Critical Success Factors For Innovation Management - Research Paper Example

? Critical success factors for innovation management BY YOU YOUR SCHOOL INFO HERE HERE Introduction Every organisation domestic and foreign wants to seek perfection in their relative markets. To achieve this perfection, organisations require a means to invent and create their own way to attain competitive advantage or stand out among competition in an industry. Innovation is important for all organisations to improve and develop, as innovation creates a unique positioning and differentiation opportunity that can give a business more market presence. What is an innovation? Innovations are unique business practices, exclusive product offerings, or any other activity that is ground-breaking or pioneering in an industry. If an organisation does not innovate, it will not have longevity as more innovative competitors will begin to outperform a business that is complacent by doing business as usual without creating inventive strategies. This report highlights the critical success factors for innovation management. 2. Innovation management practices Sebell and Terwilliger (2011, pp.1-3), managing partners at Creative Realities, Inc., believe there are nine distinct success factors for innovation management. These include: 1. Having a compelling case for innovation. 2. An inspired and shared vision for the future 3. A fully aligned strategic agenda for the innovation. 4. More visibility of senior management in the innovation process and operations 5. A decision-making model that builds teamwork 6. A fully sourced, multi-functional team dedicated to meeting strategic goals 7. Open-minded exploration of the marketplace drivers of innovation 8. Have a willingness to take risks and see value in absurdity. 9. A well defined, yet flexible execution process. The notion of having a compelling case for innovation means that the business environment, strategic objectives for profit gain, or other strategic business issue demands innovation to improve organisational position. An organisation may have a product that is currently reaching the decline stage of the product life cycle, a situation occurring after consumer demand for the product has been reduced and it is getting more costly to sustain the old product on the consumer market. Dooley (2005) emphasises that in the decline stage, inventory controls, cash management, and obsolescence costs can be substantial. In this case, the business must have a case to justify sweeping product changes and determine a new market entry strategy to provide a product that brings revenue gains unique from competition. A business case is critical to coming up with a strategic plan for new innovation offerings. Having an inspired and shared vision of the future is highly important in innovation management. Fairholm (2009) describes the importance of having transformational leaders in the organisation, those who constantly iterate mission and vision, using relationship development techniques in the social environment to gain commitment and loyalty in teams. A new innovation, whether product-based or human capital-based, will often mean the business is now taking on a new direction in its market. Innovation management, in this case, means developing an organisational culture that is focused, united and dedicated to team philosophy. This often means that senior management officials must be more visible, as was identified by Sebell and Terwilliger (2011). In many organisational models, there is a recognition that change resistance often occurs that stems from differing principles, values or work ethics of different employees in a diverse organisation. In order to get the innovation planned, produced and ultimately launched, team philosophy is critical and this could require decentralising the organisation or creating a more socially-bonded environment for group working. In the case where an innovation is product-based, the organisation must understand the drivers of marketplace competition. For instance, a technology company that has revolutionised telephony communications would need to consider an effective pricing strategy in the launch stage, how to promote the product in key target markets, and how to protect this intellectual property from competition (as only three examples). To gain knowledge, the organisation might have to dispatch certain team members to conduct quantitative or qualitative research on the external market and report back on findings to develop a pricing structure or launch strategy. These actions cannot, however, occur within a vacuum without the support of knowledge experts in the organisation, therefore team philosophy is again a critical success factor to meet long-term goals. Stover (2004) describes the open culture model in the organisation, one where those with tacit knowledge (implied knowledge) must communicate in communities of practice teams in order to brainstorm ideas and provide strategic solutions for market improvement. Many innovations require prototyping and design activities to launch a new innovation, thus more interaction with others in the organisation is required to ensure effective knowledge transfer (Stover 2004). A top-down hierarchy of control in a centralised organisation, then, might have to look for innovation opportunities related to flattening the hierarchy and give employees more decision-making control to meet the new launch goal. This could require meeting with members of research and development, production, procurement, and even shipping or receiving to look for ways to outperform competition and also recognise cost controls. Once the organisational leaders understand fully the long-term activities needed to meet the goals of introducing a new innovation, then all aspects of the value chain become important considerations for planning and implementation of new strategies. For example, a new innovation can affect inbound logistics, many areas of actual operations, sales and marketing, and service delivery (Thompson, Gamble and Strickland 2005). Proper innovation management is determining how the innovation or processes leading to attaining the innovation will impact all of these inter-dependent areas and then setting new structures and procedures to ensure a smooth transition from previous function to the new business position. This, again, reinforces why establishing a positive and unified organisational culture to avoid change resistance is so critical to meet the innovation goal. Expert knowledge holders in key divisions must offer input and analysis in order for the entire organisation to successfully meet the end goals. This demands a collaborative environment where conflict and consensus must occur to gain new solutions and directions forward in the innovation. Some innovations are directly involved with the consumer, such as providing a new product or changing a dimension of a service model to include a wholly-unique competitive concept. In this case, Muniz and O’Guinn (2001) suggest that a company or product brand will gain attachment and loyalty from consumers so long as the innovation provides an opportunity for consumer self-expansion. Many organisations rely on their brand reputation, how a consumer views the brand and its personality, in order to gain higher revenues from loyal target customer groups. Higher brand loyalty leads to higher brand equity (Boone & Kurtz 2007). In this case, managers and employees involved with advertising, promotion and brand-building must collaborate to provide their unique insight into what is driving consumer attitudes or how to create effective advertising concepts for the new brand or service concept. Innovation management in this case would include analysis of cost drivers of the marketing function, how to integrate promotional messages into an entire campaign, or even labour recruitment needed to carry out marketing research. This reinforces the importance of having a fully-aligned strategic agenda that includes knowledge transfer systems and brainstorming, as well as operational control systems, to make sure all are focused on meeting innovation project deadlines and productive outcomes. The organisation is a total assembly of inter-dependent divisions that all contribute to meeting short- and long-term goals established by senior management. These include logistics, marketing, human resources and even strategic management accounting (to name only a few). These divisions in the organisation cannot function independently of one another, thus there must be a system of management that aligns these functions in a way that is productive and efficient to meet innovation end goals. In the case where the innovation is a unique internal process in a non-business environment (such as a non-profit organisation), then the innovation end goal is efficiency to gain competitive advantage. Senior managers then might be more focused on how to use concepts or models of corporate social responsibility to gain attention from important investors and donators. The innovation management process in this case would involve consultations with public relations experts or external organisational consultants, perhaps creating training imperatives so that individuals are more socially aware or gain emotional intelligence for better relationship development with external stakeholders. Innovation management is about coordinating all functions associated with the new innovation process using appropriate planning, implementation or control models available. 3. Assessment of innovation management “Innovation is considered to be a valid tool of entrepreneurship” (Maritz and Salaran 2010, p.107). Many organisations maintaining entrepreneurial values are more prone to taking risks and will often act more aggressively when attempting to capitalise on market opportunities. Sometimes, this involves being the first to market with a new innovation to outperform competition and gain rapid profits. Furthermore, according to Kalyanaram and Gurumurthy (2008) early market entrants usually achieve higher gains than late movers because consumers will often compare late entrants to the pioneering company and buyers will not want to switch once they can identify and relate to the early entrant strategy or product offering. This is why innovation management is so important, because it allows the management team to take a holistic view of how to attain market goals especially when being first to market is important and timing is critical. The manager might have to use transactional leadership practices, such as setting rewards or punishments for meeting or failing to meet timelines for launch, as a control system to ensure compliance. So far, the research has shown that innovation management is tied closely to setting up operational processes to gain efficiency and avoid resistance to various changes that must occur to meet the innovation goals. There are many available research studies that support the importance of management involvement in more human resources-based activities in order to gain employee commitment and dedication. I believe that innovation management is absolutely a holistic activity that must take into consideration actual operations, social and psychological attitudes of many internal stakeholders, and how to set up evaluations and controls to ensure compliance and knowledge transfer in key areas. It would be rather senseless to come up with an agenda for a new innovation and then simply dictate responsibilities without being more active in the process throughout the organisational structure. Without reiterating vision and mission goals so that all employees and managers are on-board with the innovation changes occurring, there will not be the dedicated focus needed to gain efficiency and productivity. Based on the research provided on innovation management, it seems to be a complicated and dynamic system of managing many different divisional activities and then aligning them to timelines for completion. The research also provided the importance of cultural development as part of innovation management and, personally, I agree that this is one of the most critical success factors. Reaching innovation goals cannot occur without the actions and solutions of many different internal stakeholders. Psychological theory often states that employees must have a sense of belonging in order to gain self-esteem and motivation to achieve their greatest achievements (Weiten and Lloyd 2005). Based simply on psychology theory, it would seem to be a foundational need of employees to be part of a unified culture. I thought it was important to focus not just on the operational parts of innovation management, but to consider the role of human capital development as a strategic competitive advantage. Because innovations require many stakeholder involvements, it might be necessary for the organisation to create incentive programs as part of HR focus so that people are motivated to achieving innovation-related goals. I also considered the need to take risks in innovation management, which could be difficult in collectivist cultures that value group harmony and where risk aversion is common. Not all innovations are going to meet with consumer positive demand or always bring competitive advantage to the non-business organisation. For example, a new product launch might not be accepted by customers, which could cause financial problems for a business that devoted millions of pounds for an ultimate failure. I think the research identified in this report fully illustrated the importance of assessing the entire organisational environment to identify strengths and weaknesses of an innovation plan as it relates to risk and risk management. The transformational manager would need to constantly remind the staff that the innovation has positive benefits and can actually meet long-term goals effectively by expressing mission and vision repeatedly. I think this might involve some form of internal marketing program with positive communications about the innovation-related change so that it is always present in the minds of employees and managers. This report has provided enough hard evidence that cultural issues are imperatives in the innovation management process and I think that these concepts need more attention in the organisation so that the innovation process is fluid and productive. Conclusion Innovation management is not just about setting a strategic policy toward an innovation change and then believing it will happen without considering many different organisational factors. The value chain, supply chain, promotion and brand-related activities, human resources, production and other support divisions must all be involved to meet the innovation goal. This report highlighted nine critical success factors for innovation management as well as a critical assessment of how innovation management would apply in a real-world organisation. Without innovation management, an organisation simply will not have longevity in its market or maintain competitive advantages. References Boone, L. and Kurtz, D. (2007). Contemporary Marketing, 13th ed. London: Thompson South-Western. Dooley, F. (2005). Logistics, inventory control and supply chain management, Choices, 20(4). Fairholm, M. (2009). Leadership and organisational strategy, The Public Sector Innovation Journal, 14(1), pp.26-27. Kalyanaram, G. and Gurumurthy, R. (2008). Market entry strategies: Pioneers versus late arrivals. [online] Available at: http://www.wright.edu/~tdung/entry.pdf (accessed 18 November 2012). Maritz, P.A. and Salaran, M. (2010). Networking, entrepreneurship and productivity, Innovation Management Policy and Practice, 12(1). Muniz, A. and O’Guinn, T. (2001). Brand community, Journal of Consumer Research, 27(4), pp.412-432. Sebell, M. and Terwilliger, J. (2011). Success factors for breakthrough innovation, Creative Realities, Inc. [online] Available at: http://www.creativerealities.com/innovationist-blog/bid/82326/Success-Factors-for-Breakthrough-Innovation (accessed 19 November 2012). Stover, M. (2004). Making tactic knowledge explicit, Reference Services Review, 32(2), pp.164-172. Thompson, A., Gamble, J. and Strickland, A.J. (2005). Strategy: Winning in the marketplace, 2nd ed. McGraw-Hill Companies. Weiten, W. and Lloyd, M. (2005). Psychology Applied to Modern Life – Adjustment in the 21st Century, 8th ed. Thompson Wadsworth. Read More