Ways in Which Innovation Impacts on an Organisation - Literature review Example

Ways in which Innovation Impacts on an Organisation Innovation involves new ways of doing things in the organisation to improve the organisation operation in order to edge over competitors in the market. Diffusion of innovation theory explains why innovation is essential by revealing how a product gains momentum by spreading through a social system or a specific population. When diffusion takes place, people and organisations adopt a social system where they adopt new behaviour, idea or a product. Organisations use innovations as part of strategy for growth where innovation forms an important part of the strategic plan in the organisation. Innovation also acts as either an opportunity or a threat to the organisation and every organisation should evaluate and analyse the effects of innovation to determine whether it serves as an opportunity or threat to the organisation. The paper will seek to analyse the impact of innovation in the organisation and outline how innovation is linked to the strategy and whether innovation is an opportunity or a threat to the organisation. Innovation theory Innovation theory encompasses such subjects like diffusion of innovation. Diffusion of innovation entails the communication that explains the as time goes, an idea or gains from product leads to momentum and spreads through a specific social system or population. People and organisations adopt new ideas as well as new product gains. The new ideas and behaviours are adopted by the people and organisations in order to improve the standards and quality of products. Different organisations adopt innovations that are compatible with the organisations operation, goals and strategies (Siegel, 2002).  Through diffusion innovation, innovation takes a process to be diffused on the minds of people since there people who are more interested in innovative ideas than others. People who have a huge interest in innovation are likely to adopt the new ideas faster that other categories of people. The five adopter categories involve five groups of population that adopt the innovation or new ideas at different times. Innovators are the first group in the hierarchy, followed by early adopters and early majority. Innovators want to try things first and they are interested in new ideas where they can take risks to develop a new idea or a product in the market. The early adopters and majority are also quick to adopt new ideas and innovations and thus considered as opinion shapers and leaders in the society. Late majority and the laggards are the last groups in the hierarchy and they are the slowest groups who adopt a new product or idea. The laggards are considered as conservatives in the society and they oppose most of technological innovations due to their beliefs and value and they are sceptical to change (Scheler, 2012).  An innovation process can be said to be an intentional strategy and application of organisational ideas, products, and processes for the substantial benefit of the organisation or an individual. It requires the organisation to find more than a just a good idea but also engage with barriers that could be available to find the best idea that can change the value of the products and services offered by the company in line with its visions and goals. Innovation in an organisation undertakes a multilevel process. For an organisation to adopt an idea that has been put across by the members of the organisation there has to be a wide range of discussion and analysis of the idea by various parties before the idea is implemented. There are certain enabling factors that are said to be critical in innovation process. These is certain significant amount of research that leads to wide range of enablers on innovations but the most significant ones are three which include strategic enablers, operational enablers and the innovation process (Sussman, 2006).  Strategic Enablers Strategic enablers involve strategy and leadership functions to be applied in the right way. Strategy requires commitment within the organisational operations to ensure that innovation is undertaken as a core business strategy. The organisation needs to have a clear focus on the definition of innovation and practical parameters that can guide on the innovation process. Leadership on the other hand entails the fact that the organisation should understand the strategic focus and the fact that it should be embraced by the senior leadership of the organisation through appropriate risk taking, role modelling, idea sponsorship within the organisation (Poole, 2000).  Operational Enablers In any organisation, innovation has to be driven through various factors like resources, culture and methods. By merely having a strategy on paper is not enough but various methods of applying it need to be drafted to ensure that the organisation adopt the strategy. An organisation should set up the right systems and methods where communication mechanisms, performance indicators on innovation, viability on the commercial and financial variable, and the compatibility of the system in the operations of the organisation are outlined. The organisation should also ensure that the resources available are suitable for promoting innovation in the organisation. Inputs in any process are essential to support the innovation to ensure that the organisation can achieve its targets (Wangenheim, 2013). Culture is also important in the innovation process. This involves the environment that guides the behaviour of doing things in a certain way within the organisation. Values, assumptions and beliefs in an organisation can be focused on strategic process of innovation which forms an environment for innovation and creativity in the organisation (Graf, 2006).  Innovation Process Innovation process in the organisation involves various stages that are essential in ensuring innovative strategies. Innovation process involves three stages which include idea generation, idea screening and idea implementation. Idea generation- innovation builds and enhances effective team processes and dynamics. Teams engage in a process of creative thinking where brainstorming take place. Different members of the team engage and contribute different and diverse ideas that are essential in the strategy of the organisation. The ideas are focused on the problem that faces the organisation and the need to innovate (Lerner, 2012).  Idea screening- this process involves sorting and selecting few ideas from the various ideas that have been provided by the members. The process involves the convergence of different ideas that have been provided by the members to create effective, efficient and also practical ideas from them. The process should ensure that only the most significant or best ideas are selected for practical application or further development. The team mandated on the decision making process should be careful with the process to ensure that the right ideas are selected for development (Huizenga, 2004).  Idea implementation- this is the final enabler and it involves translation and implementation of ideas into action plans. This process requires the manager to consult the team that is involved in idea screening for the best idea selected. The team also requires more than cooperation and resources outside theirs to ensure that the ideas realised are the best to transform the company through innovations. The key to influence and impress the stakeholders in the organisation is through key implementation of an idea. It is also important to note that the ideas should be connected with the proper channels of approval and support for idea implementation (Bason, 2010).  The Link between Strategy and Innovation Strategic innovation involves creation of growth strategies, new services and business models as well as new categories of products. Strategic innovation is meant to change the systems and operations within the business in order to generate value for consumers and the corporation. Strategic innovation is a holistic program applied by the organisations to ensure that there is a tangible difference and change in value of products delivered to customers, corporation and the partners. The strategic innovation framework basically involves seven steps and they involve dimensions that are aimed at creating a portfolio of outcomes that would drive change in the organisation. These dimensions include a managed innovation process, strategic alignment, industry foresight, consumer/customer insight, critical technologies and competences, organisational readiness and disciplined implementation (Abbing, 2010).  A managed innovation process entails combination of traditional and non-traditional approaches to business strategy and thus creating a core approach. Through facilitation of interplay between the organisations internal capabilities and practices, while looking beyond the obvious, it is possible for the organisation to inspire and motivate the corporate imagination to explore various arrays of new possibilities. The process is structured to create and manage strategic alignment which is tool used to build support among the shareholders to galvanise an organisation where visions, actions and goals are shared. Industry foresight involves understanding the emerging and future trends min the market. It ensures a top-down perspective seeking to comprehend the complex forces that drive change that includes the converging and emerging trends, competitive dynamics, new technologies, alternative scenarios and potential dislocations. Consumer/customer insight this involves the bottom-up perspective where it provides the understanding of the articulated and unarticulated needs of the potential customers in the market. Critical technologies and competences involves the capabilities of the, organisation where assets and competences can be leveraged to deliver quality value for the customer including intellectual property, technologies, strategic relationships and brand equity. Organisation readiness involves such things like the ability of the organisation to take and implement actions and also act on new strategies and ideas for successful management of political, operational financial and cultural demands that are likely to follow. The last step of the process involves the implementation of the idea and the new strategy within the organisation. The organisation should first evaluate its processes and determine whether it is in a position to hold or implement the idea (Lager, 2010).  An organisation is considered to be innovative and strategic when it starts to institutionalise and develop cultural perspective as well as supporting processes that enhance sustainable innovation. This gives the company an edge and a platform against the competitors in the market. Innovation therefore should be linked with the strategy of the organisation to ensure that proper achievements are being made in such an organisation (Gaynor, 2002).  Impact of Innovation in the Organisation It the context of organisation, innovation can be linked to benefits in areas such as efficiency, quality, productivity, market share and competitiveness. A study conducted on organisation performance indicated that lack of innovation, lack of motivation, inadequate learning culture and lack of time and resources resulted to negative impact on organisation performance and such organisations revealed declining trends in growth. Innovation mostly applies in organisations that have positive attitude towards growth and performance and those that develop positive working environment to ensure growth. In fact, managers who embrace innovations in their organisations are focused on positive perspectives where they create an environment for motivation, job redesign, increased responsibility, organisation restructure and adequate investment in human resources. In such perspective the organisation experiences a positive growth and outstanding performance in different areas of application (Henderson, 2013).  An example of how innovation impacts on the organisation can be linked to the City of Baltimore when it was implementing the CitiStat system for tracking and measuring performance of crime trends due to porthole condition. The city was able to save $13.2 million and made procedures and policies that enhanced efficiency and accountability. The CitiStat system enhanced performance measurement forms and also transformed the stakeholders’ view on role of the organisation which led to improvements on the organisational culture (Kumar, 2013). This reveals that innovations improve efficiency, productivity and growth in the organisation. There are other benefits such as increased investments and effectiveness in utilisation of resources in the organisation (Kuehn, 2008).  Innovation as an Opportunity in the Organisation Innovation in an organisation serves as an opportunity where an organisation can outperform its competitors or improve its market share growth through added value to the consumer products and performance improvement. Innovation enhances and boosts the potential of the company in its area of performance thus leading to the fact that opportunities are created by innovations. For instance, in 1980s, the European Commission was involved in a process of pursing an aggressive policy to support the mobile communications and broadband sectors. Though the episode was not documented in online mediums, the engagement has been described to be the most effective and biggest achievement in the European industrial policy and it has led to the fact that Europe is dominating in the mobile communications industry (Jolly, 2003).  The US and Japan were involved in information technology but Europe engaged in information communications and technologies which accelerated the urge to pursue the mobile communications and the information communications technologies policies together. Today, Europe dominates in both fields. Europe is a leader in both areas and this explains how innovations create opportunities for growth in future. The policies were based on innovations and other regions were reluctant to learn about the innovative strategies and their impacts in the future of technological world. The US has tried to catch up with the technological innovations especially on the mobile communication areas where they have been bearing huge competition from the market leaders in Europe (Grandori, 2013).  Innovation as a Threat in the Organisation Innovation besides serving as an opportunity for organisation to grow also serves as a threat for organisation. There are organisations where application of innovation is determined by the market or the industrial players. In such places, the organisation is involved in a process where the innovation strategies applied leads to threat or negative impacts in the organisation, customers or the environment (Terziovski, 2007). For instance in fast moving consumer goods, organisations are advised to apply food additives so that the products may move fast in the market due to the competition. When an organisation applies such a strategy, its strategy is limited on time since the medical practitioners also advise the consumers not to take foods with additives for health purpose. This innovation is threatening for the company because in future, other companies may come up with food products with good quality and no additives. Such a move will result to loss in companies that have innovated in additives (Cobbenhagen, 2000).  Another industry that reveals how innovations can result to threat in an organisation is that of mobility. Innovations in such areas such as location-based services have led to a negative innovation culture. The location-based services involve taking the products closer to the customer. However, such an innovation is a threat to the ICT revolution and it can either wipe out the ICT services or be wiped out also. Investment in any of these innovation sectors attracts uncertainty that the business might thrive or flop in future. In such scenarios innovation serves as a threat for the business (Grant, 2010).  In conclusion, the process of innovation in the organisation today is very critical as it encompasses various and strategic areas of value addition to attract more customers to either gain a better market share or to overcome competition. Innovation involves various processes and activities which are critical in ensuring that organisational goals and strategies are achieved. There are many benefits of innovation in the organisation although innovation can be a threat for the organisation. References Abbing, E.R. (2010). Brand-driven Innovation: strategies for development and design. Lausanne, Switzerland, AVA Academia.FRENKEN, K. (2006). Innovation, evolution and complexity theory. Cheltenham [u.a.], Elgar. Bason, C. (2010). Leading public sector innovation: co-creating for a better society. Bristol, UK, Policy Press. Cobbenhagen, J. 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