Understanding Innovation Processes in New Venture through SME's - Essay Example

?Understanding innovation processes in new venture through SMEs Introduction The small to medium enterprises (SMEs) are part of the country’s economic condition’s indicators. For this reason, there are policies implemented by the government that are in line with how to create favourable conditions for SMEs. Thus, the government is always looking forward to consider the following: characteristics of SMEs, evolution of the external environment, and evolution of performance of SMEs (Organisation for Economic Co-operation and Development, 1997). However, SMEs are also trying to create innovative moves aside from relying solely on their external environment. Thus, it is important to analyse the processes involved in the creation of a venture and this can be clearly illustrated through the study of SMEs. Especially in the case of understanding innovation for a new venture, SMEs are perfect models in order to understand the entire process involved. This essay tries to discuss the processes of innovation involved in the creation of new venture through understanding SMEs. SME and its environment The SMEs are affected by the internal and business environment because they are all integral parts of the existing innovative process of the global business. As of the present trend in conducting business, SMEs are the basic units of a country’s affairs in commerce and trade. Thus, there is a need to analyse the recent business environment that substantially influenced SMEs significant moves. PEST Analysis Politics, economy, social and technological aspects are essential parts of the business environment. All of these components are affecting SMEs at certain level. After all, SMEs are organisations or companies with specific structure, operation and resources that are highly influenced by politics, economy, social and technological factors. It is in this reason that there are substantial innovations that are created because of the existing influence brought by the business environment. Politics Power and influence are all integrated with politics (Rosati and Scott, 2010; Trubowitz, 2004). In the same way, as money created power and influence, it has also great role to play over politics (Korten, 2000). This is the very reason why business and politics are integrated with certain level of power and influence. This is the current scenario especially among SMEs in which their opportunities lie on the ability of the government to integrate its political power into the business environment. Thus, SMEs are trying to create important efforts to eliminate whatever existing gaps that may arise along the process. Economy The recent global economic recession is said to be worst economic downturn in history as next to Great Depression (Marino et al., 2010). It is in this reason that companies are making extra effort in order to recover from corresponding profit lose they incurred from such economic event. In line with this, SMEs are under important moves in order to ensure continuous business operation. Social The business environment without question is composed of individuals who are in their daily activities may be influenced by the information they received from the environment. One of this may be due to the effort of companies to stimulate needs for their offerings. Kotler (1999) discussed that companies are into formulating strategies that eventually will stimulate needs for their offerings. This in return may set the current social trend in which the business sectors have gained considerable opportunity for their growth. In line with this, SMEs are challenged to formulate their own strategy in order to also gain social acceptance. Technology The transfer of knowledge and technology is politically desired by the government but this is hindered by issues such as problems related with communication and technology down to intellectual property regimes (Dhillon et al., 2009). The real issue therefore is on how SMEs can eventually adapt into technological competency as the latest trend in the business environment. Aspects of innovation According to Mulej and Rebernik (2011) innovation is a matter of creating new ideas that could substantially give beneficial impacts. They illustrated that production and market research are integral parts of the process and it is important to mark them as covered by the innovative scientific research and development. These are the common areas in which innovation usually takes place. They also include different aspects that need to be dealt with and these primarily involved vision, management, strategy, product development, marketing, people and environment. However, innovation in entrepreneurship is not just about creating instant ideas through experience, identification, assessment and refinement, but creativity on the process is necessary and a very important consideration prior to achieving a significant result (Bessant and Tidd, 2007). Through this creativity, there are many things that can be done including the most important part which covers handling the operations and resources. Innovation of new venture is therefore a complex process because there are specific aspects that need to be taken into account. This can be illustrated in detail by understanding the very nature of top 10 SMEs in the United Kingdom in 2011. The top 10 SMEs include Softcat, Christians Against Poverty, Brand Learning, Qedis, Lane4, Shine Communications, Bite Communications, Fairbairn Private Bank, ANS Group and Lexis Public Relations (Times Newspapers Ltd., 2010). These companies belong to different sectors which primarily involve IT solutions, Debt counseling charity, management consultancy, Professional services, Public relations, Financial services, and IT and Communications. As noticed, there are diverse sectors in SME but generally they can be subdivided into three as public, private of third sector. It is important to analyse why specifically there are different yet specific sectors that arise. These sectors tend to generate a focus strategy in which according to Porter (1990) is a specific generic strategy for competitive advantage. Aside from this, it is important to consider that there is a remarkable process that exists prior to their successful existence in the business industry where they belong at present time. Below is the case of Softcat in which there are substantial ideas that could effectively illustrate the new creative process applied in new venture. Softcat Softcat, a small medium enterprise is an IT solution provider which has become established because of its ability to give detailed importance on how to make the people in the team happy, motivated and satisfied (Times Newspapers Ltd., 2010). In short, the company is creating good idea on how to interrelate management for its people in order to enhance business activity to the fullest performance. Softcat believes that people are best assets that a company could ever have. Peter Kelly, the founder of Softcat was from the start not after of how much profit to generate but the entire idea was to make his people happy. Due to this approach, people were eager to work effectively leading to the success of the business at present. The entire vision of Kelly for Softcat is an integral part of an innovative strategy considering that no business at present would be willing to bear in mind not to go after of how much profit to generate. However, because of the noted success of Softcat, the idea of Kelly was indeed an innovation for an effective creation of a venture with noted differentiation at certain level. What Softcat has started so far is a specific process and in a way an innovative approach because only few companies are trying to adhere on the best and sound moral principle for the employee’s satisfaction, particularly when the whole thing talks about business. In fact, it is commonly viewed that the bottom line of every business is profit, stock values, earnings per share and more. However, there is always a good reason to link employee satisfaction to the bottom line (Allen and Wilburn, 2002). Employees are the company’s best assets. The human resource is a complex aspect to be handled in business because this involves people, staffs or employees that need to be motivated from time to time. If they are not motivated accordingly, the level of their performance would reflect on the entire organisation’s performance. Thus, a creative process is necessary in order to reach the maximum potential output of enhancing the best human resource. In fact, one of the best ways in order to evaluate how the entire human resource is performing can be elaborated clearly through understanding customer satisfaction and loyalty, financial performance, stability of the internal business process and the progress in learning and growth programs. All of these are specific evaluative measures that could help integrate the entire information about an organisation’s business performance when it comes to translating strategy into action (Kaplan and Norton, 1996). Fortunately, Softcat is good at evaluating its employees’ performance due to its ability to put them as priority in its strategy. It is also noticed that giving the best that employees’ need from a company is an advantage since an organisation can eventually demand for higher level of performance and that is tantamount to creating higher level of customer satisfaction just like in the case of Softcat. As a result, the company has become one of the best companies of choice among employees in the UK. In the case of Softcat, the whole thing started with creating more personal business with employees and customers in order to set aside company’s needs and structure. This is very innovative considering that modern companies are most likely to stimulate needs for their product or service offerings but not entirely for the needs of customers, but for their competitive advantage due to increasing fierce competition everywhere. In fact, modern organisations are actually good at stimulating needs for their product and service offerings (Kotler et al., 1999; Boone and Kurtz, 2006). What Softcat has just started is not a way of stimulating needs for its personal interest but a genuine approach in which the bottom line is to help its employees achieve their best performance as possible. Peter Kelly had made it clear from the start that the whole business about Softcat is not about creating much of profit but just to give much favor on its employees. This approach is remarkably new or seldom in its kind and thus very creative in a way. Organisations have long been informed the potential advantage of putting employees first, which means motivating and keeping them feel secure about their future with the company (Abrams and Kleiner, 2003; Daft, 2007). However, there is always an existing gap regarding this considering that as stated earlier most companies are looking forward to their competitive advantage and the generation of profit. There are still other top SMEs in the UK and they may exist as the best in their industries because of their ability to create the necessary creative foundation process for their success. Findings It is found that the above stated SME is actually good at creating ways on how to sustain its operation and even ensure more productivity and growth. Softcat is excellent at managing both its resources and operations. The good thing about Softcat is its ability to grow because of taking important account on staff productivity, motivation, and effective implementation of the vision and all other related aspects that can ensure management, employee and customer satisfaction. This resulted to stability and continuous growth at some point. Softcat is giving focus on how to get its human resources satisfied for the reason that they are under controllable number. Thus, one of the greatest advantages upon creating the necessary improvement with SME like Softcat is the ability to handle human resource at very focus and effective ways. It is clear that the two most essential aspects under consideration in the system innovation within Softcat are the resources and operations involved. Under resources, the best asset comes to be the human resource in which Softcat has considered to be the most important strategy to be developed just prior to implement the company’s vision successfully. The entire smooth flowing operation would just therefore follow considering that the resources involved are sufficient to address the necessary needs of the management, employees and customers. Conclusion Innovation in new venture is remarkable within SME. SMEs can be much organised when it comes to achieving specific performance they want to achieve. This is made possible through the availability of resources that can be put to its full potential in the process. 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