The Expansion of Globalization - Essay Example

? Critically evaluate the claim that any organisation can learn to be innovative Table of Contents Introduction 3 2. Innovation and change in modern organizations 4 3. Conclusion and Recommendations 12 Bibliography 14 1. Introduction The expansion of globalization in all countries worldwide has led firm to search for strategies, which will help them to keep their position in the local or the international market. However, in practice, the above target is difficult to be achieved taking into consideration the high market competition. Innovation, as part of the organizational strategic process, can help firms to remain competitive, even under strong market pressures. The potential of firms to be innovative is critically examined in this paper; particular emphasis is given on the fact that each firm can learn to be innovative, a claim that is discussed by referring to the literature published in the particular field. In order to show whether a firm can learn to be innovative, reference is made primarily to the requirements and the characteristics of innovation; then the effects (benefits and drawbacks) of innovation and change are presented aiming to evaluate whether it is feasible for a firm to learn to be innovative and the terms under which such process could be successfully completed. It is proved that, indeed, a firm can learn to be innovative but the level at which innovation will actually become part of the specific organization cannot be standardized. In fact, each firm is likely to respond differently to the requirements of innovation, as part of the strategic planning process. Moreover, leaders and managers in modern organization are likely to develop different views on the needs and the scope of innovation, an issue which should be also taken into consideration when examining the influence of innovation on organizational life and, especially, the level at which each organization can learn to be innovative. 2. Innovation and change in modern organizations In order to understand and evaluate the potentials of an organization to be innovative, it would be necessary to refer to the framework of innovation, as part of the strategic planning process of modern organizations. Innovation can has many forms. Primarily, in order for innovation to exist it is necessary that the changes in the existing organizational practices are such that the product/ process involved is unique or at least quite difficult to be identified by customers in the particular market (Tidd et al. 2005, 8); also, time is quite important when referring to innovation. The introduction of the innovative products/ services in the market need to be developed quite fast, ensuring that no similar products/ services are available in the market at the particular time point (Tidd et al. 2005, 8). Innovation could also refer to the following issues: a) the introduction of a process/ platform, which would be used for the development of other products/ services in the future; these processes could pre-exist but they have not been used in the specific role up to now or b) the introduction of totally new platform/ processes (Tidd et al. 2005, 9), an initiative which may be risky, especially because there are no prior indicators of the performance of the specific processes. Innovation requires the change of existing organizational practices – referring also to those practices, which are introduced for first time, since such initiative indicates the change in the organization’s strategy. Different approaches have been used in the literature in order to define change – as part of innovation. In accordance with Andriopoulos et al (2009) change has been characterized as both ‘an ongoing dynamic process and as an episode in the life of an organization’ (Andriopoulos et al. 2009, 16). It is noted that both the above views perceive change as a factor contributing to the organizational development (Andriopoulos et al. 2009, 16). In this context, the interpretation of change, as part of the organizational life, cannot affect its role in innovation, as a condition for the increase of organizational performance. It should be noted that innovation is not identical with change; in fact, in accordance with King et al. (2002) the term innovation is used in order to describe ‘a tangible product or process which is new and which is intentional rather than accidental’ (King et al. 2002, 2). In the study of Beiske (2008) reference is made to the following two definitions of innovation: a) the definition of innovation given by the European Commission, in 1995, in the context of which innovation is regarded as ‘the successful production, assimilation and exploitation of novelty in the economic and social spheres’ (Beiske 2008, 2) and b) the definition of innovation given by Zaltman et al. (1973); in the specific definition, innovation is described as a series of ‘ideas, practices, or material artifacts perceived to be new’ (Beiske 2008, 2). However the second definition is opposed with the current definition of innovation, as promoted my most theorists, that innovation refers to tangible assets and not to ideas, as explained above. The important role of innovation and change in the development of modern organizations cannot be doubted. However, the level at which this role is perceived to be decisive for the organizational performance is not standardized. There are organizations where high emphasis is given on innovation and change while others have incorporated innovation and change within their culture and mission. Moreover, innovation is related to various parts of organizational activities, being influenced by the organizational structure and culture. An indicative example is presented in the study of Wilson (2003). The above researcher perceives innovation as one of the indicators of performance of organizations. From this point of view, the level at which innovation is promoted within a particular organization can be measured using the ‘balanced scorecard’ concept of Kaplan and Norton (Wilson 2003, 90). In accordance with this view, innovation can affect organizational performance equally with other elements of the organizational performance, such as the customer satisfaction (Wilson 2003, 90). As a result, promoting innovation is of key value for modern organizations – since innovation is perceived as having the power to highly affect organizational performance. Therefore, all organizations need to learn how to be innovative because this activity would influence organizational performance, as described above. At this point, it would be also necessary to refer to the types of innovation, as developed in modern organizations; in accordance with Mayle (2006) innovation should focus on the achievement of the following targets, which are also known as the four P’s of innovation: a)’ innovation to introduce or improve Products’ (Mayle 2006, 202), b) ‘innovation to introduce or improve Processes’ (Mayle 2006, 202), c) innovation related to the Positioning (referring to either the firm or its products) (Mayle 2006, 202) and d) innovation related to ‘the Paradigm of the firm’ (Mayle 2006, 202). The above categorization of the plans promoting innovation is also highlighted in the study of Tidd et al. (2005) where Positioning, as part of the plans promoting innovation, is related only to specific products/ services and not to the firm involved. The methods used by firms for the promotion of innovation and change across their departments can be differentiated. In fact, the leader of each firm decides the level at which innovation and change will be involved in the particular firm’s daily operations. This issue is highlighted in the study of Pettigrew (2003) where reference is made to the following strategic options available to leaders who wish to support the development of innovation and change in their organization: increase of variety of resources used in daily organizational activities, emphasis on ‘the potential interaction of tacit and explicit knowledge’ (Pettigrew 2003, 79) and thorough examination of the capabilities/ skills of managers involved in the realization of each organization’s projects (Pettigrew 2003, 70). The above activities are indicative of the strategic choices available to leaders of organizations where innovation and change are key elements of the organizational culture and initiatives. At the same time the above study highlights the value of leadership skills as a prerequisite for the promotion of appropriate policies related to innovation and change. It is also assumed that these policies are not applicable on firms of all industries. Rather, each of them can perform better if used within a particular organizational environment, an issue, which needs to be taken into consideration when specific plans of innovation and change are to be implemented in a particular organization. On the other hand, Gailly (2011) notes that the promotion of innovation and change within an organization is not necessarily related to specific measures and initiatives; rather, it should be related to the change of organizational culture and ‘the raising of awareness for innovation and change’ (Gailly 2011, 88). The above view cannot lead to the assumption that the organizational plans on innovation and change are of no value or use; rather, it is made clear that these plans would not have many chances to succeed unless they are combined with the transformation of existing organizational culture allowing the development of innovation and change – not just as an element of the strategic process but rather as indispensable part of the organization’s daily operations. Regarding the methods used by organizations for promoting innovation, Storey et al. (2005) have highlighted the following issue: the willingness of an organization to support innovation is differentiated under the influence of the approach on innovation that the particular organization has been accepted – reference is made to two main approaches of innovation, as used by modern organizations: the positive and the negative approach. The former is related to the scope of innovation, as it is commonly known and as described above; the latter is based on ‘a conventional definition of innovation placing limited value on innovation’ (Storey et al. 2005, 148). From another point of view, Bessant et al. (2007) note that organizations tend to use different methods for promoting innovation and change; the differences in the methods chosen by organizations for the promotion of innovation and change are highly depended on the resources available for the completion of the relevant projects; this activity is also described as organizational slack, a term used for describing the resources required for the realization of a particular organizational project compared to the whole resources of the specific organization. It is explained that when the increase of the firm’s productivity is set as a priority, organizational slack may cause delays in the completion of the relevant activities – where the resources required are more than those available in the organization; on the contrary, when innovation and change is attempted, organizational slack is considered as ‘a dynamic shock absorber allowing for experimentation’ (Bessant et al. 2007, 61). It is assumed that in the case of innovation and change plans, the risk involved in the use of organizational resources is considered as justified; seeking for additional resources, if the existing ones are not adequate, would be also a justified organizational strategy under the terms that innovation and change are of critical value for the organizational development, even in the long term. In accordance with Lutolf-Carroll et al. (2009) the organizational plans for promoting innovation should highly emphasize on the increase of learning across the organization; it is explained that learning is a necessary prerequisite for promoting innovation and change in regard to one or more organizational processes (Lutolf-Carroll et al. 2009, 79). At the same time, the development of strategic alliances is suggested as a method for promoting plans of change, as through this method the following benefits are achieved: the resources available for the realization of the relevant projects are increased while the risks involved are mitigated (Lutolf-Carroll et al. 2009, 79). Similar initiatives for promoting innovation and change are suggested in the study of Woods et al. (2010); in the above study reference is made, additionally, to the value of team working for the promotion of innovation and change within a particular organization (Woods et al. 2010, 506). However, it is made clear that in order for team working to effectively support plans of change it is necessary that it is aligned with the organizational culture and mission; initiatives are allowed but communicating is of higher importance for effectively contributing in the change processes. Innovation and change are quite important for the development of organizational performance, as explained above. More specifically, by promoting innovation and change in their departments, an organization can achieve the following targets: a) to improve its position towards its competitors, b) to keep – and, potentially, increase – its customers, c) to protect its brand name in the local and the international market, d) to increase its profits, even at a marginal level, e) to keep the balance in its internal environment; through the increase of the organization’s profitability, conflicts in the internal organizational environment are expected to be limited mostly because the firm will be able to appropriately reward its personnel for their contribution in the increase of organizational performance, f) to keep the balance with its external environment; reference is made to the relation between the firm and its suppliers; reference is also made to the firm’s creditors; since the firm’s profits are kept at high level, as a result of the promotion of innovation, the firm will be able to pay its suppliers and creditors on time, a fact that will eliminate conflicts in the external organizational environment. On the other hand, innovation and change can have certain drawbacks, which can be prevented though if appropriately measures are taken in advance, i.e. when the innovation and change plans are introduced in the organization involved. In this context, the promotion of innovation and change in a specific organization may result to the following problems: a) development of conflicts within the organization – reference is made specifically to the resistance of employees to the attempted plans of change, b) the resources used in the relevant processes may be more than those required, a problem related with the lack of skills in the management of the relevant plan, c) the benefits of the attempted change may not be immediate; the delay in the appearance of benefits of the particular plan increases the risk for turbulences in both the internal (employees) and the external (suppliers, creditors) organizational environment; d) in large firms, the delay in the achievement of the targets set in the plan of change can result to severe conflicts among the firm’s shareholders regarding the processes used for the implementation and the monitoring of the particular plan. The above drawbacks of innovation and change would not prevent a firm from promoting innovation in its activities. Instead, a firm should try to learn all aspects (requirements, benefits, risks) of innovation trying to avoid high risks either in the short and the long term. Despite the efforts made by theorists and organizational leaders for the promotion of innovation and change in organizations worldwide it seems that the relevant efforts face a series of barriers, a problem occurring especially when the plans introducing change and innovation are activated. The above phenomenon can be explained using different approaches. In accordance with Salisbury (2008) the promotion of innovation and change is often delayed because of the following fact: in most organizations, leaders are not fully aware of the context and the requirements of innovation – as part of organizational life. Under these terms, it is explained that valuable time is spent on updating existing organizational practices instead of developing really innovative solutions. Innovative learning (Ilearning) is suggested as a tool for developing really innovative organizational plans and avoiding repeat practices, which have been used in the past and have led to severe organizational failures (Salisbury 2008, 21). In the context of innovative learning, leaders and employees are informed on the elements and the priorities of innovative plans; in this way, they are able to develop and support innovation in all organizational departments. On the other hand, West (1997) notes that the promotion of innovation and change in modern organizations is likely to face delays, mostly because of the following reasons: a) because of the existence of conflicting interests – referring to the interests of specific groups of people which are likely to cause strong oppositions towards the attempted change, b) because of the lack of understanding of the change plans involved; quite often employees are not fully aware of the changes initiated within their organization; as a result, they rush to express their opposition before being informed on the actual content and scope of the particular plans of change (West 1997, 103), c) because of personal attitudes; it is explained by West (1997) that people are likely to be negative to changes, especially when there is chance that their interests will be threatened, d) because of the lack of relevant skills of the managers handling the change process; in this context, the mis-management of the specific process could lead to its cancellation or its significant delay (West 1997, 103). All the above issues are of equal importance for the success of a plan of change within a particular organization; therefore, measures should be taken in advance ensuring that all needs of the process, as derived from the issues highlighted above, are adequately covered. 3. Conclusion and Recommendations In accordance with the issues discussed above, a firm can learn to be innovative; however, this target could not be easily achieved. In fact, there are many barriers that the firm promoting innovation would have to face. The specific fact, as explained in the previous section, reveals the lack of effective mechanisms for the monitoring of organizational practices. More specifically, in most firms the plans for change are initiated without the necessary support – using the argument that by limiting the resources engaged in such initiatives, the relevant risk is minimized. The above fact is partially true but it leads to another risk: by avoiding engaging the necessary resources in the promotion of innovation, the risk of failure of these plans is increased – if such plan finally fails, the resources used in this plan would be also lost (or limited in terms of their volume/ level). In accordance with Isaksen et al. (2006) the key reason for the failure of innovative plans is the fact that these plans are designed and developed by individuals who are not appropriately skilled; innovation is regarded rather as a trend and not as a key factor for the organizational development. Moreover, Howard (1993) notes that innovation should be based on the increase of the use of knowledge as a key tool for improving organizational performance (Howard 1993, 43). Only in this way, innovation would be effectively promoted within a particular organization. At this point, reference should be made to the study of Clark (1995) who explains that promoting innovation can be a challenging task, a fact related to its complexity (Clark 1995, 238). Under these terms, it is made clear that innovation can be learned, but only if certain conditions are met; reference is made specifically to the skills of managers involved in the process, the availability of resources and the establishment of a mechanism that will monitor the performance of the relevant plan. The assumption that innovation can be learned is also verified by the fact that governmental and non-governmental organizations have developed schemes which can support firms in learning innovation – for example the schemes available in the Department of Business, Innovation and Skills, Innovation Space scheme (2011), the schemes promoted by the Business Link organization (2011) and so on. On the other hand, the effects of innovation and change on organizational performance are differentiated, as explained above. In this context, it would be difficult for a firm to learn to be innovative. However, there are certain measures which could help a firm to promote innovation in its internal environment without being highly exposed to risks: a) the conditions in the global market are not standardized; turbulences may appear which may influence the performance of all markets worldwide; also, the laws regulating the commercial activities in a particular market may change unexpectedly (Andriopoulos et al. 2009, 16); this means that the plans of change which are promoted in a particular organization need to be flexible enough so that they can be easily transformed, being aligned with the local regulation and the market conditions, b) the investment made on plans of change should be carefully examined, keeping a balance between the amount invested and the expected return; however, the payback period would not be necessarily short, taking into consideration the fact that the plans promoting innovation are more likely to benefit a firm in the long term rather in the short term, c) the learning of innovation would include the reference to the practical implications of the relevant plans; appropriate theory should be also reviewed, but it would be mostly through the effects of innovation on specific organizations that the real aspects of innovation could be understood. 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