Change and Innovation in the Organization - Coursework Example

Innovation and Change "Critically evaluate the claim that any Organization can learn to be innovative" Table of Contents S.No CONTENTS PAGE Introduction 2 2. Change 2 I. Changes with respect to External and Internal Factors 2 3. Innovation 5 4. Innovation And Entrepreneur 7 5. Entrepreneurial steps for innovation 8 6. Innovative Organization 9 7. Mergers, partnerships and alliances promoting Innovation 15 8. Conclusion 16 9. References 17 Introduction Innovation and Change have become buzz words in the last one decade (2000-2010) and it is expected to be more buzz during the current and next ten years (2011-2020). So Change is a process of transition from one stage to another and organization have to move forward and manage change, otherwise they will go backward as at is said in management there is no standstill. The following illustration is very simply explaining the process of change transition stages. Change Management is the process of moving from the current state to the vision of the future and involves a degree of transition. Organizations today focus on the factors that may lead them to the innovative techniques and can bring a change into the society. Change Change is defined as the process of transforming or entering from one stage to another. Changes may be positive or negative depending upon the circumstances and conditions that are leading for any change whether in any condition, change requires a lot of efforts either to bring it or to accept it. Changes with respect to External and Internal Factors If we looked at what has happened in terms of massive challenges and changes at the globe, it revolved around some very important areas. Examples are: Political Challenges / Changes: The Israeli / Arab Conflict, Iraq and Afghanistan War… etc. All of these conflicts have not been resolved and in fact getting more complicated by the emerging of the Political revaluations in the Arab World e.g. Egypt, Tunisia, Libya, Yemen, Bahrain……etc. Economic Challenges / Changes: Prices of oil going up and down between US$ 40 to US$ 140 per barrel of oil, the financial crisis, and so many of business and organizations went bankruptcies in particular Banks and Airlines. Technological Challenges / Changes: The technology has become a very powerful tool during the last few decades as becoming high tech and sizes becoming more smaller with very much less prices. E.g. laptops, mobiles, digital cameras and computers with more usage of Face book, twitter…..etc. Social Challenges / Changes: The world population growth is getting a problem and total number of world population has exceeded five (5) billions and growth rate in certain countries is around 3 to 4%. Such challenges requires government to find food, homes, jobs, better health systems and protection to fight deceases as these deceases are effecting people and business from time to time and the recent one was the H1N1. E.g. all airlines and hotels we found them to be empty as people don’t want to work with others. So a better protected life is required to all human round the globe. Culture Challenges / Changes: This is a very serious challenge and I believe the most serious enemy to Innovation is having a culture that has not support innovations at all levels and types of innovative areas; According to Peter Drucher – The most innovative area may well have been management itself – with "Outsourcing" and "Downsizing" economic value analysis and reengineering sweeping the Management World. He added: the next decade will require even more innovation, and especially from business and business executives. For, surely he said the next decade will be a decade of changes. Therefore, I will emphasis more in the couple few pages on the culture looking into it from business prospective, so that will be able to critically evaluate the claim that any organization can learn to be innovative. Organization culture is frequently perceived as a fuzzy, soft, elusive area that is difficult to define and has an unknown impact on organizations results. Culture is defined as the shared assumptions, beliefs, values and norms of any organizations, insofar as they drive shared patterns of behavior. It is often described as "the way we do things. A major characteristic of organization culture is that it essentially controls peoples behavior. It determines and dictates what acceptable practice is and what is not. It is increasingly recognized that organization culture is one of those "soft" things that is as hard as nails, hard to build and capable of delivering hard results. The critical question we need to ask is "Does our culture support achievement and innovation at our organizations?" The chances are strong it does not in many cases and it vary from one culture to another, However culture is part of the organization’s heritage. Current assumptions, values and beliefs are developed from the past, out of more stable, predictable times. Organizations need new assumptions, values and beliefs that will drive organization success in our rapidly changing, fiercely competitive and high tech world. In short, we need an organization culture that generates performance, love, belonging, pride and most importantly innovation. Organizational Environment/ Changes: Organizational changes means the level and the hierarchy can bring a change. People who are working with the same staff in the organization face difficulties when the staff suddenly changes and this also affect the performance of employees. Employees personal issues When any employee faces issues in his personal life, it also affects his/her performance in the organization. But when one works in a team that is the organization, the performance of one affects the whole team and causes problems. Innovation Innovation is the appropriate and the Specific tool of entrepreneurs. Entrepreneurs need to search for the sources of innovation and they always need to know the principles of successful innovation. Innovation means to create something by using specific defined tools. For creating something there are three steps According to Peter Drucker "Innovation is a discipline, with its own fairly simple rules”. Peter Drucker in describing the innovation he added. "Among the business, I know personally, the one that has created the most jobs during the five years 1979 -1984, and has also grown the fastest in revenues and profits, is a financial services firm. Within five years this firm alone has created two thousand new jobs, most of them exceedingly well paid". Peter Drucher also added "Innovation does not have to be technical, does not indeed have to be a thing altogether. Few technical innovations can compete in terms of impact with such social innovations as the newspaper or insurance". Based on the above all business organizations have certain clear goals and objectives that need to be achieved and therefore they work hard to their short term and long term strategies to ensure survival and good bottom line (to be a profitable organization, for the non government sector and better services for the government sector). However, the massive challenges, changes and high level of competition as we stated earlier made these organizations have no choice but to be innovative and creative, irrespective of size, type and location of the organization. Again according to Peter Durcher "In such a period of rapid change the best – perhaps the only way a business can hope to prosper, if not to survive, is to innovate. He adds – it is the only way to convert change into opportunity. We have read, seen and experienced many organizations that have innovated ideas, systems developed new machines, equipment and manage to have a competitive edge over their competitions. A typical example is China as a country when introduced mass production and new products with very low prices. Innovation and Entrepreneur Innovation is the specific instrument of entrepreneurship. It is the act that endows resources with a new capacity to create wealth. Entrepreneur is the one who especially take the part of innovation into consideration in order to gain more profit and as the characteristic of entrepreneur is to take risk therefore any good entrepreneur is one who takes risk in terms of innovation because any innovation cant be done unless risk is not involve into it. So in order to build a market the term of innovation is closely associated to the entrepreneur. Any entrepreneur should look for the possible steps that lead to the innovation and the result will be good because innovation without proper steps cannot work out. The best example of entrepreneur and the innovator as well is of Richard Branson, British entrepreneur known for Virgin Groups which id of 400 companies. He is the great entrepreneur because he believes that for every businessman it is important to make a proper plan and details about the market and the industry that we are going to start. He followed five major steps to establish such a big empire of Virgin Group. These steps includes To enjoy the work what we are doing To create something that is new or an idea out of the box Creativity should be such that people should enjoy to work with it Leadership qualities Be clear with your objectives Entrepreneurial steps for Innovation Innovative Organization (Environmental Factors) The following points that we have learned may prove useful to others embarking on the same route of change and need to be innovative: Accept that culture change takes time and hard work. We believe it will takes between 1-3 years to achieve significant, lasting change. Decide and define the culture that organizations really want – then determine how to recognize it and keep track of progress, otherwise it remains a very "fuzzy" process. "Walk the Talk", especially at senior management levels and across the organization. Always provide a healthy environment in which people are encouraged to experiment with change. Focus on Talent Management Programs and on talented individuals. Creating innovative organizations is difficult and multifaceted because the changes that occurs are not easy to be adopted by everyone but few valuable skills are required to make innovative organization. It is important for organizations to be functionally and cross functionally innovative because in today’s era any organization not only deals with single function or area but with several and for this every employee from top to bottom should be efficient enough to present him/her in front of the other organizations. “Cross functional teams”- should be established to surmount the lack or others and of the organization. Mix of highly innovative employees and creative minds with the average and creative minds should work together so that one who is not efficient can overcome his lacking by joining the team of mixed employees. This will improve the abilities in several ways because it is not necessary that every person can be creative or innovative, so it would be unfair to neglect them. Therefore, mixed teams can overcome the deficiency of others and those with low creative minds can get a chance to learn and to improve their skills. “Formal and informal culture” – Today organizations follow the informal culture because it is observe that working in a free environment can bring a huge change related to innovation. In order to establish free culture in organizations, manager of different hierarchy try to communicate with their subordinates so that they could informally discuss more about issues and dilemmas that any organization is facing. “Communication”- Flow of communication should be clear in order to get clear response. Whether it’s about the employees, any marketing strategy or anything that is exchanged between two stimuli, communication is very important. By stimuli means that communication should be clear even within us to be innovative and creative. It can be explained with an example. Suppose we read some article or research about the specification and characteristics of any product with shows bad reviews from the customers, one who is reading all that research should be clear in understanding it because at that time you are communicating with your brain and with the observation. So if you get baffled with the observation and you encode wrong message then the outcome won’t be clear. Dealing with conflicts and chaos – For any organization it is important to deal with the chaos that may occurs when the message is not delivered properly and the novelty and innovation turns out to be stagnation. Therefore in that situation it is important for the innovator to have a back up plan to overcome with any problem. Diversification – Diversification is another important element for organization to be innovative because when a lot of diversified minds in terms of culture, region, religion and attributes, works together they always bring something new to the industry. For this one has to be a good thinker and a good listener because one who is not able to thing about the changes and issues that occurs cannot bring a change to the world. Ideas comes from good listening because when you listen to others you realize that what is actually the need of the society and what they want. Careful with the idea – Organizations should be careful with the idea of innovation as this is the ear of modernization and globalization, anything that is good for you can’t be good for others because of the cultural variations and the messages that are interpreted differently into different regions. There is an example of a tagline of PEPSI, in United States the tagline was "Come alive with the Pepsi” which was modified for another market that was of China and the tagline then became “Pepsi brings back your dead ancestors” but when it comes to Germans, the tagline became "Come out of the grave with Pepsi". So for every culture, the strategy should be deeply analyzed with respect to culture. Any organization who needs to be innovating should build proper training of their employees because ideas are not bound to any specific level of organization. Change and innovations can come even from the front line managers too. Therefore all organizations should give training and evaluating the performance of every employee so that they could get the best set of employees in the organization. Innovation and Change are two important words whereas change is a consistent due to continuous customer’s expectations, development of industries, products, prices changes, technologies and the different challenges highlighted earlier. So organizations have to innovate and innovate in order to cope with changes, demands and supplies. Therefore, and to critically evaluate such change I am going to focus on few examples starting from countries and then focusing on few organizations such as airlines and car industries. If we take an example Japan particularly after the II worldwide war, they focus heavily on innovation, creativity and quality concepts. QC (quality circles) was one of their success stories. Today we all see Japanese cars such as Toyota, Honda, and Nissan are still the highest sales world wise compared to American and European cars. At the same time if we look at the mobile, computers, laptops in Asia are cheaper and high tech and the typical example is Taiwan. Within airline industry there are massive changes. Air Asia was founded in 2003 and as one of the low cost carrier to serve Asia in particular and the whole world in general. In 2003 the total number of staff was 200, aircrafts were two and zero female pilots. Now in 2011, they are 9000 staff, 104 aircrafts and 52 female pilots. Therefore as a result to change and high level of competition, airline have no choice except to be innovative and creative to add value to passengers, otherwise for sure they will be losing and then bankruptcy as there is no standstill in business. Mr. Tony Fernandes, the CEO of Air Asia is a model of innovative and creative individual he said "I am as a CEO, do different job every three months such as serving food at the aircrafts as air hostess, baggage porter and check-in agent. Please visit www.airasia.com Another opposite example of low cost airline is my home country Bahrain, we have the Bahrain Air. This was established in 2008 with 300 employees and how they lost over 3,000,000 of US$ and this airline expected to disappear from market shortly. Bahrain Air due to its losses is unable to be Innovative many competitors in the region and short term vision this because from my point of view of two main reasons: 1. High level of competition are (Eleven low cost carrier and Six high cost carrier) 2. Organizations can easily learn to be innovative and can lead business irrespective of their type of business and irrespective at which market and country. This can be done by depending on few important factors such as: 1. Provide the right and suitable, flexible and healthy corporate culture was ideas can be encouraged; staff is motivated and engaged to do a difference. In management we know that there are four levels of employee engagements. 1. Satisfied employees 2. Motivated employees 3. Committed employees 4. Advocate employees So type 3 and type 4 employees are needed and the employees with highest talents as if no talented employees no sales, and if no sales no cash and no cash no business. An example of recent innovative action is that Government opposition in my country Bahrain has called for revaluation similar to what is going in Egypt and Tunisia, but they need a serious government reform. Therefore for almost 6 weeks, no schools, no universities, work being affected, malls, all types of business such as airlines….etc. The Kingdom of Bahrain (my country has recently i.e. from 14th February faced a serious unrest economical situation where Bahrain lost in two months $ 500 million. Large, small and medium enterprises were the most affected organizations. This is due to the political situation, and therefore been affected very badly. Now the situation is almost in standstill, so certain banks said we are going to give a grace period to some to enable them pay the installments on time when the situation go back to normal. One of our major bank in Bahrain (National Bank of Bahrain) NBB came up with a very good innovative idea as a result to the change affecting the country. They came with an announcement by the CEO stating that we are going to help the SMEs with advises to provide loans without interests and have opened a special unit to handle this. This means almost all SMES will have no choice but to open a bank account with NBB and start dealing with them. It is also the bank which gains the confident of the government and the community for helping such crises. Only Comment: This is totally an innovative product where the bank will be able to attract new customers, build a good name like helping the government and the country at this crises and also getting business. According to Jack Welch in his book Winning he said: "an effective mission statement basically answers one question: How do we intend to win in this business? It does not answer: What were we good at in the good old days? Nor does it answer: How can we describe our business so that no particular unit or division or senior executive gets angry or frustrated? Instead, the question "how do we intend to win in this business?" is defining. It requires companies to make choices about people, investments, and other resources, and it prevents them from falling into the common mission trap of asserting them will be all things to all people at all times. The question forces companies to delineate their strengths and weaknesses in order to assess where they can profitably play in the competitive landscape. Jack Welch knows how to win. During his forth-year career at General Electric, he led the company to year-after-year success around the globe in multiple markets and against brutal competition. His honest, be-the-best style of management became the gold standard in business, with his relentless focus on people, teamwork and profits. Since Jack retired in 2001 as chairman and CEO, he has travelled the world, speaking to more than 250,000 people and answering their wide-ranging questions. Inspired by their hunger for straightforward guidance, Jacks philosophical and pragmatic book is destined to become the bible of business for generations to come, clearly and succinctly laying out the answers to the most difficult questions people face both on and off the job. Aimed at people at every level, in companies large and small, Jacs optimistic, no excuses, get-it-done mindset is riveting. Packed with personal anecdotes and written in Jacks distinctive no-nonsense voice, Winning offers deep insights, original thinking, and nuts-and-bolts advice that will change the way people think about work. Mergers, partnerships and alliances promoting Innovation Merging policy, partnerships and alliances leads to innovation because it is observe that when two great minds work together then the end result or output is always effective and helpful for the industry and people. Therefore according to many studies mergers in US were the most interesting area due to the successive mergers. When one company is merged with other or the partner is created then it gets easier for them to work because the decision making process and strategies became more effective and employees get a chance to bring mix ideas for creating one big idea that is innovation. Even it is observe that when there is a merger of one powerful organization with a weak organization then that weak organization no more left weak because things get fixed due to collaboration of teams. However, we can’t predict that mergers, partnerships and alliances can be 100% successful in terms of bringing innovation because for being a good innovator one has to bear risk to extreme. Without bearing risk or expecting the factor of uncertainty or risk nothing can be done successfully. It means that when we find problems into any idea then only we realize the other ways of the ideas. Innovator has to think in all the ways and in all the dimensions in order to create something unique and effective. The best example of mergers is of SONY and ERICSSON. Ericsson was good in mobile phones but their selling strategy was not good whereas, Sony was well known company in Europe but bad in making inroad. So when they both merged then they come up with idea of mobile phones with advance features and they succeed too. Conclusion In my point of view, I agree that each organization can learn to be innovative and can make a difference. We have seen many examples worldwide who managed to turnaround. Today the concept of bringing change is very observable because now people quickly get fed up with the same thing they using even if only one month is passed and they want the change quickly. In this fast pace it is very challenging for organizations to bring rapid changes to their products with the idea of being innovative. Henceforth, innovation has became a very prominent part of our lives and every entrepreneur should follow proper steps in order to bear small risk in bringing idea to action because risk can’t be eliminated completely but it could be avoided or handled by effective planning and backups. Bibliography (September 2009), The Keys to Creating an Innovative Organization. http://greatworkplace.wordpress.com/2009/09/15/the-keys-to-creating-an-innovative-organization/ Behn, R, (1995), "Creating an Innovative Organization: Ten Hints for Involving Front line Workers", State and Local Government Review, vol. 27. 3. http://govleaders.org/behn_innovation.htm PRODUCT NAMES CAN GET LOST IN TRANSLATION:  http://matt.baya.net/jokes/products.html. Daft, R, (2009), Organization Theory and Design, 10th Edition, Cengage Learning,USA. http://books.google.com.pk/books?id=CmFjF5tNmuEC&pg=PA417&lpg=PA417&dq=innovative+organization+is+difficult+to+create&source=bl&ots=XqwGzSzXu8&sig=gVtEjSZhJ9C5dssfp3M9opGa1wA&hl=en&ei=gfrATcj-FMTJrAfaqKnhAw&sa=X&oi=book_result&ct=result&resnum=9&ved=0CFgQ6AEwCA#v=onepage&q=innovative%20organization%20is%20difficult%20to%20create&f=false Drucker, P, (1985), Innovation and Entrepreneurship, Revised Edition, Elsevier Ltd. http://books.google.com.pk/books?id=VkUj7LHMEcsC&printsec=frontcover&dq=Innovation+and+Entrepreneurship+by+peter+drucker&hl=en&ei=DezCTek3kew5ud28nQg&sa=X&oi=book_result&ct=result&resnum=1&ved=0CDAQ6AEwAA#v=onepage&q&f=false Katz, M. 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Charan, R., Why Innovation Matters. http://www.businessknowhow.com/growth/innovate.htm Read More