterprise struggled in the bottom tier of the competitive, market after it failed to satisfy the needs of the customers. Consequently, majority of the shares of Motorola was taken over by Google. Part 4 Critical Analysis According to Borrus, Ernst and Haggard (2004, pp. 45), innovation helps to increase the avenues of income, reduce cost of production and maintain competent operating systems. Innovation facilitates companies to look for potential acquisitions for having cost advantage, enhancing capabilities and accelerating the top line growth of revenue. They also stated that positive innovation can help in the expansion of the research and development (R&D) base of a company and bring in the latest technologies within the organization. Therefore, innovation can support a company to have an edge over the competitors and enter the new sectors of business in a faster and deeper manner. As per Castellani and Zanfei (2004, pp. 447-475). companies of various sectors and sizes all across the world are operating in an extremely complex, unpredictable and dynamic environment. There a number of firms that seeks fresh ways of conducting their business through innovations of some kind with the motive to make profit and remain competitive in the market. They stated that intense competition in the global markets, rapid changes in the technology, proliferation of product variety all forms a part of the modern manufacturing environment. While the big organizations are able to invest on the fresh equipment and technologies: provide world class training and skill development programs to the workforce as well as win new markets easily, the same is not relevant for the small enterprises. As a result small firms are entering into new business sector with fresh products, processes and ideas. Successful innovation is quite a complex task for the small and medium sized manufacturing industries as they fails to possess the required funds and know how to invest in the research and development activities fails to convert new ideas developed into innovation. According to Bertalanffy, product and process innovation is hugely affected by the organizational structure (Bertalanffy, 2010, pp. 23). He said that the organizational structure that is formal, unspecialized, hugely rigid, centralized and politically empowered fails to encourage the process of innovation. As per his statement, extremely formalized structure of organization does not support the process of enterprise innovation. The informal structure of organization is consequently extremely vital for innovation projects. He stated that management of companies feels less burdened to implement new innovations in the products and processes in an organizational structure that is not centralized. The scope of decision making for the managers increases more when the structure of a business is not formal and centralized. Therefore, product innovation can take place in the informal organizational structure while implementation of the plan for innovation needs more of centralization within a company. Part 5 Conclusion In order to sustain in the market it is important for every organization to innovate. Through innovation a company can sustain and maintain growth in a competitive business environment. With the rise in the number of technologically sound companies, innovation has an indispensible part of business. Accomplishment of accompany is directly linked to innovation in the product, process and technological innovation. The companies which failed to perform in terms of robust innovation, disastrously failed to sustain in the market. Technological innovations after analyzing the needs and preferences of the customers have supported organizations to grow rapidly. Innovation helped Samsung, Semco and several other companies to succeed in the business and retain the top position in the market. While companies like General Motors and Motorola failed abruptly to sustain in the market because of the lack of innovation in the products and processes. Hence, it can be inferred that innovation is vital for the survival and growth of companies in this highly competitive business world. Part 6 Recommendation There are numerous factors that act as a barrier to innovation. In this section recommendation to overcome those barriers will be highlighted. It is strongly recommended to the companies that they should try to bring an overall innovation in their business process and should not concentrate on a single domain. This will ensure an overall development of the firm and will also ensure sustainability. The companies are also recommended to comply with the government policies and should not take any step in innovation that is against the interest of certain communities. In order to overcome the internal barriers, the companies are recommended to ensure proper communication with the employees. This is because the major barrier that occurs internally comes in the form of resistance to changes. Therefore, properly handling and managing the change will streamline the process of implementing any innovative idea. Reference List Abernathy, W. J. and Clark, K. B, 2008. Innovation: Mapping the winds of creative destruction. Research policy, 14(1), pp. 3-22. 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