Innovation Management - Essay Example

Innovation Management Introduction Innovation refers to an outcome, competency and process that results from deliberate use of initiatives, imaginations and information (Aalbers et al., 2014). Such is an essential process in society because it contributes in the reduction of the wastes, improvement in the growth of economy and productivity and ensures that firms have the potential of providing quality services (WANG, 2013). It is the innovation that ensures companies can succeed in the competitive market place. However, some firms may not succeed if they do not have an effective innovation strategy. These companies may have organization structures that hinder the development of the innovation, or lack the autonomy, flexibility and integration of different organizational functions. As such, organizations have to allocate a set of tools that helps in responding to internal and external opportunities while understanding the goals and processes of an organization. Such depicts the essence of innovation management, which utilizes new ideas, products and processes for the purposes of improving the quality of life (Bossink, 2015). In most of the firms, innovation is undertaken by the research and development department. In this department, all the employees contribute equally towards product development, marketing and manufacturing. Common tools that are used in the innovation management include portfolio management, brainstorming, management of the product lifecycle, idea management, virtual prototyping and Phase-gate model among others. Reviewing Innovation Management Need for innovation In the current business environment, technological innovation is the key driver of achieving competitive advantage among the companies. Firms rely on the recently developed products as the major sources of revenue and increase in the profit margin. Thus, innovation is becoming a metric measure of the current performance level of firms in different sectors. Globalization has taken, and is taking place in the business world (Aalbers et al., 2014). As such, it has contributed towards the development of innovative strategies among the firms. Such emerges from the foreign pressure that local firms receive in terms of the quality of their products and services. Therefore, companies are engaging in the production of differentiated products and services so that they can survival foreign competition. The introduction of the new products ensures that firms have the potential of protecting their margins and lowering their production costs. Such includes improving on the survival abilities of the firms in the competitive market. Technological advancements have also triggered firms to focus on innovation. These advancements include computer-aided manufacturing and computer-aided design, which help in the short-run production, as well as the attainment of economies of scale within the production chain. The aim is to ensure that the products and services meet the customer needs. Such is essential because different customers express unique needs in terms of the quality of the quality of services and products that they receive from the market. A key factor of economic growth is innovation. Such occurs as the firms produce high quality products and services, which have a strong competitive strength in the market. Countries that adopt innovation are able to lead the others in the production process of goods and services. Further, the embracement of innovation ensures that a nation can remain green because there is minimal waste that is released to the environment (Bossink, 2015). Hence, innovation acts as a means of ensuring that a country remains sustainable in the conduct of its business activities. Moreover, innovation facilitates in improving on the way that people communicate and move from one place to another. Such occurs by ensuring that the society has the best systems and equipment for communication and transport. Types of innovation There are different types of innovation that exist in the modern society. These are categorized in four dimensions as product versus process innovation, architectural versus component innovation, competence enhancing versus competence destroying innovation and radical versus incremental innovation. Product innovations are linked to the organization outputs. These are the services and goods that an organization has the potential of providing to the society. An example of this is when the BWM develops a new car that is highly intelligent and can detect obstacles on the road (Brandão Santana et al., 2015). On the other hand, process innovation relates to the conduct of business activities of an organization in the production and marketing of goods and services. Hence, it is clear that process innovation focuses on the improvement of the efficiency and effectiveness of an organization in the production of goods and services. For example, an organization may focus on reducing the defects rates in the production line. Both product and process innovation occur in tandem (Vaughan, 2013). However, in most cases product innovation is visible compared to process innovation, but they are essential for an organization in order to achieve competitive strength in the market. Radical innovation represents the departure of an organization from using its existing practices. This is considered in terms of the newness and differentness of the new practices. For example, a new technology that is adopted in a business unit is considered as a radical innovation. On the other hand, incremental innovation is not new to a firm. Such an innovation appears as an improvement of what was known to the firm (Clark &Wheelwright, 1992). An example of this is the change in the configuration of a phone’s key board. Thus, the firm new about the keyboard configuration, but it engages in the change in its configuration. Radicalness of an innovation is associated with the risk and it is relative. Such is because of the potential impact of such an innovation on the existing, as well as new practices in a firm. An innovation is competence enhancing if it contributes in the building of the existing knowledge base of a firm. It ensures that the firm has additional knowledge in the conduct of its business activities. In contrast, it is competence destroying when it does not add value to the existing competency level of a firm (DAVERN & WILKIN, 2008). Architectural information relates to the change of the entire system of the organization practices. Such includes changing the production line. On the other hand, component innovation focuses on changing a single component of the production line in a firm. For example, a packing unit for salt may have the component change on the pneumatic system that picks the papers to be filled with the salt. Sources of innovation Sources of innovation are different. Innovation may come from an individual as it is the case of the inventor of the lone. Such an innovation is based on the thinking ability of the person, and the desire to solve a social problem. Research institutions, non-profit organizations, government laboratories and universities may also be the source of innovation (DAVERN & WILKIN, 2008). This occurs when these bodies engage in research, which is directed towards solving a social problem, which affects the quality of life of human beings. Another vital source of innovation is the firms. Firms present a good source of innovation because they have the resources that include the personnel to run the innovation process (Clark &Wheelwright, 1992). These firms also have an established effective management system, which is focused on directing all the resources towards the collective purpose of engaging in innovation. Furthermore, firms often obtain incentives, which trigger them to focus on developing differentiated products and services. These new products and services are aimed at ensuring that firms gain a competitive advantage in the market. Hence, the innovative abilities of the firms are higher compared to government or non-profit funded entities. Another integral innovation source is the innovators networks. These networks involve leveraging on the resources and knowledge from multiple sources. As such, they act as powerful agents of contributing towards technological advancement. Hence, it is clear that innovation source involves a complex system where the innovation can come from one component of several components (Brandão Santana et al., 2015). For example, a firm may work together with a non-governmental organization to develop innovation that is directed to a specific purpose. However, individual creativity and organizational creativity cannot be ignored as sources of innovation. Individual creativity illustrates a function of a person’s intellectual abilities, personality, knowledge, motivation, environment and style of thinking to develop new ideas, which contributes to innovation. On the other hand, organization creativity illustrates a functionality of the individual creativity in the organization and the contextual factors and several social processes, which influence the interaction and behavioural mode of an individual. Hence, organization creativity stems from an individual creativity, which is influenced by the structure and nature of the organization processes. Innovation strategy Innovation in an industry may not achieve success if a strategy is not developed, which contributes to its entry and survival in the competitive market. As such, new innovation should have its unique strategy that gives the framework of entry and use in the industry (DESPA, 2014). On the early stages, a company has to ensure that it engages in the assessment of the current position and defines an effective strategic direction, which is vital for the achievement of the future success. In order to do this, it is good for a firm to conduct an external environmental analysis, as well as stakeholder analysis. Stakeholder analysis facilitates in gaining perspectives on the perception of the interested parties regarding the new innovation. On the other hand, the external environmental analysis helps an organization in knowing its competitive strength and ability to adopt the innovation. The use of porter’s five-force model is a critical process, which facilitates in understanding the firm’s threats and opportunities, as well as the attractiveness of the industry where the innovation is being adopted (Dolfsma, 2004). Such includes understanding the degree of the existing rivalry, threat of new entrants, bargaining power of buyers, the bargaining power of suppliers, and the threat of new substitutes. Understanding the stakeholders helps in addressing management issues, which are linked to the financial performance of the firm. Moreover, it is good to conduct an internal analysis. This involves value chain analysis of the organization. Such entails examination of the inbound and outbound logistics, operations, marketing and services. This ensures that the strengths and weaknesses of the industry in each level are identified (Dolfsma, 2004). In addition, a firm has to examine its capability and competency abilities. These are essential features, which determine the ability of an organization to achieve its desired success level in the competitive market with the new innovation. They also illustrate how the organization should engage in its business activities while embracing the new technology. It is at this point where the organization develops a strategy, which is aimed at value creation and achievement of success. This is followed by having a strategic intent that identifies all the resources and capabilities. Finally, the firm has to develop a balanced scorecard, which aids in the consideration of goals from different perspectives, as well as developing measures of addressing these perspectives. Timing of entry Timing of entry of innovation in a firm is essential because technological innovation has the potential of improving the revenue base of an organization (Dolfsma & Van der Velde, 2014). Thus, the manner and time of adoption of innovation is a factor of consideration in determining the level of business success. For example, an early adopted technology may have the benefits of availability of adequate funds for the investment, less customer uncertainty and plenty of complementary goods. In contrast, early adoption may have the limitation of being unattractive. Consequently, there are few people interested in the use of such a technology and the complementary goods become limited. Such indicates a failure of the technology in achieving its desired impact in the organization. Hence, the timing of entry of an innovation is associated with the likelihood of achieving success. Market entrants can be grouped as first movers, early followers and late entrants. First movers are considered as the pioneers (DESPA, 2014). These are the first individuals to engage in the selling of a new product or service. Early followers refer to the individuals and organizations that are early in entering the market. However, these are not the first group to enter the market. Late entrants get to the market after they realize that the product has begun penetrating the mass market. There are several advantages of each of these market entrants. First movers and early followers often obtain the benefit of higher survival rates and returns in the market environment. Some literature provides insights that the first movers become the failures in the market giving a chance to the early followers to benefit from the market. Such indicates that research has to be conducted in an effective manner in order to determine the best timing for an innovation to get into the market (Dolfsma & Seo, 2013). It is essential to focus on the preferences of the customers when introducing a new innovation. This is because customers play a significant role in determining the success or failure of a new innovation. Further, it is good to examine the threat of competitive entry, the need of complementary goods and the associated technological improvement. These are essential factors, which demand careful assessment for the purposes of ensuring that the technology achieves its anticipated success. Theme of choice Need for innovation Currently, the world is changing from being a knowledge centred economy to the one that is based on innovation. As such, global environment success is reliant on the managers, scientists and engineers who understands the needs of the society, government, industry and business. Hence, a new generation of entrepreneurs and innovators is developing for the future leaders in government, business and industry (Dolfsma & Van der Velde, 2014). It is the innovation that aids these leaders in implementing, developing, inventing and designing new products, systems, processes and services that meet the current social demands. Further, innovation creates space for the development of structures and models that add value to the nation, region, community and education sector. Customer needs are changing over time. As such, these needs and expectations drive the level of innovation that should be present in the market. It is a key requirement among customers that they get products, which contribute in making their life easier, as well as improving on the quality of life (Dolfsma & Seo, 2013). This is occurring in the current generation because modern customers have knowledge and awareness on the products and services that they need to buy from the market. To an extent, customers have embraced global technological advancement in the field of technology. Therefore, they are eagerly waiting for the market of different products and services to ensure that they get what is good as per their expectations. Manufacturers and other innovators have a challenge of differentiating their products. This demands that they engage in intensive innovation, which contributes in giving them a competitive strength in the market. As such, when firms cannot compete on price of their products, they need to develop innovative ideas and products, which are outstanding (Seely Brown & Duguid, 1991). However, such innovation in the market is easily triggered by the level of innovation, which competitors have adopted. The beneficiaries of the innovation competition are the customers because they get high quality products. Nevertheless, organization benefits because they get additional revenues, brand loyalty and market share for their products and services. The breakthroughs in the field of technology and medicine have contributed in the improvement of quality of life. This ensures that the society has a better life and individuals enjoy life to their maximum. Such ensures that the newly developed products have the potential of responding to the needs of social members in different ways (Schilling, 2013). Further, these breakthroughs improve on the standards of living of individuals, which have the impact of social advancement. They also contribute in the improvement of the business operation in the markets all over the world. Hence, the existing market gaps between countries are closed by the innovative strategies among the firms. Innovation is considered as a key factor towards economic growth. As such, industries are maturing and they use innovation as a strategy of ensuring that they get to the next level of conducting their business activities. Current products are also maturing, which indicates a need for innovation to develop new products that satisfy the needs of customers. Hence, innovation acts as the creation, as well as the transformation of the new knowledge into new services, processes and products that meet the needs of the market. This has the impact of creating new businesses, which is a fundamental step of ensuring that the growth of the businesses and industry occurs successfully. Technological innovation also influences the growth of the gross domestic product (GDP) (Schilling, 2013). GDP gives a ratio of the total outputs annually that are measured with reference to the final purchase price. As such, technological innovation contributes in increasing the output achievable in the capital and labour. Changes in global cultural, social, business and political environments have triggered the development of innovation in different sectors. The aim is to use innovation as a means of ensuring that change remains effective and does not fail. This occurs since innovation introduces new things that were not in existence (SRIVASTAVA & GNYAWALI, 2011). The change that occurs is based on the creativity level of individuals and organizations. It is the creativity that triggers the development of innovation, which helps in achieving global objectives in different sectors. Hence, innovation acts as a means of ensuring that a country remains sustainable in the conduct of its business activities. Moreover, innovation facilitates in improving on the way that people communicate and move from one place to another. Such occurs by ensuring that the society has the best systems and equipment for communication and transport. Nevertheless, innovation may have negative effects to the society. An example of such a situation is when the innovation results in the development of the environmental pollution. Hence, this pollution affects the ecosystem of flora and fauna. Such is a harmful effect to life. Pollution of the environment also acts as a source of harmful effects to human beings (Seely Brown & Duguid, 1991). Other harmful effects include elimination of natural habitats, soil erosion, release of greenhouse gases to the environment, which leads to global warming, and moral dilemmas in the use of genetic modifications. Thus, as much is the fact that innovation uses knowledge to solve problems, there is a need to consider the measures that need adoption for the purposes of ensuring that innovation does not bring negative impacts in the environment. However, technological innovation provides the vital knowledge, which is essential in ensuring that social problems are solved (Utterbak & Abernathy, 1975). Hence, the negative impacts are outweighed by the positive impacts of innovation, which indicates a need for ensuring that innovation is embraced widely in society. Conclusion In conclusion, innovation is a good strategy for business growth and expansion, improvement in the quality of products and services, reduction of wastes, improvement of quality of social life and economic development. However, innovation originates from individual creativity. This indicates a need for having respect to individual thinking abilities in society. Further, organizations have to identify the right type of innovation that they need for the purposes of achieving business success. Such is because each innovation has its unique contribution towards the achievement of business success. Moreover, it is good for the organizations to develop and effective strategy and has an accurate timing for the entry of the innovation. References Aalbers, R. W. Dolfsma & O. Koppius. (2014). Rich Ties and Innovative Knowledge Transfer within a Firm” British Journal of Management, 23 (1), 96-109. Bossink, B. (2015). Demonstration projects for diffusion of clean technological innovation: a review. Clean Technologies & Environmental Policy, 17(6), 1409-1427. Brandão Santana, N., Rebelatto, D. N., Périco, A. E., Moralles, H. F., & Leal Filho, W. (2015). 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