The Organizations Can Learn Innovation - Dissertation Example

The Organizations Can Learn Innovation Introduction: The Significance of Innovation In this contemporary business environment, the organizations would have to face intensive competition. In such case, it was pretty obvious for the organizations to search for the competitive advantages. As a consequence, the organizations have recognised the innovation as a crucial ingredient for survival as well as to fetch a sustainable profitability. In this ‘information age’, with the advancement in technology, the necessity of ‘innovation’ has increased with a focus to create a dynamic as well as interactive process of modifying, creating an idea and incorporating the same to produce new products, services, structures, policies or processes. The organizations which can excel in these activities would be in a better position to fetch a continual competitive advantage over its competitors. The successful and effective utilisation of the inventive technologies and new resources is very much dependent on the capability of an organization to indulge into innovation. However, the introduction of such new technologies can bring in some complex challenges as well as opportunities, leading to considerable changes in the managerial practices to form new organizational environment. As in today’s environment, the organizational and technological innovations are entwined. In the year 1950, Schumpeter considered organizational changes, along with the new processes and products, new markets as the key factors leading to ‘creative destruction’. Innovation: The Concept In the general sense, the ‘organizational innovation’ would refer to the adoption or creation of a new behaviour or idea within the organization. There is a good amount diversified literature on innovation in an organization. It has been pretty evident that the organizations can achieve successful innovation under uncertain changes and complexity; however, in that case, it would need to integrate the knowledge inside and outside the organization. One of the significant issues in carrying out research on innovation is to exactly define the concept, ‘innovation’. There is no need to say that ‘innovation’ is something new or original. Beyond this concept of freshness, the dentition of ‘innovation’ would vary in accordance with academic perspective as well the application of the same. A number of researchers have agreed to the fact that an implied aspect of innovation is surely its usefulness. Hence, it distinguishes the ‘innovation’ from any invention as inventions may not have a practical application. More precisely, as per business sense, it is very much desired that innovation would be contributing to the firm’s performance in one or the other way. There is an ongoing debate whether innovation is a mere process or an outcome of the same. This is significant and may be useful in studying the innovation stages as part of organizational processes. Even, the differences can be useful to find out at which point the organizations become innovative. Another concern has been raised in defining the ‘innovation’. The innovativeness of any firm can demand the firm to be the first mover in any market or innovator in activities. In the year 1983 Rodgers and after 10 years in 1993, Dowling had said that the firms are required to be among a specific percentage of the adopters to be innovative (Read, “A Definition of Innovation’). The concept of innovation is pretty wide as there can be various types and stages of innovation and varied level of analysis. In the year 1997, Gopalkrishnan and Damanpour had identified three kinds of innovation: radical versus incremental, technical versus administrative and products versus processes. Product innovations can be assumed to be the outputs of any organization (Milling & Stumpfe, “The Management of Innovation as a Complex Problem”). A process innovation can be looked upon as a tool which would assist the organization to develop products and services by utilising several forms of inputs. The incremental or radical innovation would be defined looking at the degree of change needed for the implementation of innovation"n. A technological innovation has direct relationship with the production process. An administrative innovation would relate to several processes oriented to the management, like accounting systems, human resource management and structure of the organization itself. In the literature of ‘innovation’, two wide stages have been found: generation of innovation and adoption of the same. Generation of the innovation would include the creation of ideas and solutions of the problems regarding the products as well as the processes. The next stage of adaption is the implementation of an innovation within an organizational context. This phase would also include the acquisition of innovation. In this specific stage, any organization can do either of these activities or can go with both of them. Innovation in the Organizations: The Models The literature can be widely classified into three diverse steams. Each of these streams has different focus as well as there are different questions which would be addressed through different questions. The organizational design theories would particularly focus on the association of structural forms and the intensity with which an organization can innovate. Some research papers concentrate on the organization itself to find out the structural characteristics of any innovative organization. These papers are to determine the impacts of organizational structural variables on the process and product innovation. This arena of literature has been considerably impactful and well integrated into the literature containing technological innovation. The theories on the organizational learning and cognition have the tendency to concentrate on the micro level process of the way in which the organizations would develop new ideas in problem solving. These theories emphasise on the cognitive foundation of the organizational innovation which can be associated to the process of creating an environment of organizational knowledge and learning (Lam, “Introduction”). These types of research would offer a micro lens to understand the organizational capacity to create as well as exploit the new knowledge required for the required activities. Another category of research papers are related to the organizational change and adaptation. These researches are also concerned with the processes which are the base to create new organizational forms. The main focus has been to understand whether these organizations can overcome the indolence as well as can adapt to the radical shifts in both the business and technological environments. In such a context, the innovation has been considered as significant capacity to response to the changes in the external environment as well as to influence the same (Lam, “Introduction”). There can be various factors to drive the innovation within an organization; two significant driving forces are Technological push and Demand pull. In the technological push the companies are required to invest more into research and development to encourage innovation in the products and services. In case of ‘Demand Pull’, the nature and speed of innovation would vary according to the market. These simple linear models have been in the literature since a long time. The ‘Technological push’ came into picture during the post war period while the ‘Demand Pull’ had been popular during the 1960s and 70s. After this period, some other models came into picture leading to widening of the research arena on innovation. Since 1930s, the view towards ‘innovation’ has changed. In the year 1994, Rothwell had explained the entire advancement in innovation with five generations of factors. First Generation Innovation – In this case, the innovation was instigated by technological push, as mentioned in the above discussion. This era of innovation has further driven the industrial revolution. The innovation happened with technologically advanced, new products as well as new production means. Second generation innovation – This era of innovation is driven by the demand pull. The innovation in this era has shifted to have more focus on the market or customers. The innovation would be done with a focus on the customer requirements; the production technology must be there to determine and satisfy the consumer requirements. In this era, marketing had been influential to generate new ideas. Third Generation Innovation – In this era, the coupling model was introduced which included the coupling of both push and pull models. The market may demand some new ideas which may not be possible from the feasibility point of view. In such a case, the production technology would refine the same. On the other hand, this can also be done with the research and development sector creating new ideas aligned by the feedback gathered from the market research. In this generation of innovation both the marketing and research and development were linked together. Fourth generation Innovation – This generation saw the introduction of integrated model. This era has experienced a firm coupling of R &D activities and the marketing feedbacks with their strong association with the suppliers and close relationships with the key customers. Fifth Generation Innovation – This era had experienced system integration and networking model (SIN). The integrated model has been the base of this specific innovation model. The model has considered strategic partnerships with both the suppliers as well as the customers. The model also considers utilising the expert systems and would have collaborative marketing as well as research arrangements. In this generation of innovation, there had been an emphasis on the flexibility and pace of development with keeping an eye on quality and some more non price factors. Rothwell mentioned that the last generation of innovation had both the strategic as well as enabling characteristics. The strategic components would include time concerned strategies i.e. the strategies are meant to develop faster as well as more efficient products with concentration on quality and some more factors. These non price factors would include responsiveness and flexibility. Furthermore, the strategies must have the consumers’ requirements at the forefront with strong strategic alliance with the suppliers, enhanced electronic data processing systems and an effective way to control the quality (Terziovski, “Evoltuion of Innovation”). On the other hand, the enabling factors include an improved level of overall organization and integration of the entire systems towards a more flexible and flatter organizational structure for effective and raid decision making, effective external data link and a well developed internal databases. Furthermore, there are some more models which can analyse the position and abilities of the companies to innovate and the circumstances in which the innovation would develop within one single market place. Some of the significant models in this category are Schumpeter’s theory and the incremental – radical dichotomy. As per Schumpeter’s concept, the large firms would innovate more than the smaller ones. Around 1930s, he described creative process to be the emerging of new markets, either domestic or foreign, growingly revolutionaries the internal economic structure by destroying the old structure to create a new one. According to him, as the large corporation have enhanced resources and better market power, they will be best at innovation. However, this theory does not have any empirical foundation and strong evidence to support the same. The Incremental - Radical dichotomy was used by a number of authors, sometimes with different terms, but to express the same meaning. Back in the year 1978, Abernathy differentiated among the radical and incremental innovation. As per Abernathy and Clark, there are two influential factors which can be used to deploy from a radical innovation to the incremental one. They identified the first dimension to be based on the resources and knowledge involved. A radical innovation would demand entirely new knowledge and resources while incremental innovation would be based on the available resources and knowledge bases, enhancing the organizational competencies (Decelle, “Identifying innovation in tourism as innovation in services”) . In this case, the differentiation in innovation can happen based on the technological changes and the competitiveness of the market, the organization is operating in. An incremental innovation would emerge with modest technological changes to make the existing product still to be competitive, while a radical innovation would bring in considerable amount of technological advancements, making the current products to be non-competitive and hence, obsolete. According to the framework, the existing organizations can be more beneficial through incremental innovation, as they would be able to innovate using their own resources and knowledge base. On the other side, the new entrants can be more benefitted from the radical innovation as they would not require to bring in any change in their knowledge bases and technological abilities Abernathy and Clark model (. In this arena, there is another model of Henderson and Clark. The research was to find out why some organizations fail to catch something simple and straight forwards as the incremental innovations. For an instance, Xerox failed to develop small plain paper copier despite of the fact that it was leading the industry of xerography. They had also mentioned that whether some innovations may look like incremental at the very first sight, they may not be the same throughout the business. So, the organizations are required to cautiously take their picks and distinguish between the incremental and modular innovations, as the competencies of same may not suit other ( Narayanan & O'Connor, “Static and dynamic innovations models”). David Teece identified two factors which would have the influencing ability to determine the ultimate profit fetched from an innovation: imitability and complementary assets. Imitability refers to the easiness with which the competitors can imitate the process or technology supporting the innovation. There are many barriers like complex internal routines, tacit knowledge and intellectual property rights which a company can use to protect itself from the replication (Afuah, “Role of Resources in the Face of New Games”). Another model, S-curve is a mathematical model which is used in many areas including innovation. The S-curve exemplifies the introduction, the growth, technological cycles and the maturation of the innovations experienced by the industry. This model is backed by a number of empirical evidences which had been found in various industries. The innovation literature consists of Abernathy-Utterback model, which has identified some phases. The first phase is the fluid phase in which in the presence of technological as well as market uncertainties a considerable amount of changes would take place in short span of time and consequences may vary considerably with radical innovation. In the ‘transitional stage’, there would be some kinds of standardisation in the process with the adaptation to the technological advancements. In the specific phase, incremental innovation would rise gradually. However, threats can arise with the emergence of new technologies and the firms bringing in disorderly innovations (Davies & Hobday, “Critical Product Dinmensions”). Conclusion: The Organizations can learn innovation The organizations can learn to be innovative. In this case, the strategies would be to start with radical innovation if the firm is a new entrant, or with the incremental innovation for the existing ones. This strategy is backed by the Abernathy and Clerk model. It would be easier for the new entrants to indulge themselves into new technologies and resources. The organizations can start with incremental innovations with the existing technology and knowledge bases. At the same time, they can acquire new resources and technologies to encourage radical innovation. It is pretty important to develop a work environment to encourage the employees to be indulged into new innovations, which is really important for the organizations to survive in this competitive business environment. References Afuah, A. Strategic Innovation: New Game Strategies for Competitive Advantage. Taylor & Francis, 2009. Davies, A. & Hobday, M. The business of projects: managing innovation in complex products and systems. Cambridge University Press, 2005. Decelle, X. 2004. A CONCEPTUAL AND DYNAMIC APPROACH TO INNOVATION IN TOURISM. May 09, 2011. . Lam, A. April, 2004. Organizational Innovation. May 09, 2011. . Milling, M. P. & Stumpfe, J. No Date. Product and Process Innovation: A System Dynamics-Based Analysis of the Interdependencies. May 09, 2011. < http://www.systemdynamics.org/conferences/2000/PDFs/milling1.pdf >. Narayanan, K. N. & O'Connor, C. G. Encyclopedia of Technology and Innovation Management. John Wiley and Sons, 2010. Read, A. 2000. DETERMINANTS OF SUCCESSFUL ORGANIZATIONAL INNOVATION: A REVIEW OF CURRENT RESEARCH. May 09, 2011. . Terziovski, M. Building innovation capability in organizations: an international cross-case perspective. Imperial College Press, 2007. Read More