Growth Through Inequity and Key Performance Indicators - Assignment Example

Growth and development of organizations depend on the ability to use and apply innovation strategies available. It helps companies move from being a national organization and reach the highest rank as a multinational organization with reputable outcomes. Therefore, it is important to assess how companies apply and use innovations strategies to reach greater heights from simple manufacturing organizations to large organizations that own great wealth through business activities. Reasons for 3m Being an Innovation Organization 3m (Minnesota Mining and Manufacturing Company) started as a small manufacturing organization in the region of Minnesota as early as 1902 (Cassingena & Georghiou 2005). It has been operating its business operations currently for over a hundred years. After the mineral mining proved to be unsuccessful, the company owners were forced to sit and rethink on the course to take. They decided to buy minerals that could enable them produce finished products, which greatly saved the company setting the base of the entrepreneurship spirit that has since been shaping the company. It is from this weak start that the company has developed tremendously into a multinational organization. Currently the organization produces and sells over 50, 000 different items for commercial use, industrial purposes or healthcare products. Most importantly, it sells its products in over two hundred countries around the world (Cassingena & Georghiou 2005). 3m has worked tirelessly to bring changes in its products while inventing and producing new versions of items. It is in this spirit that the organization has been able to identify consumer needs in the market and respond to them accordingly for example, the post-it® Note. The organization undergoes different stages to come up with an item on the market. It taps the original ideas, designs the product, manufacture it and deliver the finished product on the market. The 3m does not base on one particular style to generate its ideas. It uses manager’s method to tap ideas from people and its own employees (Chesbrough 2003). At the same time, remains proactive in encouraging all workers to come up with new ideal processes, which makes the organization active in developing new products on the market. The company produces goods with customer requirements in mind. This enables it to provide various solutions to customer needs around the globe. In developing the goods, it starts with focusing on customer requirements then make decisions on the products to manufacture (Cassingena & Georghiou 2005). This makes the company produce goods that are ready to fit in the existing market as customers come looking for them once they appear on the market. Several factors determine innovation strategies of an organization such as 3ms. First, extend of technical knowhow of the staff plays a great role in making innovation strategies. This makes clear on which innovations will be taking place in the organization. Secondly, customer requirement is another great factor that plays a role in determining the nature of innovations taking place in an organization. Certain changes may occur in the nature of production to suit the demands of customers thus marking innovation a strategy that can fulfill both customers and the organizations needs. The other very important factor that plays a role in innovation is the availability of raw materials. For instance, the 3ms had great problems during its initial stages due to depletion of minerals. This caused them great damage almost getting to the end of its operations. It is quite important to have natural resources and other required raw materials for proper innovation to take place in manufacturing of products (Cassingena & Georghiou 2005). Innovative Application: Cooling The demand of air conditioning and cooling is greatly increasing at a very fast rate. A car is an example of equipment that requires cooling system and it started back in twenty years ago. The luxury cars were the only ones that had such equipment like an air conditioner (A/C) component in Saudi Arabia. Currently most of medium sized and increasing part of compact vehicles provides comfort of air-conditioning inform of a standard alternative. Ninety percent of new cars sold from Saudi Arabia and some few Middle East countries have A/C with them while other nations in the region are on their way to include A/C in manufacturing the new cars with the same features. Built environment also require the cooling system to keep the temperatures at their normal rates. As evidence, twenty-six million air conditioners for rooms were sold globally in 1998. Additionally, over forty million air-conditioning equipments were expected in 2006 (Cassingena & Georghiou 2005). Some innovations bring both advantages and disadvantages while others may only cause benefits to customers. For instance, this particular innovation has its negative and positive effects on the consumer and the entire world. Many of these machines are made in single-split, which means they demand a lot of energy to drive them. This creates a great problem to customers due to power consumption. It also has problems when it comes to environment since the increase in the cooling systems generally causes an increase in power consumption during summer season in the Saudi Arabia nations. It has also related problems like emission of carbon dioxide in the environment and nuclear waste among others. Most of the conventional machines for cooling base on refrigerants that have the potential of depleting o-zone layer. These were realized from the first innovations, which had strong effects on global warming (Eckerson 2006). The observation of the early innovations made the air-conditioning equipment manufacturers to shift from their sources of energy and start using the renewable energy sources for driving the machines. For instance thermal driven cooling machines base on sorption or desorption cycle. Additionally, they base on Desiccant and Evaporative Cooling (DEC) principles. The innovation has been in practice for many decades majorly in industrial waste heat that used to drive the cooling machines. Initially large machines were produced which could not be used in smaller regions like in residential areas but recently they have been developed to serve users on small scales. In the near future, even other smaller machines will be in place to serve other users who may require their services on even smaller scales. The innovation is greatly focusing on the interest of the consumers. This is because they have moved from machines that could affect the life of their customers and create machines, which can serve people with less negative effects on human being and generally the environment at large (Chesbrough 2003). Importance of Commercialization to innovative Organizations Technology and information are becoming main assets in creating wealth for organizations that are elemental for innovation. This enables most companies that use innovation strategies to maintain their competitive status on the market. Innovation in this case, and according to systemic reviews, searching and acquisition of technical knowhow and information is taken as a process through which different agents interact with each other. The process of interaction leads agents into contact with external socio-economic environment. In the economy that is based on knowledge, companies depend on their employees and customers to invent and create new products to sell on the market (Cassingena & Georghiou 2005). Additionally, the competitiveness of an organization depends on the quality of its technical knowhow based on assets and victorious application of assets to operational actions to meet the terms of its strategic aims. The ability to gain and apply knowledge never goes on to isolation although they are often supported by different outside sources of experts. The experts may include research institutes, universities, suppliers, government agencies among many other organizations. The triumph of an organization greatly depends on the ability to make use of both external and internal sources of knowledge. Inter-organizational collaboration normally enables creation of a strong base for generating innovations and at the same time providing several other advantages. The advantages may include accessing new ideas and penetrating to new markets by acquiring licenses (Parmenter 2007). There are some potential challenges that an organization can face during the innovation processes. They can include creating partnership that can build a network of inter-organizational, which may provide ways of coordinating various factors, which may be like small technological organizations, universities and science parks, which may contribute to particular competencies together with technological assets. This may lead to commercialization of organizations with high technological knowhow (Parmenter 2007). Commercialization process in this case is in which investment of technological innovations are commercialized effectively through production of ideas for activities that sustain commercialized goods. Organizations with high technology have the potential to improve commercialization procedure through external services and collaboration between its customers, employees and partners. It is important that proper commercialization can lead to reduction of expenses of market launching which in turn reduces the entire production cost of goods. This may also provide goods of high quality goods with lower prices all benefiting the customers and the companies. Commercialization of goods has many advantages that all organizations with intentions of innovation can make better improvement in their products and services (Chesbrough 2003). Key Performance Indicators Key performance indicators are proven strategies that can be used to identify the success of an organization. For the indicator to be accurate they should be able to provide reflection of what has been identified by company as the critical factors for its success. Notably it is very possible to measure many things in business but key performance indicators have a great difference in that they are things, which are important in an organization. This means that if the company aims at making any profit then the company should be ready to use them in measuring its success. They help organizations to run towards the objectives that they have identified. Designing Key Performance Indicators A very important factor to consider when identifying key performance indicators is that they should remain constant and are with reference to long term once they come in existence. Additionally, they must be able to reflect across all sections of various measures in the entire organization just in the same manner a balanced scorecard comprises of measures but not financial issues while assessing the performance of an organization (Cassingena & Georghiou 2005). Using KPIs Correctly Organizations that value best practices will always have interest in understanding on how to use key performance indicators properly. First, they have to understand the aspect, which key performance indicators are needed for learning and improvement then aim at those. Secondly, they should be able to separate all reporting indicators in case they are irrelevant internally to overloading of data that can result in confusion. Lastly, they should be able to create an excellent culture that is able to drive high quality performance (Eckerson 2006). What to Measure As noted above, it is possible to measure very many aspects in a business organization. At the same time, it is important to note that sometimes it is impossible to design indicators that may measure things accurately. In this case, KPIs are present to provide information that helps the organization make better decisions in management. It can be on the part of decreasing uncertainty, which will be proper to include proxy indicators. In the same manner, it is important to use proxy indicator while quantifying things such as temperature. In temperature, the extension of mercury in the thermometer is usually the form of a proxy for the real temperature. Words star rating, traffic light and numbers can all be quantifiable (Parmenter, 2007). The important aspect in this case is to quantify only relevant issues that can help in answering questions that can help in improving the organization. In this case, it is important to involve the word indicator rather than measure. A performance indicator shows the level of performance rather than measuring it as indicated in the diagram below. It indicates that to measure performance we involve measurement while assessment we do assess by use of an indicator (Eckerson 2006). For example, an indicator is introduced to measure and assess satisfaction of customers; the indicator will provide an indication on the feeling of customers. However, it cannot quantify or measure satisfaction of customers to the fullest (Chesbrough 2003). This is in the same way the intelligence quotient provides an indication about intelligence, mostly in mathematical concepts and reasoning logically, but in real sense, it does not measure all intelligence of human aspects such as emotional intelligence, special awareness and hand-eye coordination (Chesbrough 2003). Extend of KPIs Business organizations usually associate KPIs with numbers and quantifications. The apparent aim is to give the organization an objective, uniform and rigorous outlook of reality. Although it seems to be working in some parts while giving different results in other occasions. It is quite possible to quantify items such as money eared, transactions of customers on a daily basis, the number of treated patients, the number of visits and incoming complains. Some things may not be counted generally. For example, the general delivery of services, the general culture of organization, technological knowhow, customer relationship strength and the reputation of the organization. These are some of the organizational components that cannot be easily counted (Eckerson 2006). For that reason, measuring in the modernity reaches beyond simple mathematical counting and includes pictures, videos, and words to make clear description and assessment of performance. Measurement might be just like a social activity for example, identifying a restaurant for the following special occasion (Parmenter 2007). Somebody reflects on past experiences in the restaurants that he or she visited. The person may also read reviews of new restaurants on websites to form opinion on various restaurants in the region. It is also possible to watch videos and pictures of different restaurants. Basing on star rating, pictures and videos one can make judgment of certain elements of restaurants like the quality of food, service delivery, environment and prices. This helps in choosing the best restaurant for the occasion. It is important to include qualitative and quantitative strategies to gain true understanding on the performance of an organization (Parmenter 2007). Practical Examples of Key Performance Indicators Example 1 A company can have an outline of the duration at which it can make an answer to a customer’s phone call. This can be one of the key performance indicators. It can then provide reflection in customer’s service department all the incoming customer numbers and how they are answered within a specified period or a specific number of ringing as a key indicator. In a school, setting the government may set the key indicators for all schools. This provides all schools with targets that the government may wish them to attain. In Saudi Arabia, it may be set in the form of percentage of learners who are attaining level four in the assessment tests at the age of eleven years (Chesbrough 2003). This information is then put on table to identify schools that may be underperforming, which in turn forms the base of school league tables. This is actually the form in which the government measures the performance of individual schools while comparing with other schools. Example 2 If an organization bases on having presence of a strong website to produce leads, a relevant KPI can be a bounce back rate. The bounce back rate shows the percentage of primary visitors on the site who bounce to other sites rather than continuing to exist on pages of the same site. The reasoning behind it is that customers who bounce do so because of inadequate important reasons to continue exploring the site. Technically, when the bouncing rate is thirty percent or lower it requires update on a daily basis. On the other side, if the rate is above thirty, the content on the web may require modification to reduce the rate to thirty or lower. This is one of the ways to satisfy the traits of a KPI. It is obvious how it is important to keep monitoring the bounce rate of the website (Chesbrough 2003). The KPI will reveal that an action requires being in place. If a KPI has been properly assigned to an organization, it can provide a flow-on-effect that will later bring benefits to the organization. All the company employees can access the data and provide the necessary corrective measures to enable the company succeed in attaining the KPIs rate of the company (Eckerson 2006). Additionally, KPIs can generate a type of benchmarking in a business. An individual can visualize the current quality of a business together with using KPIs they can make visions on the type of businesses they would like to have in future. KPIs help organizations to attain their dreams the embodiment of success via the procedures of managing, supervision and analysis (Parmenter 2007). Performance dashboards are implemented generally to facilitate monitoring of organization’s KPIs. The dashboard can check the rate of the identified KPI is succeeding or failing. If the outcome of the KPI is not making any improvement, the dashboard visually alerts the staff for making changes. It is therefore easy to analyze the cause of the shortcoming and enable the workers make the necessary remedies to correct the situation (Chesbrough 2003). Performance dashboards help in providing the right information to the right customers and at the correct time to facilitate optimize decision-making. It also enhances efficiency and increase the pace of getting results. As performance dashboards contain information required for measuring a KPI in a central place, it is simple to observe if the KPIs making success in their functions or failing. These types of dashboards enable employees at all levels to monitor data that represents the results of a KPI. Each individual organization should strive to make exceptional KPIs since they indicate ways in which troubled organizations are capable to fix their own problems. On the other hand successful organizations proactively plan and manger continuous success. All business organizations can succeed when employees understand the needs of the company through presentation easy-to-read dashboards that allows them make valuable follow-up decisions. The diagram bellow shows the summery of benefits of Key performance indicators (Cassingena & Georghiou 2005).  Bibliography Cassingena Harper J & Georghiou L. 2005, Foresight in Innovation Policy: Shared Visions for a Science Park and Business-University Links in a City Region, Technology Analysis & Strategic Management 17 (2), 147-160. Chesbrough H. 2003, Open Innovation: The New Imperative for Creating and Profiting from Technology. Boston: Harvard Business School Press. Eckerson, W. 2006, Performance Dashboards: Measuring, Monitoring, and Managing Your Business, New Jersey: John Wiley & Sons, Inc., Parmenter, D. 2007, Key Performance Indicators: Developing, Implementing, and Using Winning KPIs, New Jersey: John Wiley & Sons, Inc., Read More