Can Organisation Learn to Be Innovative - Essay Example

?Can any organisation learn to be innovative? Table of Contents Introduction 3 2.Theoretical Background regarding Innovation 4 2 Incremental and Radical Innovation 5 2.2.Spectrum of Radical Innovation and Four Ps of Innovation 5 2.3.Innovation Adoption Curve 7 3.Drivers of Innovation 8 3.1.Internal Environment of the Organisation 8 3.2.External Factors Influencing Innovation 10 3.3.Technology Push vs. Market pull 13 4.Implementation of Innovation in an Organisation 15 4.1.Role Entrepreneurs in Innovation 16 4.2.Appropriate Organisational Structure and Culture 17 5.The Companies learn to be Innovative 19 6.Conclusion 20 Reference 22 1. Introduction There have been significant changes in the structure of the society and human activities. These significant changes are led the impact of the globalisation which has also encouraged the technological expertise and innovation. In fact, globalisation and innovation are closely related with other. “Globalisation can be viewed as the outcome of processes of imitation and adaptation of innovation” (Organisation for Economic Co-operation and Development, 2005, p.108). Trade and business is the most of the important area that has been heavily influenced by globalisation. Globalization has been a boon for the trade and commerce as it has provided a vast opportunity to entire business world. However, it has also led to intensify the global competiveness as majority of the economies encourage the international trade by imposing free trade policies. Hope and Maeleng have defined the free trade policy as a “competition enhancing device” (Hope and Maeleng, 1998, p.61). In such competitive environments, the business organisations are trying to gain sustainable competitive advantage, and in this course, innovation is the one of the most key factors. For example, Tidd, Bessant and Pavitt has identified that new product development is highly correlated with the market share and innovative attempts is the core essence of a new product development (Tidd, Bessant and Pavitt, 2005, p.5). The level of innovation generally depends on the size and types of industry. For example, technological innovation is more prominent in automotive industry rather than apparel industry. However, innovation can be termed from the technological perspective but it can be also defined from the management strategic perspective. On the other hand, there are certain requirements that must be met for incorporating innovation and these requirements are external as well as internal environments. This paper wills attempt to present analysis and discussion on the multiple aspect of innovation required in an organisation. The primary focus will on the multiple factors that must considered while incorporating the innovation within an organization. Hence, certain popular theories and models on innovation will be explained in order to understand the basics of innovation. In order to meet the primary objective of this paper, the identification of drivers and barriers of innovation will be analysed. Finally, the entire discussions and analyses will be summed up in the conclusion. 2. Theoretical Background regarding Innovation Innovation has been a popular area of study and many scholars and academics have tried to offered and explain their views to present the multiple aspects of innovation. They have realized the increasing importance of innovation in every aspect of human activities especially for the commercial purposes, and hence their theories are essential for the organisation seeking to develop an innovative business model and organisational culture. Incorporating an innovation within an organisation is a long process and number of factors must be aligned as per the prevailing condition. At presents, the business organisation is continuously trying to improve their overall business model and operating activities by incorporating innovations in their organisation. The innovation used by them “can range from straightforward cost reduction measures to completely re-designing the business” (Verloop and Wissema, 2004, p.35). Many academics have tried to interpret and define the innovation. Schumpeter defines that innovation a unique combination of purpose s followed by methods (Ziegler, 2009, p.86). On the other hand, Roger has tried to define the innovation from the social point of view, and he explained the innovation as procedure by which a concept and idea in transmitted through different channels that are spread over a specific time span within the constituent of the society (Rogers, 1995, p.11). 2.1. Incremental and Radical Innovation The activities related to innovation have a multi dimensional spectrum, and considering the feature of innovation, Researchers has identified that innovation are of types i.e. radical and incremental. The incremental innovation also known as sustainable innovation widely used by the business organisations as this innovation has become a prominent trend. However, it is the business organisations who determine the type of innovation (i.e. incremental or radical) as per their requirement (McElheran, 2011, p.5-6). The incremental innovations are less volatile and it focuses on the existing use of technology and ideas. While incorporating the incremental innovations, the cross functional teams are key players. The business organisation implement this innovation to bring improvement in their existing process and products; whereas, the radical innovation is incorporated for a new product and process development. Hence, the risk associated with this innovation much higher and each individual of cross fictional team play a crucial role in the entire process (United Nations and Economic Commission for Europe, 2009, p.6). 2.2. Spectrum of Radical Innovation and Four Ps of Innovation The radical innovation is supposed to be more aggressive and it has the ability to influence the entire industry and market trend. For example, if new product succeeds in the market, the other followers try to follow that technology to offer the similar product in the market which leads to intensify the market competition. In this Tidd et al (2005) have proposed four major types of innovations which are necessary to transformation or radical innovation. It is known as four Ps innovation that include process innovation, product innovation, positional innovation and paradigm innovation. Combining these four Ps of innovation, an innovation space can be formulated for the spectral innovation from incremental to radical. The following figure represents the model of innovation space. Figure 1: The Innovation Space (Source: Tidd and Bessant, 2009, p.24). The above model of innovation spectrum provides a logical agreement that what the reason is behind for the change in innovation. The product and process innovation is the core internal area of an organisation that must be incorporated for radical innovations. On the hand, for shifting towards radical innovation, an organisation needs to restructure its mental model (paradigm) and it also needs to decide a context (position) where the product and place can be placed. Bason has also described that “the innovation space is also well-suited tools to map current innovation practices” (Bason, 2011, p.44). 2.3. Innovation Adoption Curve The adoption of radical innovation should also need to be incorporated considering the time horizon. As per the above discussion, it can be observed that the organisation who are able to introduce the innovative product and process in the market, gain an upper hand position in the market. On the other hand, the followers have to struggle to follow the innovative trend as barriers become more intensified. As per the Roger, innovation is a long process which adopted by the entire players within an industry in different stages rather than in single phase. In order to explain this argument, the following model of innovation adaptation curve is useful. Figure 2: Innovation Adoption Curve of Roger (Source: Nelson, National Association of College Stores & ECAR, 2006, p.5) The above model depicts that the innovators comes with their innovative ideas as much earlier stage and for this process of innovation, they require the least time. The process of innovation is followed the early adaptors as they can able identify the necessity and opportunity of the latest innovation introduced by innovators. However, after this stage, the barriers of innovation adoption intensified and this is represent by ‘adoption chasm’. The potential organisation who are capable of incorporating innovation must overcome this barrier to be successful in adopting and implementing the latest process of innovation (Nelson, National Association of College Stores & ECAR, 2006, p.5-6). 3. Drivers of Innovation Innovation is highly influenced by a number of factors and it affects the nature, feature and degree if the innovation. The drivers of innovation for an organisation is primarily categorised into two groups i.e. internal and external. The internal factors mean the factors lying within the organisation like size, structure, culture, labour force etc. The external factors are macroeconomic forces and industrial forces. The macroeconomic forces are the economic condition, government policies, availability of necessary resources etc. On the other hand, industrial forces are also very crucial as it leads to create the market demand for innovation. According to Nanja Strecker, the two major drivers of innovations are technology push and demand push. The technology push innovation is occurred due to the scientific and new technologies break through, whereas; demand push is an effect of the market trend and change in consumers preferences (Strecker, 2009, p.32). 3.1. Internal Environment of the Organisation The internal factors of the organisation are primary drivers that determine the degree of innovation. Therefore, in order to implement innovation within the organisation, it is very necessary to realize the size and age of the organisation. Todd, Bessant and Pavitt have argued that for innovation initiatives and managements the size of the organisation matters. In case of small size organisation with minimum experience within the industry, innovation process for product and process development becomes quite challenging tasks and the associated risks also intensifies. However, considering the world economy, nearly 95% of the total firms belong to small and medium scale or micro businesses (Tidd, Bessant and Pavitt, 2006, p.71). On the other, the organisation structure and culture are the two crucial factors influencing the innovation. For example, the each organisation follows typical types of structure like bureaucratic, hierarchy, autocratic etc and these organisational structure have a critical influence on innovation, Horst Albach has argued that bureaucracies and autocratic organisational structure are barriers for innovation as such organisational structure limits employees power, innovative thinking (Albach, 1994, p.173). Whereas, in case of flat structured organisation, every each of the management and employees are having the freedom to express their innovative ideas and they are also being included in the decision making process. Organisational culture tends to influence the overall growth of the organisation and hence, it also influences the innovation. However, the organisational culture is the highly dependent on the structure of organisation. The organisational culture refers to the shared value, leadership, mission & vision, and core behaviour that help to encourage motivation, commitments, team work and organisational performance. Innovation always requires change and hence, a flexible organisational culture is highly required. The following model depicts the influencing factors for innovation. Figure 3: Internal Factors of Organisation Influencing Innovation (Source: Hasenfeld, 2009, p.499) As per the above, innovation within an organisation is mainly determined by the four major factors i.e. organisational culture, structure, vision & mission and leader ship style. 3.2. External Factors Influencing Innovation External factors relating the macro-economic are major determinant of innovation within a country. The macro-economic factors are very crucial as these factors are very crucial shaping the trade and commerce, innovation and other related factors. Pestle model is an analytical tool which is helpful in assessing and analysing the impact of macro-economic factors. The Pestle is an acronym for political, economic, social, technological, legal and environment. These macro-economic are explained below. Political: The government is one of the key factors in influencing the innovation trend within a country. A stable and strong political environment is very necessary for the economic development as it helps to encourage the trade and commerce. In order to shape an economy, the stable and efficient governments are able to make necessary initiative to develop the innovation facilities. The structure of the government determines the leadership for a country. For example, democratic and bureaucratic political conditions are vital for innovations as these two types of political conditions are liable to shaping the leadership within a country (Carlton and Schaerf, 1977, p.14). On the other hand the international organisation are playing crucial role in developing the innovation in the world economy. National Innovation Systems (NIS) is an initiative taken by the OECD organisation and its associated counties for the betterment of innovation. NIS mainly deals with innovation approaches followed by the public and private sectors business organisation and it main focus is to bring significant development in the economy. Freeman (1987) has defined NIS as “...the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies” (OECD, 1997). NIS has brought major development to the major world economies like U.S., Japan, European Nations etc. In fact it has brought the globalisation for technologies as technological alliance between multiple counties increased significantly causing major technological development in multiple areas like new product development and information technology etc. The following figure represents share of technologies through import. Figure 4: Share of total acquired technology obtained through imports (Source: OECD, 1997) Economic: Economic development and technological innovation are directly inter-related with other as better availability of technology leads to improve the overall productivity, and on the other hand, higher amount of capital is required for better research and development process (Dodgson, 1993, p.2). Social: Social factors involve the culture and local population of an economy. The social factors include a number of parameters like demographic, literacy rate, skills, consumer behaviours etc. For example, the tech-savvy consumers demand more innovative product and this causes marker pull innovation. For example, while explaining the NIS, Edquist (2004) has defined that the social capability is highly require for better innovation, and he focused the “countries level of general education and technical competence” (Lundvall, Joseph and Chaminade, 2009, p.84). Technological: Technological and infrastructural changes also influences the innovation. Proper infrastructural availability is also one of the key determinants for encouraging the innovation. In order to conduct a better research and development process, better infrastructural facilities like informational technology, transportation etc are highly required. For example, “the success of innovation in Hong Kong” is mainly due to the better facility of “physical infrastructure” (Lee, 2001, p.106). Legal: Technological innovation also brings several for threat of misuse of the technologies and hence, it is very necessary for establishing a proper legal framework for necessary protections. For example, in case of nuclear innovations, the governments of many countries have set a proper the legal frameworks for controlling the import and export of nuclear control (OECD Nuclear Energy Agency, 2007, p.86). Environment: The technological improvements and innovations have also negatively impacted the environment causing the higher pollution and global warming. For example, innovation in automobile industry has lead to increase the sale of cars which has intensified the carbon emission. However, considering the environmental protection, government has taken initiatives for innovating better alternative technologies. Many automobile manufacturers like Ford, Honda, Toyota etc are focusing on the developing high fuel efficient cars and hybrid cars. 3.3. Technology Push vs. Market pull The products or services offered by an organisation must match with the target consumers’ demand i.e. as per their taste and preferences. However, consumers’ tastes and preferences are subject to change with time and it can be explained by product life cycle. When a product reaches to its declining stage, the organisations should try to bring improvements in existing product or should try to introduce new product in the market to maintain a sustainable source of sales revenues. On the other hand, when key competitors come with a new product which becomes highly successful in the market, they gained a majority of the market share. However, in such situation, the competing organisation needs to develop a new rang of product and service to counter competitive product offered by competitors. In both cases i.e. consumers; demand and competition, an organisation have to go for new innovation and it is known as market pull or demand pull innovation (Betz, 2011, p.139). In case of technology push innovation, “the stimulus for new product and processes comes from (internal or external) research” and the primarily reason behind such innovation is to commercialise a new invention and know-how (Brem, 2008, p.48). For example, the invention of radio signal and based of this radio signal, Radio and other wireless communicative products were commercialised. However, some of scholars have opined that technology push innovation may lead to develop an imbalance between consumers’ requirements and technical feasibility (Swamidass, 2000, p.781). Gerpott (2005) has attempted to differentiate the technology push and market pull innovation using the following table. Table 1: Technology Push vs. Market Pull Innovation (Source: Brem, 2008, p.49) As per above table, the technology push innovation can be termed as destroying or creative where improvements are totally new or prominent. On the hand, markets pull attempts to replace or substitute. Technology push is unable to align with the market demand, and hence, the uncertainty is higher. 4. Implementation of Innovation in an Organisation The above sections have focused on the necessity and major drivers of the innovation. Innovation is one of the key success factors for an organisation and hence, each organisation including small and medium scale must try to incorporate the innovation within their organisation for process and product developments. In this respect, two major factors are very crucial i.e. role of entrepreneurs and organisational culture. 4.1. Role Entrepreneurs in Innovation From the very beginning of the trade and commerce, the entrepreneurs have played a vital role diffusing the innovation. The role of entrepreneurs is very important for the regional development in terms of innovation. Entrepreneurs usually come with new ideas and new products which are able to meet the demand of the population. Their skills mainly lie in their analytical skills which helps them in indentifying the underlying opportunities. Moreover, in the technological push and market pull innovation section, it has been mentioned that technology push innovation are riskier and entrepreneurs have the risk taking ability. Moreover, many people have the ability to invent new ideas and new product but very few people have the ability to commercialise the idea for the economic benefits. In case of entrepreneurs have both the abilities for planning and executing the new ideas (Miller, 2009, p.40). Josheph Schumpeter has explained that a new product and new services are critical for gaining competitive advantages and when entrepreneurs achieve this competitive advantage, other entrepreneurs tends to imitate the new ideas or come with another unique idea. As a result, this process becomes a cyclical effect and it continues (Tidd and Bessant, 2009, p.15). Tidd and Bassant have also identified that the entrepreneurial skills like analytical skills, execution, sense making, focused mind, information acquisition etc are responsible for their innovative mind and approaches (Tidd and Bessant, 2009, p.41-42). In case of setting up a new venture, entrepreneurs have to take a number of factors into account for effective innovation-based and successful venture. These areas are represented in the following model. Figure 5: Factors Affecting a Start-up Venture (Source: Tidd and Bessant, 2009, p.46) The task of creating innovative ideas and its commercialization mainly passes through three stages and these are “understanding the opportunity; generating ideas; and planning for action” (Tidd and Bessant, 2009, p.46). 4.2. Appropriate Organisational Structure and Culture The organisational culture indicates its underlying value and work cultural and these factors are very crucial for encouraging innovation. The primary task for an organisation seeking for innovation is to develop innovation oriented vision, mission and shared values. In this respect, Dan Dension has developed a model for creating an organisation culture that fosters the innovation. This model is known as Dension model and it is shown below. Figure 6: Dension model (Source: Deschamps, 2008, p.384) As per the above figure, an organisation must try to adjust itself considering the internal and external factors. There are four major components required for developing a growth oriented organisational culture and the four components are adaptability, mission, involvement and consistency. Tidd and Bassant have also given the similar argument for implementing innovation within an organisation. They have given the priority to the organisational structure for executing innovation within an organisation as they believe that organisation structure influences the culture of organisation. In the post modern age, the mission-oriented organisation structure must be encouraged. Such kind of organisation is effective in developing an appropriate culture like team work, openness, higher level of commitments etc (Tidd and Bassant, 2009, p.109). Moreover, they have also mentioned a range of necessary components necessary for innovation supportive organisational culture. These component and its key features are given below in the table. Table 2: Components of Organisational Culture for Encouraging Innovation (Source: Tidd and Bassant, 2009, p.100) 5. The Companies learn to be Innovative This paper has presented broad discussions on innovation and its prevailing theories and models. The primary aim of this paper is to determine whether a company learn to be innovative, and hence in order to facilitate the innovation within the organisation, the above stated theories and models are very useful. The primary task in this process is to determine whether the company would like to go for incremental and radical innovation. However, this decision primarily depends on the internal factors of the organisation. It must assess its size, its culture and structure supporting the type of innovation suitable for the company. Moreover, it also needs to assess the required technologies is market pull of technology push. However, the external forces are important that plays a critical role in incorporating innovation within the organisation, as the favourable external factors are necessary. Assuming that the external factors are in favour of innovation, the development organisational culture is the most vital aspect. In this respect, the entrepreneurial role in motivating the subordinate to encourage innovation within the organisation is very necessary. A company with productive entrepreneurial leadership needs to restructure its organisational culture and structure. However, when a company fails to identify the primary basis technology and fails to of incorporate these changes; it cannot learn to be innovative. 6. Conclusion This paper has presented an extensive discussion on multiple aspect of the innovation and the primary objective is to focus on the areas which need to be taken into account for incorporate innovation within an organisation. The theoretical background has focus on the incremental and radical innovation. These two types of innovation has their own features but incremental innovation is more prominent as radical seems to be complicated. Moreover, the organisation must try to shift towards radical innovation approaches as it is more productive. In this respect, the organisation must condition adoptability curve that indicates the degree of barrier in innovation. Innovation is influenced a number of factors like internal factors (organisational structure and culture), external factor (market, macroeconomic factors) and organisation must assess these driving factors. In order to develop innovation-supporting organisation, proper entrepreneurship is necessary as entrepreneurs have the capability to generate and commercialise creative ideas. Appropriate organisational structure and culture are also inevitable criterion for incorporating innovation within an organisation. In this respect, the mission oriented organisational structure and organisational culture based on shared-value; team work, high involvement innovation etc are prime essence. Therefore, as per overall, discussion and findings, it can be interpreted that any organisation can learn to be innovative but it must need to identify the drivers of innovation and also need to frame its organisational structure and demand accordingly. Reference Albach, H. (1994). 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