Ways in Which Innovation Can Be Strategic Opportunity and Threat for Todays Organisations - Literature review Example

Ways in which Innovation can be a Strategic Opportunity and a Strategic Threat for Today’s Organisations Introduction In the business scene, innovation has always been perceived as being a major part of the long-term success of any organisation. Business innovation is descriptive of the process of the defined utilisation of knowledge in a special way for the purpose of increasing the organisation’s financial benefits. Business innovation could include the manufacturing of new goods and services as well as the utilisation of new business models so that the organisational objectives can be reached more effectively. Innovations can be acquired from knowledge that is accrued from external and internal sources; with its success also being determined by tangible aspects like the labor force’s level of education, the nation’s political stability, and intangible aspects like the organisation’s leadership and culture. Globalisation, in particular, has driven the need for innovation. Before globalisation, many business organisations in the developed nations were mainly product-centric. Today, the majority of organisations are transforming to embrace a culture that is more complex, open, and interdependent. Moreover, innovations can only be as successful as the transformation of a concept into value. This is what causes some organisations which perceive innovation as being the introduction of new goods and services to lose capital. While this is a considerable part of the innovative process, implementing innovations also consists of changing the thinking pattern of the organisation’s workers as well as the executive management. Thesis Statement - The introduction of innovations in any organisation can be confronted with unpredictable or predictable challenges. The organisation can surmount predictable challenges by estimating abilities; however, unpredictable challenges could bring about devastating outcomes. Innovation Models and Theories Most business organisations resort to using innovation models when they want to expand in terms of physical growth. Generally, smaller organisations tend to have more expectations of developing faster and further than the larger organisations. Innovation models, when used practically, can effectively meet the demand for development by identifying and furthering the concepts for change (Boddy 2008). There are different types of business innovation models that various organisations of any scale can use. Some of these include: -The linear innovation model: This model stresses on the importance of scientific advancements in realising business innovations while downplaying the contributions of business officials towards the process of innovation. According to Boddy (2008) innovation begins with basic research which is then transformed into applied research. The next step of innovation has to do with further development of the suggested concepts and then the diffusion of these concepts into different corporate levels. There are different variants of the linear innovation model. These are based on: Market pull - This variant holds that research that is conducted in order to conduct innovations is usually in response to significant market needs (Boddy 2008). In this variant, the market needs are the component that results in development which then leads to sales. Technology push – In this variant, there is a transformation made in the linear model whereby the production processes has the aspect of marketing and sales added to it. Connect and Develop" model -In this variant, the most important aspect has to do with dealing with increasing costs of research by ensuring that the organisation engages in partnerships as well as networking opportunities for the sake of development. The Phase Gate Model - This variant adjusts the linear model by asserting that there are time variations as well as feedback loops between its assorted steps (Boddy 2008). This is done in order to determine the criteria for changing between the key stages of innovation development. Innovation Diffusion Theory – This variant is centred on psychological profiles that illustrate adopters at different phases of a cycle of innovation adoption; thus making it possible for the organisation to be able to focus on realising market innovation. The Actor-Network theory- This variation encompasses using models that deal with change discontinuities that can upset corporate functions and result in the emergence of paradigm shifts (Brooks, Weatherston, and Wilkinson 2011). In this theory, research into innovation research can be very complex, and even touch on factors in philosophy like epistemology. The Impact of Innovation on Organisations Introducing the use of different types of innovation in an organisation can be quite beneficial. It not only increases productivity but also results in the efficiency of operations which then contributes towards reduced costs (Campbell, Edgar, and Stonehouse 2011). Innovations can also make sure that an organisation grows more competitive and benefits by contracting new relationships or partnerships with more advanced or celebrated organisations. The use of innovations also increases a product’s brand value while improving productivity. Businesses that fail to implement timely innovations may experience failed productivity and lose substantial market share to their business rivals (Capon 2009). They may also lose some of their more talented employees to their competitors and be faced with the prospect of becoming less relevant in the business scene. Innovation tends to generate constructive tension between different corporate objectives such as product value, development cost, quality, performance, and time to market (Tellis 2013). In addition, functions like sales, strategic planning, operations, sales, purchasing, cus­tomer support, and finance are also considered as being important. The way in which these different components work together determines how effectual an organisation will be in successfully developing improved goods and services. There are different organisational qualities that ensure the success of organisational initiatives for innovation (Johnson, Whittinggto, and Scholes 2011). Some of these include transparency, speed, and accountability. Speed In most industries today, globalisation has compelled most organisations to seek to implement different kinds of innovations at a faster pace. Making decisions with speed also allows organisations to be able to mobilise in the face of new opportunities so as to benefit from first-to-market opportunities (Kew and Stredwick 2008). On the other hand, organisations that are ‘over-managed’ may be faced with problems when required to make decisions. Over-managed corporations typically have many management levels in a hierarchical corporate structure. These numerous layers then serve as barriers to the smooth process of information flow (Mitchell and Coles 2004). This means that there will be additional chances of the original initiatives being altered through the addition of alterations to the original message. In organisations in which there is a culture of general inclusion and agreement, there may also be hindrances to the acceptance of innovations (Kleinbaum and Tushman 2007). This is because there is a high chance that it would be hard for workers to identify the times when there is resistance. Incidences of pas­sive resistance may also cause disruption. This may not be evident for a long time; thus resulting in irrecoverable delays in the implementation of different functions. The process of innovation is costly because redirection of corporate policies may result in delays which increase the costs (Klijn and Welko 2010). Innovation also calls for market leaders in organisations to prepare for unanticipated moves that may be staged by market place changes or even business rivals. Transparency Transparent organisations tend to be able to realise innovations more easily because the transparency ascertains that development efforts and priorities are aligned with the organisation’s strategic priorities (Lines 2004). Transparency also facilitates information exchange between different corporate functions which is something that is vital to revolutionary processes such as innovation. Transparency also ensures that an organisation’s performance remains perceptible to the senior management; thus making it possible for executives to make a connection between an organisation’s performance and its objectives (Zott and Amit 2008). Accountability Accountability is one of the most important factors for any organisation that wishes to conduct innovations (Morrison 2011). The lack of accountability during processes that are meant to implement innovations may manifest in processes such as poor product launches. Poor accountability can also challenge the workers’ confidence in the many functional operations that are necessary to create new goods or service. Opportunities and Threats related to Innovation There are different opportunities and threats that companies face in trying to implement different kinds of innovations (Mullins 2010). Some of the opportunities include the ability to adjust to new and more efficient business environments and the prospect of sustaining continued development. Implementing innovations also allows for organisations to be able to reach new markets with their products or services (Needle 2010). They may even be able to generate new markets. Innovations can help an organisation to be able to acquire the necessary resources that are of the best quality. Organisations that implement innovations may also be able to distribute such assets in an efficient manner. Opportunities for companies that implement innovations also come when their business rivals do not implement innovations as fast. This is a weakness that can be an opportunity for growth (Palmer and Hartley 2012). The company that has implemented innovations can attack a business rival’s weakened position by launching efforts in an uncontested area. It can also make the most of its position as a dominant organisation by entering into collaborations with other organisations in which it becomes the dominant partner. Weaknesses There are definite risks that are involved in the process of innovation. These risks may be commercial, operational, or even economic. Innovation-related weaknesses are identified through losses, failures, defeats, and the inability to take advantage of a dynamic situation by implementing rapid changes (Schweizer 2005). The weaknesses may be the result of poor managerial abilities, technological backwardness, insufficient quality of corporate operations, the dearth of resources, and slow deliveries. Organisations that are interested in implementing innovations could also be faced with risks due to the existence of external threats. For instance, the inclusion of technological developments may render the company’s offerings as being obsolete. In addition, there may be market changes that are experienced in the course of innovation and which result from changes that are observed in consumer needs, demographic shifts, and the moves of business rivals (Sloman and Jones 2011). Weaknesses experienced may also result from a change in the political situation in which the taxation structure is altered without prior warning Case Studies of Successful and Unsuccessful Innovation Successful Innovation- (Ford -Car Manufacturer) There are past cases in which organisations implemented innovations in order to improve their financial and business prospects. When there was a global economic crisis less than five years ago, the automobile industry was at a crossroad. There were many scholarly advocates who had a lot of experience in market-driven economics felt that corporations such as ‘Ford’ ought to be allowed to go into dysfunction without much interference (Worthingon and Britton 2009). Other scholars felt that national governments should have made it possible for resources to be re-allocated to the service industry. Ford, like the other American giant car-maker, Chrysler, had been in decline for some time. Car-makers in advanced economies such as America were faced with severe competition from car-makers in newly developed nations. They could face this challenge by constantly seeking to raise the bar by means of incremental innovations that were centred on the improvement of comfort levels, air dynamics, and ride responsiveness. The Ford Corporation, as well as other automobile corporations, implemented serious innovations by integrating improvements such as the inclusion of car-to-cloud offerings and developing the car chassis. The Ford Corporation would also include medium term improvements that would integrate office and home data thus making it easier for services to be able to use services in simpler ways (Yip 2004). Essentially, the Ford Corporation prospered because it incorporated innovations that dealt with mobility across the virtual and real worlds. The Ford Corporation also implemented innovations that basically allowed for the re-thinking of ownership, which is indicative of a paradigm of new wealth creation. Innovation managers at the Ford Corporation have changed the corporate culture to align with a growing ecosystem within the industry. Unsuccessful Innovation-Kodak In rare circumstances, an organisation will come up with startlingly practical concepts that are ahead of its time and thus prone to being rejected by customers. This is what would happen to the Kodak Company (Wiles 2012). The Kodak Corporation was formed by George Eastman in the 1880s. During the 1990s’, when Kodak was at its peak, it was considered to be the fourth most valuable corporate brand in the world, and had annual proceeds of $16 in 1996 (Wiles 2012). The company had tens of thousands of workers and even a campus with its own fire department and power plant. Even though the company still remains in existence today, it is a mere shadow of its former self when it was at the core of photography (Wiles 2012). The Kodak Corporation did not fade into a pale shadow of its former self because it failed to implement definite innovations. It was actually negatively affected by its implementation of aspects that were too advanced for its market. In the 1980s, there arose a demand for electronic photography implements. In 1987, there were film scanners and printers that were being created to transmit data via channels of telecommunication. However, the continued implementation of new technological discoveries in the coming years would cause clashes between Kodak’s employees and executives. While executives were not interested in transforming Kodak into a computer-using company, Kodak’s employees were eager to include the latest technological developments in their products and launching the company into the digital age (Wiles 2012). Kodak’s workers would end up creating products and launching them into the market under names that did not identify them as being in any way related to digital products. To their amazement, their products were considered as being too expensive by a consumer group that did not understand what to do with them. Basically, the market was just not ready for Kodak’s amazing products. Kodak’s executives were faced with the difficult choice of deciding to either cleave to the new-age products even with the prospect of vanishing profits, or remain with products that would grow less popular because they were becoming outdated (Wiles 2012). Even though Kodak still had considerable capital as well as patents, it now required a hit product to propel it back into a state of profitability. This would push it to engage in more desperate innovative strategies. However, Kodak had to deal with continued disruptions in the coming years as phones were included in the market for consumer cameras. Platforms such as ‘Instagram’ would effect serious damage on Kodak, and almost succeeded in completely annihilating it (Wiles 2012). Conclusion It is not unusual for business leaders to claim that the innovation of business processes is vital to the survival or organisations in this era of globalisation. However, the reality is that realising large-scale practices of innovation is still a confounding process for even experienced business men and women. Innovation remains to be a challenging task. Even at a time when the pace needed to stay competitive is only likely to keep increasing, realising the market value of good business ideas is still a hard task. It is better for organisations to first determine to create the groundwork for prospective innovation by tackling required operational adjustments to generate the right culture, and direct the company through the frequent periods of change. References Boddy, D. (2008) Management – an introduction, Financial Times Prentice Hall, Harlow. Brooks, I., Weatherston, J. & Wilkinson, G. (2011) The international business environment, Prentice Hall, Harlow. Campbell, D., Edgar, D. & Stonehouse, G. (2011) Business strategy: an introduction, Palgrave Macmillan, Basingstoke. Capon, C. (2009) Understanding the business environment, Prentice Hall, London. Johnson, G., Whittinggto, R. & Scholes, K. (2011) Exploring strategy, Financial Times Prentice Hall, Harlow. Kew, J. & Stredwick, J. 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