Innovation and knowledge management - Essay Example

Introduction When it comes to the current competitive situations of organisations, innovation has been granted high regard by firms as it has been significantly associated with improved growth and performance through developments in quality, productivity, effectiveness and market shares. Often, the terms “innovation” and “creativity” are interchangeably used; however, primary differences can be distinguished between the two. Creativity is an essential step for innovation to be successfully applied. In fact, the current definition of innovation has become equal to creativity plus effective implementation. In the creativity stage, useful ideas are generated while the innovation process involves the course of action and the actual development of these ideas to reality. To simply put it, the innovation first starts with a particular need which brings forth a creative idea. Amabile et al (1996) suggest that all innovations start with the formation of a creative idea. Innovation is therefore defined as a successful and effective achievement of creative ideas that are brought up in an organisation. In terms of implementing a physical product or object, product design and development is extremely necessary. As in this stage, concept development as well as the testing and manufacturing of the product or object is undergone. When an organisation has conceptualized and evaluated their ideas, through product design and development they are able to make them concrete and tangible using a systematic method. At present, this evolving process has been allowed and facilitated by digital tools and equipment which enable organisations to envision, convey and evaluate their creative ideas in ways that may have entailed great human power in the past decades. To come up with significant ideas that can deal with the present situation and effectively create a future, managed knowledge is necessary. Knowledge management makes use of practices and strategies that are applied in an organisation to recognize, adopt and give rise to perceptions as well as experiences. These perceptions and experiences are generally comprised of knowledge that is either represented in an individual or set in the processes and practices of organisations. Knowledge management efforts mainly focus on the organisation’s objectives such as gaining competitive advantages, improving overall performance, exchanging of lessons learned, and developing innovation. Knowledge management is primarily focused on facilitating knowledge as a “strategic asset” and encouraging the exchange and sharing of knowledge (McAdam & McCreedy 2000; Thompson &Walsham 2004). Through initiatives subsumed under knowledge management, individuals and groups within an organisation are encouraged to share remarkable insights so they can adapt and adjust to rapidly changing markets and business environments. However, while innovation can normally add value to any product or service, it might also negatively affect the organisation as old practices and procedures are cleared away and replaced by new developments. Furthermore, these organisations that do not effectively apply innovation can be wiped out by those who use innovation properly and successfully. Therefore, innovation generally involves risk. A popular product that has undergone those risks that are necessary for innovation is the iPod, manufactured by Apple. Known as one of the finest and most superior inventions of this century, the iPod is a small and portable mp3 player that contains a hard disk inside which allows the player to fit thousands of high quality songs depending on the size of the hard disk. Because of its small size, the iPod has allowed its users to enjoy entertainment as well as convenience with just the touch of a hand. It has been considered as an innovative product because of the all the effective developments and changes the product has undergone in just 9 years. When it came out in 2001, the iPod was primarily used as a music player to replace the bulky CD players that came out in the nineties. However, as the years passed, extensive features and characteristics were additionally implemented in the iPod itself as it allowed users to enjoy not just music but photos, videos and movies as well, still retaining its portable size. Innovation To follow the definition of Schumpeter (1994), innovation pertain to ideas that are successfully applied in practice. The primary goal of innovation is to implement a positive change, to make something better, and when innovation improves productivity, it will become the main source of an organisation’s high sales and earnings. Furthermore, when discussing innovation, a number of economists place their emphasis on the whole process itself, from the creation of ideas to their transformation and development into that can actually be used, as well as the system that has been used to spur the innovation and its growth. Innovation literature over the past years has been focused on descriptions classification of types but is generally focused on technology. A large deal of research has placed emphasis on the actual process of innovation or the ways on how to innovate. Innovation can be applied from several sources. In a linear model of innovation, the company innovates to be able to sell the innovation, which is also known as a manufacturer innovation. An end-user innovation, on the other hand, a company creates and develops innovation that can be used for their personal use owing to existing products that are not able to satisfy them (Von Hippel 2005). Furthermore, it was stated by Engelberger (2000) as a paraphrase of the US Dod Program’s conclusion in 1967 that innovations must be comprised of three things- an identified need, capable people who can use relevant technology, and adequate financial support. Innovation in organisations can be achieved using a number of approaches which has been given much attention over the years using research and development. In his study, Thomke (2003) made an outline of six principles that companies should follow in unlocking their potential for innovation. These include the anticipation of early information, frequent experimentation, incorporation of new technology, frequent failures at an early stage but avoid mistakes all throughout, and project management. Once innovation has been implemented, it may slowly grow as the new product or service establishes itself. However, at some point, the demand of customers will grow and the product growth will increase as well. The new innovation or change is responsible for the continued growth of a product. Figure 1: S-curve or Diffusion Curve by Rogers (1962) In this chart by Rogers (1962), the S-curve is derived from the idea that it is possible for new products to possess “product life” such as a start-up stage, an immediate increase or a final decline. Innovative companies often work on new innovations which will eventually take over and replace the older ones. A succession of s-curves will be develop to replace the previous ones and will continue to cause the growth to move upwards. In this figure, the first curve represents the current technology; the second curve, on the other hand, represents the emerging technology that has a lower growth at present but, sooner or later, will overtake and leave behind the current technology and will lead to a higher level of growth. the length of a product or good’s life certainly depends on specific factors. As what Davila et al (2006) state, companies cannot achieve growth through the mere reduction of costs or reengineering; instead, innovation should be put forward to provide companies with competitive growth and lead to positive results. In the case of the iPod, this product primarily started as a music player that has the basic function of playing hundreds or even thousands of good quality songs. When the product came out in 2001, sales rocketed up for Apple as the public widely accepted the iPod as a source of entertainment as well as convenience. But as the years passed by and the iPod became very popular worldwide, Apple applied new technological advances and innovations to the product as the first iPod was transformed into other products such as the iPod Nano and the iPod shuffle, each having their own special features and characteristics. From music players, the manufacturers of iPod enabled their product to play and store photos and snapshots, and eventually videos and movies. With these new added features, a large percentage of the public became more interested in iPods than any other player as the portable object can hold various sources of entertainment, from music to videos to movies (Kahney 2007). Creativity Creativity is an essential key in any type of innovation as it supports the generation of original ideas and overpowers the challenges that may arise in bringing these ideas to reality. Smith (2006) has summarized her views on how creativity is established. First is grace wherein creativity comes through a divine inspiration, something that naturally comes to an individual which is out of his or her control. Companies who believe in this view can only improve their creativity when the look for employees who are bestowed with divine inspiration. Second is association wherein creativity occurs when certain procedures are applied such as brainstorming and imaginative thinking. Smith (2006) has pointed out that individuals often miss big opportunities and that proper training should be provided for the employees of a company to improve their level of creativity. Next is the cognitive belief that there is nothing special in creativity just that it depends on a normal process that relates to a large deal of thought such reasoning and comprehension. Furthermore, hard work as well as productivity is highly emphasized here. Gurteen (1998) also asserts that at least ten years of preparation is necessary for one to be able to pull off a creative act. Companies often have a high regard for this cognitive view as it enables people to work harder, therefore leading to more creative solutions. However, Amabile et al (1996) suggest that despite the fact that challenges may lead to creativity, too much demand can lead to the opposite effects of productivity. This cognitive approach can effectively work only when the problem or the need has been identified and the solution is the only thing that is lacking. Finally, the personality or “skill” view is seen as a natural human ability wherein creativity is seen as a natural talent and removes mental obstructions as spontaneity and naturalness is allowed to flourish. To simply put it using this view, creativity is something with which we are naturally born with. It is important to leave behind quality time particularly for individuals to learn creative thinking techniques. The first step for this is to satisfy significant criteria to adjust to the cultural situation, or to give a “status” to the effort such as identifying the resources that you can use on this subject. When companies work apply creativity, recognizing and rewarding their employees who effectively implement creative thinking techniques will strengthen the significance of creative thinking. Trott (2005) states that creative thinking can be stimulated through a number of techniques including lateral thinking that looks for irrational problem solutions in order to come up with a wide range of alternatives, the metaphoric thinking which generates ideas by creating a link between the problem and an unrelated matter, the positive thinking technique that allows the negative to be viewed in different perspectives and transform it into something positive and finally, the capturing and interpreting of dreams which triggers an individual’s subconscious to generate new and creative ideas. These creative thinking techniques can provide companies with process that can be a systematically solve their problems as well as provide new opportunities (Trott 2005). For instance, lateral thinking can be used in all situations so creativity can help in the development of the innovation process. On the other hand, Roffe (1999) has drawn out the most concise conclusion on the creative process and he stated that the entire creative process must retain a balance between imagination and careful analysis. The creative idea behind the iPod was to take a music player, build an online store to complement it, and then establish a company around it. Tony Faddell, the man behind the whole idea, had taken several years before giving out his suggestion, similar to the idea of Gurteen (1998) that it should take a number of years before being able to pull off a creative act. Faddell also admitted that he was familiar with a number of reference designs that were fit for mp3 players including a player that took on the small size of a cigarette packet. Applying Smith’s (2006) cognitive belief, most of his time was focused on how he could shop his idea around until every company turned him down except for Apple and once he was hired, his main emphasis was to come up with the software and hardware system for the music player. Product Design and Development In relation to innovation, the product’s design and development is normally considered to be the process in which creative ideas are transformed into a concrete and tangible outcome. Furthermore, design focuses on exploring and experimenting. Kotler and Rath (1984) believe that product design is extremely necessary for an organisation to maintain its competitive advantage owing to the fact that design can provide enhancements for a product, organisational environment and communication as well as identity or the brand name of the organisation. However, it has been a main concern over the years if design can actually make an impact of a product’s success and whether the performance of a company can be significantly affected by the attitude of the management towards it (Hart and Service 1988). Moreover, Dumas and Mintzberg (1991) strongly believed that product design management is correlated with organisational learning, that the organisation can only come up with a strategic design when its employees have attained full understanding and evaluation of their team’s objectives and priorities. Furthermore, as an organisation that comes up with new products and services, they must be willing and capable of implementing changes and innovation, they should be open to all ideas and suggestions and that they should be completely aware of the rapidly changing environment around them. Figure 2: Model of Product Design Management by Gomez, Vidal, Alcami (2004) Applying Kothler and Rath’s (1984) suggestion, the manufacturer of iPod was provided an industrial team that consisted of programmers, designers, and hardware engineers to improve the product’s design. Additional reference designs were applied such as a music format, a book format as well as an equalizer. When the iPod was further developed and finally released, the international market was threatened as the public widely accepted the introduction of the latest music player. When the company realized that they had to keep up with the demands of their consumers, innovations were implemented from time to time, adding new features and characteristics in the iPod such as new interfaces and new capabilities to store photos, videos and movies. To follow the suggestions of Hart and Service (1988) that management will affect innovation, the managing staff of iPod including Apple CEO himself Steve Jobs was very committed in the tasks that were involved in the development of the iPod. Every day, he provided his ideas and shared suggestions of how the music player can be improved, therefore motivating his entire workforce. The success of the iPod can be partly attributed to the efforts and actions of both individuals as well as teams within the organisation. Knowledge Management Knowledge management is known to be a set of principles and strategies used by organisations to identify and adopt the experiences that may be necessary in an innovation process. A large number of companies and organisations have resources that are primarily set aside for their efforts on knowledge management to be used as part of their human resource management or business strategy (Addicott, McGivern and Ferlie 2006). When practicing knowledge management, organisations typically focus on their goals and objectives, and how their shared lessons and experiences can help them gain an advantage over their competitors and support an innovation process. Spender and Scherer (2007) assert that a large number of recent research has suggested that there are three main perspectives in the theory of knowledge management- first is techno-centric that focuses on technology particularly those that can improve creation and sharing of knowledge, second is the organisational perspective which focuses on the design of the organisation itself so the sharing of knowledge can be facilitated well, and lastly is the ecological perspective which primarily focuses on the communication and interaction of people, their identity and how they share their knowledge among themselves. Using Spender and Scherer’s (2007) first perspective on their theory on knowledge management, Apple was able to use the techno-centric perspective that made use of technologies that improved and significantly supported the development of the iPod. Apple is known for its technological services from its operating systems to its digital tools to its up-to-date products. Through the use of these tools, knowledge was further expanded and shared to come up with the best system and features for the iPod. Conclusion In a rapidly changing competitive market, organisations are driven to create changes and implement innovations not just within their workforce but most importantly in their products and services. Innovation has been associated with the overall growth and enhanced performance of organisations through the improvements in their effectiveness, productivity, competitive advantage and most importantly, the quality of their goods. Generally, the innovation starts with creativity, or the formation of new and creative ideas. Organisations start to attain innovation when it is successfully implemented and transformed into a particular object or service. To simply put it, creativity is considered as the starting point for innovation, while innovation is the effective implementation of these creative ideas in an organisation. When creativity has been applied, the product design and development is now necessary for teams to come up with the important innovations or changes that are essential to the success of a product or service. Furthermore, organisations must understand the function of knowledge management and how sharing of knowledge, insights and experiences can become a solution to the risks and challenges that may arise throughout the innovation process. More importantly, innovation should meet the goals and objectives of an organisation. However, failures can also be experienced in an innovation process which opens the vulnerability of organisations to harmful risks that may threaten their workforce and their goods. Failure is inevitable when implementing innovations and may result to loss of investments as well as the decrease of motivation in one’s employees, an increase in distrust or defiance to possible changes in the future; therefore the early identification of mistakes and failures is necessary. The iPod has been considered as one of the most innovative products of the century as it has taken a creative idea and applied the use of effective and modern product design into it to be able to come up with a successful product that has been embraced by its international consumers for almost a decade now. Ever since the iPod came out, it was evident in reports that sales and growth significantly increased for its company as they continue to build and apply changes and enhancements for the iPod to become valuable for the next years to come. References Addicott, R., McGivern, G. and Ferlie, E. 2006, Networks, Organisational Learning and Knowledge Management: NHS Cancer Networks, Public Money & Management, vol. 26, no. 2, pp. 87–94 Davila, T., Epstein, M. and Shelton, R. 2006, Making Innovation Work: How to Manage It, Measure It, and Profit from It, Upper Saddle River: Wharton School Publishing Dumas, A. and Mintzberg, H. 1991, Organisational learning and product design management, The Learning Organisation, vol. 10, no.3, pp. 167-184 Engelberger, R. 2000, Sectoral patterns of technological change in services, economics of innovation, Economics of Innovation and New Technology, vol. 9, no. 4, pp. 183–221 Gomez, R.,Vidal, J. & Alcami, R. 2004, A model of product design management in the Spanish ceramic sector, European Journal of Innovation Management, vol. 7, no.2, 150-161 Gurteen, D. 1998, Knowledge, Creativity and Innovation, Journal of Knowledge Management, vol. 2, no. 1, pp. 5-13 Hart, S. and Service, L. 1988, Cross-functional Integration in the New Product Introduction Process: An Application of Action Science in Services, Journal of Service Management, vol. 4, no. 3, pp. 50-66 Kahney, L 2007, Inside Look at the Birth of the iPod, Wired, 21st August, p. 1-2 Kotler, P. and Rath, A. 1984, Design: A powerful but neglected strategic tool, Journal of Business Strategy, vol. 5, no. 2, pp. 16-21 McAdam, R. & McCreedy, S. 2000, A Critique of Knowledge Management: Using A Social Constructionist Mode, New Technology, Work and Employment, vol. 15, no. 2 Roffe, I. 1999, Innovation and creativity in organisations, Implications for training and development, vol. 23, no. 4-5, pp. 224-241 Rogers, E. 1962, Diffusion of Innovations, Glencoe Free Press Schumpeter, J. 1934, the Theory of Economic Development, Harvard University Press, Cambridge MA Smith, D.2006, Exploring Innovation, McGraw Hill, London Spender, J. and Scherer, A. G., 2007, The Philosophical Foundations of Knowledge Management: Editors' Introduction, Organisation, vol. 14, no. 1, pp. 5–28 Thomke, S. 2003, Experimentation Matters: Unlocking the Potential of New Technologies for Innovation, Harvard Business School Press, Boston, MA Thompson, M. & Walsham, G. 2004, Placing Knowledge Management in Context, Journal of Management Studies, vol. 41, no. 5, pp. 725–747 Trott, P. 2005 Innovation Management and New Product Development 3rd ed, Prentice Hall, London Von Hippel, E. 2005, Democratizing Innovation, MIT Press Read More