Innovation, Creativity and Change in Business Context - Literature review Example

Innovation, Creativity and Change in Business Context Table of Contents Introduction 3 Models of Innovation 3 “Distributed Innovation Model” of Eric Von Hippel 3 “Open Innovation Model” of Henry Chesbrough 3 Creative Destruction Theory 4 Lewin’s Change Theories 4 Google’s Nine Principles of Innovation 5 Unconventional Management Model of Google 6 Google Analysis 7 Conclusion 7 Reference List 8 Appendix 1 10 Introduction The learning of organizational change or creativity has obtained a significant amount of consideration from scholars over the years. Thompson (1965) describes innovation and creativity as the acceptance, implementation, and generation of new services, products, or processes inside the organizational location (Thompson, 1965). Thompson’s definition entails the stress on the execution of the creative items. Innovation generally takes place with authentic use only. For example, a plan to include a new product to the line of current product does not refer as a creativity or innovation. It takes place generally when the recent product plan is really implemented (Thompson, 1965). The author favours this definition because it makes creativity or innovation tangible as well as measurable relatively than a theoretical concept. In organization, innovation is observed as a relating process consisting of different stages. First stage is expressed as the commencement stage where the new proposal is introduced, authorized, and established for adoption. Next stage is described as the implementation phase which comprises of the changes in the actual management that happens in the company, as the modernization is placed into operation (Rogers, 1983). The aim of the paper is to explain the hypothesis of different models and theories on innovation and to focus on the fact that how innovation is important for the organization. Models of Innovation “Distributed Innovation Model” of Eric Von Hippel This model is projected by Eric Von Hippel, which explains the type of innovation whereby the users originates the changes as well as carry out distribution and production. This model could also be relevant to the physical products. Innovation is reasonably viable to handle without a producer if three circumstances are satisfied: the continuation of an inducement for the users to create or innovate; the continuation of an incentive in order to disclose innovations; and the probability to allocate innovations at the low cost. This model describes interesting patterns of innovation that have possibly existed in certain areas but have not been observed until now by the specialists of innovation (Haddon, 2006). It proposed that the manufacture as innovator postulation is wrong; a new means to classify investors has been planned. It explains that the innovation of product could initiate from any one of the three distinct sources i.e. users, producers and suppliers; who are also considered as innovators (Edquist, Hommen and Tsipouri, 2000). The main consequence is that the ‘distributed innovation procedure’ can be supervised through changing profits, expectations and costs. The user-leading innovation method includes: the identification of needs, research or development on the product, and building prototype. The role of manufacturer is to apply or diffuse the innovation (Edquist, Hommen and Tsipouri, 2000). “Open Innovation Model” of Henry Chesbrough ‘Open Innovation Model’ of Henry Chesbrough describes the purposive outflows and inflows of knowledge in order to accelerate the internal modernization and develop the marketplace for the exterior use of modernization (Jong et al, 2008). It explains that the companies or organization should make use of the external ideas as well as technologies in the business whereas allowing their unused thoughts to be employed by the other companies. Thus, it requires every company to unlock its business innovation model in order to let technologies and external ideas flow inside from external environment and allow more internal information flow outside (Oecd, 2008). The main consequence is that the managers are required to manage the knowledge flows. This model is different from other models of innovation because of the following reasons: equal significance is given to the external information, in relationship to internal information or knowledge; business models describes how firms produce and capture worth that is generated in open research & development system; recognition of the purposive outbound stream of information and technology; the nuanced and proactive role of management; the abundant fundamental knowledge landscape (Chesbrough, 2006) (See Appendix 1). Creative Destruction Theory Joseph Schumpeter coined the expression “Creative Destruction” and several economists adopted this theory as an explanation of the messy way of free markets towards delivering the process (Davis, Haltwanger and Schuh, 1996). During the early 1930 Joseph Schumpeter started learning how the industrial system was exaggerated by the market innovations (Davis, Haltwanger and Schuh, 1996). His theory of creative destruction states that the industries revolutionize the financial structure from inside by continuously devastating the old one and constantly creating the new one. This process is known as creative destruction. Schumpeter developed a hypothesis where the ability of the company to create was mainly related to its dimension and size. Originally he supported his theory by stating that the small companies are in a better position because of their flexibility, whereas the big companies may get captured in the bureaucratic structures. After some years, he changed his perception by declaring that the larger companies with various levels of the monopolistic power can have the benefit to expand innovations (McCraw, n.d). As compared to the smaller one, the big companies have superior resources as well as more command over market. The creativity hypothesis of Joseph Schumpeter was just a minor part of his work; it was obtained from his investigation of different social and economical system. Therefore, the theory has no experimental foundation and empirical evidence to hold the relationship amongst the company size and its capability to innovate. One major insight occurring from his notion is that the creativity could be observed as a sign of creative destruction that reform the entire market in those favours who catch discontinuities faster (McCraw, n.d.) Lewin’s Change Theories The three stage model of Lewin describes that the organizational change entails a shift from one inert state by means of a developmental move, to another inert state. The three stages are: unfreeze, change, and refreeze. The ‘unfreeze’ stage includes forming the right situations for the change to take place. By opposing change, people frequently attach logic of identity towards their environment. The analysis is to shift people from the frozen condition to an unfrozen or ‘change ready’ state. The second stage is transition or change stage which explains that as functions change, a decreased state of competence is formed, where goals and objectives are considerably lowered. The aim of this step is to acquire people to the ‘change ready’ state and keep the people there. The last goal of this model is to attain a ‘refreeze’, re-creating a recent place of steadiness and raise comfort levels through reconnecting them back into their familiar environment. It takes the people from low productivity phase to that of sustainable performance and organizational effectiveness (Foster, 2012). Google’s Nine Principles of Innovation Google Inc. was instituted in the year 1998. Its mission is to manage the information of the world and also to make it unanimously useful and accessible for the users (Google, 2014). Innovation and Google go together. The products of Google ranges from core search task, to ads, maps, the cloud, and glass to scrape the surface. In addition, it also offers Android, hardware products such as Chrome, Chromecast, Chromebook, and also the Nexus devices (Businessweek, 2014). Google employed the strategy of “open innovation”. The acquirement of the You Tube is also noteworthy in terms of Google innovation and it also obtained a mobile operating organism known as Android (Jartese, 2014). Its nine principles of innovations are: Innovation from all over: Employees are persuaded to seek the innovative clarifications to all instant problems, and present their function for other matters confronting the Company. Thus, innovation at Google is not just the purview of particular department, but it is the responsibility of everyone (Jartese, 2014). Focus on user: Customer-based product designs are advocated above pure revenue motivation. Making products which are easier for the users to operate, generates profit by customer approval of useful produce experiences, self-promoting the item (Jartese, 2014). Think 10X: The aim of Google Company is to offer an answer that is 10% or 10 times enhanced than what presently exists. Seek radical instead of incremental development and improvement, accept facts from improbable sources in order to generate unanticipated but extremely practical solution (Jartese, 2014). Bet on technological insights: Internal open-sourcing encouraging alliance within the company is particularly open towards exchange of technological insights across tasks aligned with the strategic imperatives of Google (Jartese, 2014). Launch: The necessary purpose of innovation or modernization is improvement. Improved or new products will reach users who will have their personal view about the functionality of the object. By getting the feedback of customer, further changes are made and that’s the critical idea of innovation (Jartese, 2014). 20% time: Google depends on the philosophy of “20% time” where all the employees were assigned 20% of their personal work-time in order to develop the side-projects. Performing so transforms all employees into the innovation agents just by following notions they were passionate about. 20% time resulted towards the growth of successful produce for example Google Alerts, Google News, Gmail labs, Google Earth, Gmail, and Maps Street Vision (Jartese, 2014). Default to unlock process: Open-sourcing attracts assistances from greater number of possible innovators, thus, bringing a global collection of minds in order to carry the projects of every kind (Jartese, 2014). Fail well: The failure is regarded as a derivative of innovation or modernization and is often viewed as the basis of process development. Sometimes thoughts may not implemented as planned, although can direct to something besides of value (Jartese, 2014). Have a goal or mission that actually matters: A fundamental idea of the innovative processes as well as the principles directing them, is offering a means of functioning them in the direction of the business strategies and objectives. Google’s aim of generating data for everyone with the access to computer motivates its workers to innovate internationally, across all disciplines and fields, for an extraordinary range of services and products (Jartese, 2014). Unconventional Management Model of Google Google has constructed an “unconventional management model” which depends on the six management philosophies (Steiber, 2014). First is the dynamic capability which states the ability of Google to incorporate, develop, as well as reconfigure external and internal competencies to meet fast changing surroundings. Second is a constantly changing organization which states that the company should be infused with a positive approach to modify or change. Third is the people-centric move which explains that the company focuses on individual employee towards providing their own creation and suggestions. The principle depends on the belief that employees want to be imaginative and the company provides them with a situation in which they convey their creativity. Fourth philosophy is an ambidextrous company which describes that constant innovation must mingle two different types of organizational sense within the similar organization. These are ‘every day creation’ which works finest with a conservative control and planning approach and ‘innovation’ which needs greater flexibility, freedom and an open approach towards experimentation. Fifth is the open organization which states that the company is open to incorporation with its environment. They have a conscious and constant exchange of ideas with their environments. The sixth philosophy is the systems approach which needs a holistic vision as well as the understanding of entire corporate system and how various mechanisms in the organization manipulate each other (Steiber, 2014). Google Analysis Most of the companies face major challenges in their innovation process. In 2012, merely after fourteen years of its establishment, it has been renowned as the world’s most expensive brand according to the ‘Brand Finance Global 500’. It has also accounted sales of around $50 billion and also $11 billion in the gross profits (Steiber, 2014). As of now, it is the most inventive company of the world. From the external environment perspective, the company have successfully merged two different competencies: scientifically based proficiency regarding the human capital and engineering expertise in the computer science (Hbr, 2013). It is deeming bringing an edition of the Play mobile-app shop to China which is considered as a good step, thereby focusing its creativity (Wallstreetjournal, 2014). Google has adopted the open innovation theory by giving equal significance to the external information, in relationship to internal information or knowledge. It allows the outflows and inflows of knowledge in order to accelerate the internal modernization and make use of the external ideas as well as technologies in its operation. It has been analysed that there are various signs of energetic capabilities at Google. The management team has regularly demonstrated proficiency with regard to deciding what the subsequent significant area for the company will be. Moreover, when the new projects intimidate the existing products then also the company is not scared of developing them. The culture of company assists dynamic potentials through the continuous prospect of the external change which is there in the intellect of employees and management. Moreover, engineers are expected and entitled to utilize time on their personal projects or task according to the rule of 20%. Thus, every employee’s presentation is appreciated according to the aspects of innovation as well as production. It has been also analysed that Google is adopting distributed innovation model as the innovation of product start from any one of the three distinct sources i.e. users, suppliers, and producers. In fact, the engineers are primarily responsible for the research or development of the product and building prototype; then managers apply or diffuse the innovation as per their knowledge on creativity of product. It also figured how to parlay the search technology into ‘disruptive advertising model’ through which companies propose to bind their advertising towards exact search terms (Hbr, 2013). Conclusion The paper lays stress on the fact that innovation is very important for the success of an organization. To considerably strengthen the ability for innovation, the most important thing is the increased dependence on the creative abilities of employees and the company should be ready to challenge the conservative management as well as the organizational models. By doing continuous innovation, Google is regarded as the most innovative company of the world. The innovative culture of Google reflects its obligation to steady performance, perpetual growth, and operational excellence, thus encouraging international association and goodwill. Reference List Businessweek., 2014. Google Inc. [online] Available at: < http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=GOOG> [Accessed 28 Nov 2014]. Chesbrough, H., 2006. Open Innovation: Researching a new Paradigm. United States of America: Oxford University Press. Davis, S.J., Haltwanger, J. and Schuh, S., 1996. Gross Job Creation, Gross Job Destruction. Cambridge: MIT Press. Edquist, C., Hommen, L. and Tsipouri, L.J., 2000. Public Technology Procurement and Innovation. Netherlands: Springer Science & Business Media. Foster, C., 2012. Organization Development. [online] Available at: < http://organisationdevelopment.org/five-core-theories-lewins-change-theories-organisation-development/> [Accessed 28 Nov 2014]. Google, 2014. Google Company. [online] Available at: [Accessed 28 Nov 2014]. Haddon, L., 2006. Everyday Innovators: Researching the Role of Users in Shaping ICTs. Netherlands: Springer Science & Business Media. Hbr, 2013. The Three Most Innovatibe Companies of 2013. [online] Available at: [Accessed 28 Nov 2014]. Jartese, 2014. Perspectives on Innovation. [online] Available at: [Accessed 28 Nov 2014]. Jong, J.P.J., Vanhaverbeke, W., Kalvet, T. and Chesbrough, H., 2008. Policies for Open Innovation: Theory, Framework, and Cases. Finland: Tarmo Kalvet. McCraw, T.K., n.d. Prophet of Innovation: Joshep Schumpeter and Creative destruction. Cambridge: Harvard University Press. Oecd, 2008. Open Innovation in Global Networks. France: OECD Publishing. Rogers, E.M., 1983. Diffusion of Innovation. New York: The Free Press. Steiber, A., 2014. The Google Model: Managing Continuous Innovation in a Rapidly Changing World. Netherlands: Springer Science & Business Media. Thompson, V.A., 1965. Bureaucracy and Innovation. Adsministrative Science Quarterly, 10, pp. 1-10. Wallstreetjournal., 2014. Google Looks to Get Back Into China. [online] Available at: < http://online.wsj.com/articles/google-looks-to-get-back-into-china-1416527873> [Accessed 28 Nov 2014]. Appendix 1 Open Innovation Model (Source: Chesbrough, 2006) Read More