The Role of Innovation Management in Relation to Strategic and Corporate Objectives - Research Paper Example

 The role of innovation management in relation to strategic, international marketing and corporate objectives Introduction There is a great contribution of innovations that gives nations, industries and organizations a considerable advantage in the modern highly competitive world (Goffin & Mitchell, 2005). Through innovative approaches, there appear lots of possibilities to change the way people think and act. In innovation management, all the new things are viewed from the context of new concepts, which make people and business to move away from the existing solutions (Trott, 2008). Moreover, Dodgson, Gann and Phillips (2013) define innovation management as an important predisposition that enables organizations to have more benefits from innovation in terms of its obtaining will be well-managed. While innovation contributes to economic performance, corporate competitiveness and the overall quality of life, there are many social and economic benefits of innovation, hence, an organizational returns depend from the appropriate managing of risks and complexities connected with the innovation. The following paper will discuss innovation in terms of primary and support activities and innovative management contribution will be illustrated in terms of strategic objectives. These objectives will be argued through the creation of competitive advantage. Porter’s generic strategies and his value chain will be also discussed. The paper will also highlight the importance of innovation as the source of competitive advantage and through the viewpoint of international business. Position and Paradigm innovations and innovation space will be discussed in order to address issues of strategic direction. Innovation as the source of competitive advantage International integration that came from the interchange of world views, ideas, products and other aspects of world culture has given modern businesses more opportunities to search and expand their activities in new locations and search for suitable suppliers. However, the propriety of these suppliers made companies think about new approaches for cooperation. Thus, technical competence and innovativeness have become necessary parameters to obtain competitive advantage of these companies over others (Upadhyay & Baglieri, 2012). The independent suppliers innovate if they obtain cost-benefit ratio, however, the dependent suppliers need innovation more in order to satisfy customers. Here innovative approach is used even if they see no long-term return. This is because innovation will allow attaining customers in the long-term perspective and would allow company to obtain an advantage in the future. Upadhyay and Baglieri (2012) consider that it is more strategic decision that makes companies think they would keep their global competitiveness. In the context of modern rapid changeable conditions, the standards changes soon too, thus, the supply chain is required to adopt their activities with the latest changes by innovation and cost leadership. Despite the fact that in such industries as fashion and agriculture the innovation process is more gradual, the customers and suppliers collaborate in order to obtain long-term innovative plan. De Felice and Petrillo (2013) state that in the fashion industry the overall performance connects financial measures with the customer perspectives, internal business processes, organizational growth, learning and innovation. In order to meet objectives and customers’ expectations, fashion industry defines such key business processes as the internal business perspective , which strives to satisfy shareholders and customers and the innovation perspective that enables the company to identify the long-term improvement regarding employee satisfaction, training and skills and others. Liu et al (2014) defines that vegetable breeding industry is perceived as an innovation-driven one due to constant improvements in the production if food are expected to bring the better quality of the product and thus obtain more profit and be able to compete with the other companies. Thus, vegetable breeding companies in China are included into the competitive environment. Old companies are changed with new players, which involvement of new technology has helped such companies to increase the dependent on constant improvement of breeding processes and the fast production of innovative products with new varieties (Liu et al, 2014). In addition, with the integrative and functional capabilities of newness of innovation, the product potential brings superiority in terms of better quality, reduced costs in comparison to the current competing products. Liu, Jasimuddin and Faulkner (2014) state that within the value chain, innovative activities are distributed globally and research and development activities become internationally recognized. In the context of multinational companies, innovation enables them to increase their competitive advantage. Moreover, innovative knowledge assets are required for the growth on the international scale and new value of innovations is created to support such assets. Despite the fact that innovation activities are not often carried out within the single organization. Innovation networks assist in exploitation of internal and external resources that create more innovation. There is also a relation between innovation and patents that in the field of innovation management are studied by several researchers. Thus, Liu, Jasimuddin and Faulkner (2014) state that patents protect inventions and enable companies to make more profit, have national competitiveness and impact positively on social welfare. Innovation management in relation to strategic objectives A picture of strategy development appeals to the strategy makers within the research and development organization, since it defines creation of strategy as the one that cannot be exercised without the subject of innovation (Lager, 2010). However, to make a company achievement-oriented, there is a need to create a competitive perspective on strategies, which was most vividly introduced by Michael Porter. His three Generic Strategies are still considered as necessary in the business world. Thus, one of such strategies is the special market, where the attention is given to the particular type of consumer, segment of the product or its geographical segmentation. The entire market strategy is followed by selling to a specific target group, whereas the cost leadership and differentiation strategies are aimed at obtaining their objectives in the industry. The other strategy means the differentiation of the product or service that an organization or company is ready to offer and create something that will be perceived as unique in its type- innovative decision. Lager (2010) states, that such innovation can refer to the design and brand profile, technology and customer service. That does not mean that differentiation strategy makes the company to set aside costs, however, it enable company to capture wider market share and obtain a degree of exclusiveness to some extent. The third strategy of Porter’s Generic Strategies is the cost leadership, which means that an organization should create optimized production facilities and have more control over operating costs in order to avoid marginal customers and cost minimization of such areas as research and development, advertising and others (Dess & Davis, 2003). Many strategic leaders focus on differentiation with product innovation (Gehani, 2013). This is done for the purpose to sustain their competitive advantages and go beyond the improvements and transformations that enable them to innovate themselves. Thus, the world-known Apple’s co-founder asserted on producing differentiated and premium-priced computers instead of using low-cost clones. He urged innovative products to be well designed and well-made to be used by the top segment of the market. The other example of innovative approach in organizational strategy is Eastman Kodak case, where its successive strategic leaders did not want to switch from their low-cost leadership strategy to more innovative digital imaging with the product differentiation strategy. Gehami (2013) states that after the founding-leader of Eastman Kodak pioneered the portable photographic film and camera technology, his radical innovations brought the company the world recognition and positioned it for many decades as the domineering company in the film market. Along with the Generic Strategies that Porter proposed as the way of how companies can pursue their competitive advantage in the chosen market scope, he also offered the concept that enable companies to operate in the specific industry delivering valuable products or services. The value chain of activities disaggregate business into strategically relevant activities and enable identification of the source of competitive advantage to perform these activities in a more cheap and better that in one’s competitors’ ways (Aimin & Shunxi, 2011). If an organizations’ competitive advantage is managed by people, which is the main characteristic of almost all modern companies, it should be followed by the innovative approach since these people are developing and implementing new ideas and bring to life innovative products and services. Reddy and Reddy (2014) state that innovating as a chain does not bring good results to the company or improves its market orientation, but also enables company to direct its operations in order to result higher levels of efficiency and create competitive advantage that would be difficult to reach the competitors. It is also value chain that transforms depending on the type of capacities of the organization that deals with stable state and constant innovation (Reddy & Reddy, 2014). This forms innovation in terms of its relatively stable framework, where it indicates clear rules and the nature of competitors, the source of ideas and the relationship between the established and underlying requirements. The other type of innovation refers to the organizations that act more like new entrants with flexible performance and ability to switch the direction to make new experiments. Value chain can also be observed as the tool that enables development of innovation capabilities in the production, technologies, logistics processes of labor and organizational relations. One of the examples can be the heavy truck and bus industry of Volvo, where the domestic suppliers can compete with international suppliers and thus improve their operations by technological assistance. The constant innovation in such case is important in the long-term relationship among the intercompany learning and it enables company to generate benefit for domestic suppliers. Along with the defining a balance between technological and market conditions of the product, businesses should also pay attention to the place on product or process innovation. Product innovation refers to the final product while the process innovation relates to the way where this product is produced and distributed (Johnson, Scholes & Whittington, 2008). While business follows technological approaches in product innovation and process innovation, the periods of product innovation depends on the number of new features that business implements. Thus, Ford has introduced the dominant design of its vehicles which were generally driven by petrol and engines at the front and the four wheels. However, once the dominant design was established, the product innovation came under the competition from other companies. However, for the period when the car was produced, Ford’s innovation has started process innovation for other types of vehicles. Ford’s attempt to create a car was dictated not by the simple desire to invent a vehicle or develop the manufacturing process to put together, but he contributed to making a considerable change in the underlying model that enabled more customers to be able to purchase cars at affordable price (Bessant & Tidd, 2011). This changes is a good example of the position innovation which means that rather than to change the product and its core manufacturing process, business positions the product for another type of customer. Along with the process innovation, there is a type of innovation, a paradigm one, that includes changes in the price strategy. The recent example of such paradigm innovation is the low-cost airlines, the provision of online insurance and financial services. Innovation paradigm can be triggered by technologies, the appearance of new markets, new legal rules and new environmental conditions. Innovation management in relation to corporate objectives Dodgson, Gann and Phillips (2013) state, that in order to manage the numerous challenges of innovation, there is a need to combine resources in different business and organizational processes. For that purpose, such processes as research and technology, market facing, internal coupling, external collaboration, strategic integration and future readiness are used to manage these resources so they were created, delivered and capture innovation with the underlying management capabilities. In the strategic overview context, these processes involve decisions that explain how innovation supports the entire organizational objectives. Besides, the high level of internal and external organizational integration should be encouraged in order to assist corporate objectives by means of involvement of investments in coordinating innovative infrastructure. An organization’s ability to develop and implement innovation strategy along with the internal and external organizational support is the main management capability of any business. While strategic objectives are designed to address strategic views of a certain organization, corporate initiatives are directed toward opportunities of innovation in products and services, operations and the business model of a company (Paladino, 2010). Within the strategic theme innovation refers to project that supports that theme. Corporate or business objectives are the natural continuation of strategic goals of the company, where innovation is given the place of its economic objectives that are able to attract customers and earn certain profit for the organization if such innovative approach is developed and implemented successfully (Business organizations, n.d.). Innovation enables business to adopt new customs and traditions of the modern and rapid changeable business. Thus, for producing a new product and to find out new ways of the old ones to be used, business should adopt new technique of management, do certain marketing research and provide more facilities to its customers so the products were successful as old as new ones. Innovation management in relation to international marketing Due to the increasing competitiveness on the global scale, innovation has become more important. Hence, corporations should redesign their management and marketing strategies and practices in order to improve and adapt their activities toward the new conditions. Since marketing policies determine positioning of certain products and services of innovation, their further promotion depends on the organizational capability to manage their innovations in order to obtain competitive edge among other companies and businesses (Ersun & Karabuklut, 2013). There is a link between marketing and innovation, since marketing is related to the company’s growth and high performance, while innovation refers to the developing of new products and services, implementation of new strategies and business models. Marketing innovation is critical for most companies that operate nowadays, since they deal with the rapid changeable customer needs and preferences, different economic, political and environmental factors. Hence, many companies spend entire budgets to innovation, trying to achieve coordination among the research and development, production and marketing functions to innovate better products and services to compete rivals. As innovation relates to creativity, marketing innovation strategy needs to be integrated to the overall strategic plan of the business to lead employees, contribute more into the well-being of stakeholders and positively impact the societal needs (Westland, 2008). Ersun and Karabuklut (2013) state that stakeholders are the important groups to be satisfied with the business innovative performance, Hence, companies should integrate more innovation with the marketing plans to provide new ideas in their implementation to succeed in the innovation marketing. By means of innovation communication, it is possible to comprise the strategy with the internal innovation communications, innovation marketing and innovation public relations. For that purpose, modern companies add high-technology marketing, advertisement and research and development implementation to their innovation marketing. Conclusion The paper has discussed the question of innovation management and its relation to such areas of business as its strategy, corporate mode and marketing. The concept of innovation was illustrated as the source of competitive advantage for an organization. Due to the changes that have emerged in the last decades, innovation has become more influential factor in building a competitive position of every modern business. Hence, it should be paid more attention in terms of its impact on the organizational strategy, business ability to conduct its activities as inside the domestic market as internationally. Despite the fact that most companies use innovation to some extent, the importance of certain types of innovation such as position and paradigm are still underestimated. Value creation is also an important factor for competition and here innovation is able to assist businesses to present that product and service that would meet the highest demands. References Aimin, W. and Shunxi, L. 2011. A Model of Value Chain Management Based on Customer Relationship Management, Journal on Innovation and Sustainability, São Paulo, vol.02, n.03, [pdf] [Accessed on 24 March, 2015]. Bessant, J. and Tidd, J. 2011. Innovation and Entrepreneurship, John Wiley & Sons Business organizations, n.d. FK Publications. De Felice, F. and Petrillo, A. 2013. Key Success Factors for Organizational Innovation in the Fashion Industry, International Journal of Engineering Business Management, Vol. 5, Special Issue on Innovations in Fashion Industry, [pdf] Available at: http://cdn.intechopen.com/pdfs-wm/45555.pdf [Accessed on 24 March, 2015]. Dess, G. and Davis, P. 2003. Porter’s generic strategies as determinants of strategic group membership and organizational performance, The Academy of Management Journal, Vol. 27, Is. 3, [pdf] Available at: http://www.wiggo.com/mgmt8510/readings/readings6/dess1984amj.pdf[Accessed on 24 March, 2015]. Dodgson, M., Gann, D. and Phillips, N. 2013. The Oxford Handbook of Innovation Management, Oxford University Press Ersun, A. and Karabuklut, T. 2013. Innovation Management and Marketing in Global Enterprises, International Journal of Business and Management; Vol. 8, No. 20. Gehani, R. 2013. Innovative Strategic Leader Transforming From a Low-Cost Strategy to Product Differentiation Strategy, Journal of Technology Management & Innovation, Volume 8, Issue 2, [pdf] Available at: http://www.scielo.cl/pdf/jotmi/v8n2/art12.pdf[Accessed on 24 March, 2015]. Goffin, K. and Mitchell, R. 2005. Innovation management: Strategy and Implementation using the Pentathlon Framework, Palgrave Macmillan, [pdf] Available at: http://www.som.cranfield.ac.uk/som/dinamic-content/media/knowledgeinterchange/booksummaries/getabstract_tutorial/media/Innovation%20Management/summary.pdf [Accessed on 24 March, 2015]. Johnson, G., Scholes, K. and Whittington, R. 2008. Exploring Corporate Strategy: Text and Cases, Pearson Education Lager, T. 2010. Managing process innovation: from idea generation to implementation, World Scientific Liu, L., Jasimuddin, S. and Faulkner, D. 2014. Does Strategic Alliance Matter In Managing Innovation In China? The Journal of Applied Business Research , Volume 30, Number 3, [online] Available at: http://www.cluteinstitute.com/ojs/index.php/JABR/article/viewFile/8565/8566 [Accessed on 24 March, 2015]. Liu, Z. et al. 2014. Key Success Factors of Innovation Projects of Vegetable Breeding Companies in China, International Food and Agribusiness Management Review, Vol. 17 Issue 4, [pdf] Available at: http://www.ifama.org/files/IFAMR/Vol%2017/Issue%204/201300947.pdf [Accessed on 24 March, 2015]. Paladino, B. 2010. Innovative corporate performance management: five key principles to accelerate results, Jogn Wiley & Sons. Reddy, G. and Reddy.S. 2014. Significance of Innovation in Business Process of Value Chain, Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport, 2(1), 18-25. [online] Available at: http://pubs.sciepub.com/jbe/2/1/3/[Accessed on 24 March, 2015]. Trott, P., 2008. Innovation management and new product development, Pearson Education Upadhyay, A. and Baglieri, E. 2012. Innovative supplier selection: key success factors, International Journal of Innovations in Business, Vol.1, N. 5 Westland, J. 2008. Global Innovation Management: A Strategic Approach, Palgrave Macmillan Read More