Managing Change and Innovation - Apple - Case Study Example

Managing Change and Innovation Within the modern highly competitive and dynamic business environment, organizations must innovate in order to be responsive to market needs (Muhammad et al., 2011). In doing so however, they are faced with the challenge of opting for an externally-driven or internally-driven innovative approach (Rahman & Ramos, 2012). In the externally-driven approach, it is believed that a firm is able to and should ideally apply both external and internal ideas in trying to advance technologically while the internally-driven approach recommends the use of only in-house talent and resources in the innovative process (Marques, 2014). Although the internally driven approach has its strengths of ensuring protection of corporate rights and profitability, an externally-driven approach is preferable as it considers the business within a globalized system and helps to optimize research. This paper discusses externally and internally driven approaches to innovation, arguing that the externally-driven perspective is more realistic. Internally-Driven Innovation Traditionally, organizations used to adopt internally-driven strategies for innovation. This was achieved through having research and development centers, departments or units that would help in exploring, developing, and commercializing their innovations. A good example of an internally-driven approach in the modern marketplace is Apple Inc. The company always chose the internally-driven innovation as its strategy. Development was guided by the simple philosophy that new ideas and innovations had to be generated from within the company, and user experience of its products was highly controlled (Ullrich & Vladova, 2016). Apple Inc. is one of the most closed organizational systems dealing in technology. It only shows off products after their official announcement and does not market itself in trade shows or even allow its workers to discuss its unannounced products. The company has, however, managed to produce groundbreaking innovations. For instance, the iPod transformed how people listen to music. Its original iMac also helped to redefine computerization through having an all-in-one PC. The iPhone is on its part a major transformative feature in smart-phone production. Going by this, one might, therefore, conclude that an internally-driven strategy could be a good idea (Johnson et al., 2012). The internally-driven approach provides the advantage of ensuring relevant focus. The tactic enables the firm to focus on employing the most gifted employees within its field. This is because there will be greater interest in ensuring that only the best people will be left with the responsibility of innovating. In addition, the strategy will allocate value for money on research and development. There is a greater likelihood of research being more profitable when focused on the particular organization’s needs throughout, as only the issues at hand will be addressed. Profits will, therefore, be controlled through the effective control of every innovation effort, and this will give motivation for ensuring that only the best research is conducted (Ullrich & Vladova, 2016). The strength of the approach when looked at from Apple’s perspective is that every idea will end up being fully protected by the firm’s licenses and patents. It is therefore able to fully exploit them for financial benefit. The internally driven system has the advantage of enabling the company to have more control and therefore optimize every element of the innovative process. This will ensure better overall performance as more capabilities and data sources will be committed. In such a system, everything is oriented towards a shared goal and consequently if well managed it will be possible to create a system that will be powerful enough and appears to be an industry standard as is exemplified by Apple Inc. However, the approach has its challenges. For instance, it implies a greater spending on research and development processes. There is also a failure to guarantee success because everything will depend on the findings of the venture that the unit engages in. Apart from this, there is the outdated promotion of inward thinking, so that innovation ends up simply being defined by what employees already know, rather than the exact needs of the wider marketplace (Beckford, 2012). A major disadvantage of the internal innovation strategy is that it requires a lot of investment and development. This is because the firm will be responsible for all creation and maintenance of the system’s components, even while there may be companies elsewhere that are very competent and specialized in what is being pursued. In addition, such a strategy might in many instances be difficult to justify to customers. This is because a large number of present-day customers like the thought of specialization in component development. They tend to prefer being given the option of seeking different parts from different sellers. Additionally, the number of people that are changed with the responsibility of developing ideas within the framework is limited. As a result, approaches may be limited, and there is even the possibility of an error being made and no one realizing its actual source (Ullrich & Vladova, 2016). The Externally-Driven Approach To counter the shortcomings of the internally-driven approach, an externally-driven perspective may be adopted. In this, there will be the application of purposive outflow and inflow of information to ensure faster internal innovation. The innovation process is considered to be inevitably a collaborative one and brings together both internal employees and their external counterparts. In the perspective, internal ideas aimed at improving the organization's competitiveness are given input from external partners. For instance, the input of students, consultants or even scientific laboratories will be instrumental. Being a common practice especially in a fast-globalizing business climate, it is based on the belief that a valuable idea is capable if originating from either within or outside the firm (Herzog, 2011). A perfect example of an externally-driven innovative organization is General Mills. The application of externally -driven innovation is in this firm is done through for instance organizing and advertising innovation challenges either to a certain group or the public in general. Interested outsiders will then come up with solutions and submit them to the advertiser, after which they will be reviewed and the best implemented. This program is packaged in what is referred to as the General Mills Worldwide Innovation Network (G-WIN). This has evidently enabled the leveraging of many advantages that small, applying companies usually utilize in their marketing efforts. Through the making of a product and enabling outsiders the chance to market it, the company has been able to fully exploit its potential within the market (Huff et al., 2013). Strengths of the Externally-driven Approach From the organizational point of view, an externally-driven process helps in ensuring the diversification of research and development efforts. This is because it ensures that management is always seeking new information and better ways of doing things. This is likely to make market entry much easier and also ease resource acquisition in general due to competitive advantage. It is relatively inexpensive because at a relatively low cost, it makes it possible to generate a variety of ideas into a pool from which management can make a choice. At the same time, it broadens the overall scope of thinking of the organization. This is because it enables exploration of a more diverse range of expertise, and therefore easily go beyond the typical, conventional approaches that are likely to be predominant in an internal environment. In this way, it may easily get more creative suggestions for dealing with day to day challenges (Beckford, 2012). An externally driven process promotes knowledge development. It not only ensures the broadening of the sources of ideas for implementation, but also leads to technological synergy and improvement of the organization’s internal capacity for learning by ensuring transfer of new learning routines and knowledge from the external sources. The approach helps to develop a more outward-looking culture in the organization, which is useful in enabling access to more access to opportunities that will eventually facilitate breakthroughs if well handled. It will generally tend to facilitate organizational development in this way because it ends up speeding up the marketing processes for new ideas, cuts down the risk associated with innovation and provides the organization with a chance to get to know exactly what the community wants. It further gathers the best ideas that would not have otherwise been accessed in-house, and in the process, enables management to exploit research and development opportunities that may not require its direct intervention, but has been done by other people (Rahman & Ramos, 2012). The approach can benefit the organization through establishing the value of its intellectual property as a strategic asset, while also ensuring that value uncertainty is taken care of and that other people’s rights are not infringed on (Herzog, 2011). In addition to this, it will enable a faster innovation rate. This is because when the innovative ecosystem has several people, any problem is solved through a joint effort. As a result, there is a shorter time-span in the development and marketing processes, as a result of which maintenance and support costs of any such venture will be lowered. The firm will not have to be responsible for development of every component of the solution being developed. In an externally-driven process, the organization is able to fully use knowledge possessed by people who may at that time be employed elsewhere and therefore incapable of offering their services to it. It also provides a choice for management to decide on which research is best; that from outside or that from within. It is able to find out which idea works best, whether from outside or within, and will facilitate the profitability of innovative processes through establishing contracts with other people who may be interested in using the innovations and vice versa (Marques, 2014). Productivity is higher in an externally-driven innovative environment. The internal staff can sometimes get an opportunity to concentrate more on what they have come up with in-house. With outsiders also playing a role, pressure will be less on internal staff to come up with more, and in this way bottle-necks to innovation will be reduced. It further makes the institution able to leverage its R&D on other parties’ budgets, for instance through buying off the new idea or paying for its licensing. Externally-driven innovation is a good way of identifying opportunities that may be in the market whole cutting down the time, cost and risk that usually comes with developing intellectual property in-house. In addition, it enables the firm to get more new technologies and ideas, and some of these may end up enabling breakthroughs when applied in development of new and more innovative products (Rahman & Ramos, 2012). Weaknesses of the Externally-driven Approach Externally-driven innovation however has its weaknesses. One of the flaws is that by the nature of its practice, it will tend to have less human interaction. This is because the process is in most cases technocratically managed and technology-based. It is also not suited for all personality types. The need to reach out to customers especially in a service sector such as healthcare makes employee satisfaction significant. Although it may be more favorable to deep thinkers such as inventors and scientists, it is not likely to be as inspiring to more creative individuals such as architects and designers. This is because unlike the former, the latter tend to be more human-centered, outgoing and interpersonal. It may further not suit a customer- centric strategy. In order to remain competitive, organizations are always under pressure to focus on quality and customer satisfaction as their main ideals. However, externally driven innovation is generally technocratic and system driven, so that it not work well when the general objective is human centered (Beckford, 2012). For example, it might not be the best for health care service provision where there is always the need for empathy with patients or where there is even greater need to identify the unsatisfied or even unknown needs of the market. The implementation process in an externally driven intervention is likely to be more complex. This is because internal resources, for instance, the staff has to be utilized, yet they may not necessarily be in agreement with the externally suggested solutions. It will also enable other participants within the innovative ecosystem to bring in competition for parts of the outcome hence expose the initiator to the risk of other people taking away more value than what he was ready to give away. In such an approach, design trade-offs, for instance have to be made, hence there is sacrifice of one’s performance for the sake of flexibility (Huff et al., 2013). The Suitability of the Externally-Driven Approach There are many influences that act upon an organization externally, and considering them will help in optimizing innovation. A major external factors that may drive the change process, is globalization. The phenomenon has led to the opening up of new markets and with the wide variety of choice and information available, customer demand is dynamic, hence the need for the organization to adapt so as to satisfy their client’s needs. Technological innovations are also a significant factor. With the onset of the information age, every organization has to embrace technologies, especially through automation and computerization, if they are to be competitive against other players within their industries. The same technological developments have enabled customers to make comparisons, for instance through online platforms. Institutional constraints are a considerable factor driving innovation from outside. The organization at all times has to deal with governance and socio-cultural institutions. For instance, it has to ensure that it is legally compliant and works according to set regulations. Any changes arising in these factors will mean that the organization might have to innovate. Competitors are a major factor driving innovation externally. It is apparent that globalization has instigated extreme competition, consequently, organizations have to change their tactics, particularly through observing and reacting to rivals. This will inevitably lead to innovation. Educational growth is a major external factor driving innovation, as the information age has resulted in more expertise being available through young, dynamic and adventurous professionals (Dahlander & Gann, 2010). Consideration of the powerful external factors will guide an organization towards an externally -driven innovation as the best response. This is because with a rather small investment of resources, the firm is able to marshal a great combination of ideas, and turn them into a profitable or competitive resource. The organization might however need to identify what it needs to outsource and what it should do internally. This is because there is no real obligation for any company to be open about the information they possess. Although an externally-driven approach seems highly appropriate, it will be necessary for the organization to consider a number of issues. These include acknowledging the importance of developing corporate cultures that emphasize quality and creativity, engagement in research so as to know what is going on outside and placing even greater value on its employees. Conclusion The external and internal-driven approaches to innovation have their respective strengths and weaknesses. However, the internally-driven approach is seemingly not the best, mainly because of the interactive nature of organizations and the aspect of labor within a globalized world. Considering the issues raised in each of the different perspectives, an externally-driven approach remains the best to pursue. However, an organization might need to consider a hybrid approach in some instances, so that management examines the functionality from which it can generate enough value that justifies taking an internal driven approach and where maximum benefit can be derived from adopting the external approach. Overall however, externally driven innovation will apply all available information in the development of an innovation pipeline that will not only improve the product, but also managerial effectiveness. References Beckford, J. (2012). Quality: A Critical Introduction. New York: Routledge, 2012 Dahlander, L., & Gann, D. (2010). How open is innovation? Research policy, 39(6), 699-709 Herzog, P. (2011). Open and closed Innovation: different cultures for different strategies. Wiesbaden: Gabler Huff, A, Moslein, K and Reichwald, R. (2013). Leading Open Innovation. Boston: MIT Press Johnson, K., Li, Y., Phan, H., Singer, J and Trinh, H. (2012). The Innovative Success that is Apple, Inc. Marques, J. (2014). Closed versus open innovation: evolution or combination?. International Journal of Business and Management, 9(3), 196 Muhammad, A., Faheem, M., Dost, M and Abdullah, I. (2011). Globalization and its impacts on the world economic development. International Journal of Business and Social Science, 2(23) Rahman, H and Ramos, I. (2012). SMEs and open innovation: global cases and initiatives. Hershey: Business Science Reference Ullrich, A and Vladova, G. (2016). Weighing the pros and cons of engaging in Open Innovation. Technology Innovation Management Review, 6(4) Read More