Change And Innovation in Business - Research Paper Example

 Introduction If there is an award for popularity of the word, two of the strongest contenders will be ‘innovation’ and ‘change’ (Sarkar, 2007). Both the words are found to be having great influence on the success or failure of the organisations in the present business scenario. The word ‘innovate’ came from a Latin word ‘in+novare’ (Sarkar, 2007). It means ‘to make new’. Different experts have defined innovation in different ways. According Michael Vance “Innovation is the creation of the new or the re-arranging of the old in a new way” (Vance, M. n.d. pp-1). Generally there are four phases in a proper innovation process. These are generating new ideas, identifying the opportunities of each of these ideas, selecting of the best idea and finally applying that idea. It is often believed that innovation is only involved with the technology (Sarkar, 2007). However it is not the actual case. Basically when a new idea is transformed into a new product which is accepted by the market, then that is the true innovation (Sarkar, 2007). On the other hand ‘Change’ can be described as one of those few things that have been remaining constant over the centuries. It is one of the most popular topics of research (Paton, McCalman, 2008). Several models, theories and techniques have been developed by the experts to identify the reasons and effects of the change. However most of the researches have been conducted to find out the ways of managing change effectively. According to Rob Paton and James McCalman “managing change is all about evaluating, planning and implementing operational, tactical and strategic ‘journeys’.” (Paton, McCalman, 2008, pp-3). This paper is all about ‘change’ and ‘innovation’. The report contains various ways of managing change and innovation in an organisation. It includes all the relevant theories and examples. Innovation Innovation is the way of adopting a unique idea and converting this idea into quantifiable business value. There are two ways of doing this. These are commercialization of idea and institutionalization of idea (Siemens, n.d.). In commercialization process ideas are converted into products and services that are likely to be accepted by the market, whereas in institutionalization process ideas are transformed into processes or methods that would enable the organisation to improve the quality as well as the productivity. Generally revenue growth of the business is directly related to the commercialization of idea. As a result it is very important for the firms to identify the right idea and convert the same into an original product or service through proper innovation process. On the other hand institutionalization of idea enable the organisation to implement new techniques, processes and methods that have direct influence on the working environment, quality and the productivity. This in turn influences the individual performance. As a result overall organizational performance is also impacted by this institutionalization of idea. Innovation needs to be properly managed in both the processes (Siemens, n.d.). Needless to say that it is very important to manage innovation properly and most of the business executives know this fact. However according to a survey conducted by McKinsey executives are not satisfied regarding way in which their companies manage innovation. This survey reveals that 70% corporate leaders know the importance of innovation in the sustainable growth of business, but it is not reflected from way in which innovation is managed by the companies (McKinsey Quarterly, October 2007). In order to manage innovation effectively it is required to implement several processes and tools. Culture in the organisation is very important for effectively managing the process of innovation. Organisation’s culture must encourage its employees to come up with new ideas. An appropriate organizational culture for effective innovation management is likely to empower the employees of the organisation. Management has an important role to play in the process of innovation management. Management is mainly responsible for adopting appropriate innovation strategy in order to guide the innovation process as well as control the innovation portfolio (The IP Mall - Pierce Law Center, n.d.). There are several steps that are involved in the effective management of innovation. These are described below. Innovation Portfolio In order to manage innovation effectively it is very important to manage each and every innovation projects as innovation portfolios (The IP Mall - Pierce Law Center, n.d.). This will enable the management to identify the projects in terms of the level of innovativeness involved with them. Management will also be enabled to identify and manage the risk that is associated with the process of innovation. The innovation portfolio needs to be properly divided into different ‘strategic buckets’ (The IP Mall - Pierce Law Center, n.d.). This process will help to allocate various resources (financial and human). It will also ease the process of reallocation of resources according to the changes that would take place in the market. Criteria selection and evaluation There must be proper criteria of selection to manage the innovation process effectively. Management needs to carefully decide the selection criteria that will be used to decide whether a project will be a part of the innovation portfolio. Apart from the selection criteria, management also needs to develop proper evaluation criteria in order to identify those projects that are not performing in the desired way. These criteria need to be included in the state-gate process. In this process any product which is under development will not pass through a stage until requirements of the gate are not satisfied. Idea Banks Organizations need to create and maintain idea banks in order to manage the innovation process effectively. These idea banks are nothing but databases that include new ideas which are given by the employees as well as customers (The IP Mall - Pierce Law Center, n.d.). These new ideas can be reviewed later on by the R&D department or product development department in order to introduce new products in the market. The concept of idea banks will be successful only when there is a culture in the organization that encourages employees to come up and submit new ideas. Competence Centers The concept of specialized centers began to come in the picture with the specialization of different departments or business units in specific areas of knowledge and with the decentralization of organisations. In order to obtain the best possible benefit from the expertise and skills of the employees it is very important to develop competence centers. This is likely to ease the process of formation of internal networks of research and development facilities. These networks are crucial to get the appropriate team together in accordance to the requirements of innovation project (The IP Mall - Pierce Law Center, n.d.). Alliance Portfolio Innovation networks are found to be extended outside the organization. They have extended from employees to the partners, customers, experts from academia and industry. It is crucial to develop an alliance portfolio to effectively manage the innovation process that involves partners and customers. It is a centrally controlled portfolio where reasons behind the alliances, expected outcome of these alliances and various other information regarding the alliances, are maintained. Such portfolio is likely to enable the organisation to make the best use of the strengths of the alliances in innovating new products and services. Competitive intelligence tools Many experts believe that competitive strategies of an organisation can be materialized through the effective management of innovation (The IP Mall - Pierce Law Center, n.d.). The main reason behind such belief is that innovative products and services that are offered by the organisation shape the competitive position of the organisation. However innovation strategies and competitive strategies should be created on the basis of the competitors’ moves and market condition. As a result it is crucial to develop competitive intelligence tools. There are several such tools that have been developed in the past decade. Selection of intelligence tools entirely depend on overall strategy of the organisation and the industry (The IP Mall - Pierce Law Center, n.d.). Apple Inc. is perhaps the best example of an organisation that has been managing ‘innovation’ effectively over the years. The company has realized the importance of innovation in staying ahead of competitors. Apple is renowned for introducing innovative products like iPod, iPhone, iTunes and iPad. Apple has been able to come up with innovative products year after year only because it is capable of managing the process of innovation effectively. Change ‘Change’ is such a phenomenon that will neither dissipate nor disappear (Paton, McCalman, 2008). Civilizations, creative thoughts and technology are likely to maintain their never ending drive. Often experts argue that the state of continual change has become a routine (Paton, McCalman, 2008). It is very important to have changes in the organisation and it is more important to evaluate and accept the required changes so that the objective of gaining competitive advantage is fulfilled. Effective management of organisational change is one of the most widely researched topics. It is found from the research that different experts have suggested different ways of effective change management. According to Donald L. Kirkpatrick a systematic approach is needed to be adopted for managing change effectively (Kirkpatrick, 2001). In his opinion there are seven ways that need to be followed for proper management of change. Each of these steps is described below. Determination of the requirement of change It is crucial to identify the necessity of change can be developed in various ways. Top management can identify the need for change based on the facts and figures. Subordinates can also help managers to find out the requirement of change in the organisation (Kirkpatrick, 2001). Preparation of tentative plans It is important to develop a tentative plan for implementing change in the organisation. People who will be involved in developing this tentative plan should be open to change. They should not take any defensive move when reactions of others are negative. Open mindedness is crucial or else people with different ideas might feel that their suggestions are not given enough importance. This is why the word ‘tentative’ (subject to change) is emphasized. People who are involved in the previous step can be asked to give their ideas. Brainstorming will be an effective tool to elicit ideas which can be used in the tentative plans (Kirkpatrick, 2001). Analysis of probable reactions It is found that there will be three different reactions on each and every change proposals. Some people are likely to resent or even resist the implementation of change. Some are likely to remain indifferent and some people are likely to accept the change. All these possible reactions are needed to be properly analyzed. It is important to find out the reasons of not accepting the change by some employees. It might happen that an important point that was not considered comes out. People, who are found to be not welcoming the change, need to be made understood the necessity of the change in the overall organizational performance. Final decision making Final decision needs to be made only after a comparative analysis of all the plans. The brainstorming (mentioned in step 2) can provide several options that can be considered. Various reactions to tentative plans might also help in the process of making final decision. There are two possible approaches that need to be taken into consideration at this point. In the first possible option managers will analyze all the information and take the final decision. It is a quick approach. In this approach the status and authority of the manager is emphasized. If the manager is extremely respected by his or her subordinates, then it will be an effective approach. Moreover if inputs that are given by the subordinates are used in decision making process then also the approach will be an effective one. The other approach involves group problem solving. In this approach the manager is likely to call all his or her subordinates and say that a decision is going to be taken. If it is found that manager is successful in conducting a productive meeting and making people arrive at a consensus, then only approach can be said to be an effective one. Since in this approach decision is made by the entire team rather than the manager alone, subordinates are likely to show high level of dedication (Kirkpatrick, 2001). Establishing a timetable Sometimes the change that is required in the organization is simple in nature. As a result these changes can be implemented in one step only. However there are changes that are complicated and a properly developed timetable is required for successful implementation of those changes (Kirkpatrick, 2001). Communicating the change This is one of the most important steps in the entire process. It is very important to communicate the reasons and expected results of changes to each and every employee in the organization who will be directly and or indirectly influenced if changes are implemented. Proper communication is also required so that more number of options can be obtained from the team members and hence the best possible option is chosen. The relationship between the manager and his or her team members depend on how all the aspects of changes are communicated to the team members. Implementing the change The final step is the implementation of change in the organization. Once the best possible option is selected, no time should be wasted to make the changes. Proper implementation is important to enjoy the desired results of the changes. Cadbury is one of those organisations that have effectively implemented changes in the organisation. In 2000 a global transformation project was launched by Cadbury Schweppes. The project was called ‘Project Probe’. Proper communication was made to the 50,000 Cadbury employees in US, UK, Australia, Ireland, Japan and France. Involvement of line management and tailored communication was the key to avoid all the logistical hassles (The Eden Tree, n.d.). There are various change management tools like brainstorming, affinity diagram, cause effect diagram, force field analysis, balanced scorecard etc. Brainstorming is a special technique that is used by a team or group with the purpose of generating large number of ideas. In this process quantity is more emphasized as compared to quality. It is one of the most widely used techniques that encourage creative thinking (Harrington, Lomax, 1999). People can share their suggestions and ideas in the meeting and this make them feel that they are making positive contribution in the entire process. Affinity diagram is quite similar to the brainstorming. According Michael Cowley, Ellen Domb “affinity diagram quickly generates a large number of ideas without the use of precious airtime, as occurs in the standard, verbal brainstorming process”. It is group process where everyone of a team participates and accepts the results of the process (Cowley, Domb, 1997, pp- 170). Another popular change management tool is the cause effect diagram. It is better known as fish bone diagram. This diagram represents the relationship between the possible causes and their effect (Welch, 1998). Another important change management tool is the balanced scorecard. In this scorecard there are four perspectives which are financial perspective, internal business process perspective, learning and growth perspective and finally customer perspective (Kaplan, Norton, 1996). In case of each of these perspectives there are goals and measures. Changes that are required for a particular organization can be identified and implemented with the help of this scorecard (Kaplan, Norton, 1996). Force field analysis is another crucial change management tool. According to this model there are two types of forces that influence changes (Value based management, n.d.). One is driving force and another is restraining force. Driving forces are likely to drive the changes whereas restraining forces are likely to resist changes. When driving forces are more powerful then changes are expected to take place (Value based management, n.d.). Conclusion Both change and innovation are crucial for an organization in order to gain sustainable competitive advantages. If organization fails to innovate and come up with new products and services on a constant basis, it will certainly lag behind in the competition. Moreover if an organization keeps on generating new ideas changes are bound to take place. However before making any decision regarding implementing a change, it is crucial to analyze each and every idea. Acceptance of change depends on how the outcomes of the change are communicated to the employees. References Cowley, M. Domb, E. 1997, Beyond strategic vision: effective corporate action with Hoshin planning, Butterworth-Heinemann Harrington, H. G. Lomax, K. C. 1999, Performance improvement methods: fighting the war on waste, McGraw-Hill Professional Kirkpatrick, D. L. 2001, Managing change effectively: approaches, methods, and case examples, Butterworth-Heinemann Kaplan, R. S. Norton, D. P. 1996, The balanced scorecard: translating strategy into action, Harvard Business Press McKinsey Quarterly, October 2007, How companies approach innovation: A McKinsey Global Survey, [Online] Available at: http://www.mckinseyquarterly.com/Surveys/How_companies_approach_innovation_A_McKinsey_Global_Survey_2069 [Accessed on March 23, 2010] Paton, R. McCalman, J. 2008, Change Management: A Guide to Effective Implementation, SAGE Publications Ltd Siemens, No Date, Product lifecycle management (PLM) –Innovation management, Siemens PLM Software, [Online] Available at: http://www.plm.automation.siemens.com/en_us/Images/cpg%20innovation%20management%20wp%20W%201_tcm1023-21729.pdf [Accessed on March 23, 2010] Sarkar, S. 2007, Innovation, market archetypes and outcome: an integrated framework, Springer The IP Mall - Pierce Law Center, No Date, Innovation Management, Comprehensive capital intellectual management, [Online] Available at: http://www.ipmall.fplc.edu/hosted_resources/al-ali/IM_title_page.htm [Accessed on March 23, 2010] The Eden Tree, No Date, Introduction, Cadbury Schweppes’ Global Transformation Project, [Online] Available at: http://member.edentree.co.uk/tree/resources/change-management/examples-of-change-management-in-practice/theory/good-practice-examples/cadbury-schweppes%E2%80%99-global-transformation-project.gp [Accessed on March 26, 2010] Welch, T. E. 1998, Moving beyond environmental compliance: a handbook for integrating pollution prevention with ISO 14000, CRC Press Value based management, No Date, FFA - Analyzing Change Factors: Driving Forces and Restraining Forces, Force Field Analysis - Lewin, Kurt, [Online] Available at: http://www.valuebasedmanagement.net/methods_lewin_force_field_analysis.html [Accessed on March 23, 2010] Vance, M. No Date, Innovation & Growth, Pragmatique Know How, [Online] Available at: http://www.pragmatique.co.uk/wmslib/Performance/Innovation_Assessment.pdf [Accessed on March 26, 2010] Bibliography Blokdijk, G. 2008, Change Management 100 Success Secrets - The Complete Guide to Process, Tools, Software and Training in Organizational Change Management, Lulu.com Green, M. 2007, Change management masterclass: a step by step guide to successful change management, Kogan Page Publishers Cameron, E. 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