Innovation and Change - Research Paper Example

? Literature Review: Innovation and Change Innovation is necessary for modern organizations to survive in the heavily competitive and globalized business world. Innovation provides market leadership to organizations. It is difficult for followers to survive in the ever changing international markets. Globalization was instrumental in stimulating innovative products, services and business strategies in the corporate world. Traditional products or business strategies may not help an organization to survive in the competitive business world. Innovations can have the ability to cause huge changes in an organization. Change is often taking place in an organization based on the innovations in product, process or strategy. Radical and incremental innovations are usually taking place in the organizational world. Both radical and incremental innovations have the ability to cause huge changes in the organizational world. This paper analyses the importance of innovations and changes in the corporate world. Introduction According to Bordia, et al (2005), “Innovation is the ability to define and develop new products and services and deliver them to market. It is the fundamental source of value creation in companies and an important enabler of competitive advantage”(Bordia, et al, 2005, p.1). On the other hand Anjani, & Dhanapal (2011) defined organizational Change as a multifaceted process which is much more complex than human behavior. In their opinion, individuals are prone to organizational changes and have a normal inclination to react in the same way towards the type of organizational changes (Anjani, & Dhanapal, 2011, p.103). In any case it is a fact that change is inevitable in business or organizational world since science and technology are advancing rapidly. Traditional business principles have given way for innovative business strategies as competition is growing day by day in the business sectors. In fact the whole concept of business has been changed from domestic circles to international circles as a result of globalization and liberalization. It is impossible for a prominent organization to think about doing business only in the domestic circles and survive in the market. As the market is getting increasingly globalized, competition from external players is growing day by day. Changes in business strategies become inevitable under the above context. Innovation triggers many changes in organizations. Many of the traditional business principles have given way for modern business strategies as a result of the innovations in the organizational world. Structural, functional, managerial, cultural and strategic changes are taking place in modern organizations because of the rapid growth of innovation taking place in and around the organizations. Findings According to Susman et al., (2006) Innovation usually takes place based on products, processes and markets (e.g., new ways to serve customers (Susman et al., 2006, p.16). many people have the illusion that innovation means the development of new products alone. In fact the development of new processes and new business strategies are examples of innovation. Innovations based on products The story of Apple Company is the most relevant example to learn more about how well innovative products change the fortunes of a sick organization. In the 80’s and 90’s Apple struggled to survive in the market because of the heavy competition from arch rival Microsoft. However, during at the beginning of 2000, Apple bounced back from the verge of destruction with the help of its innovative “I” series products such as ipod, iphones, ipad, imac, itouch, itunes etc. All these products provided new experiences to the consumers all over the world and many people started to visualize Apple as the most important technological company in the world. Pfizer is another company which used innovative products for the sustainment of their growth. For example, Viagra is a revolutionary product introduced by Pfizer to cater the needs of sexually impotent people. Pfizer was successful in realising the market requirement for Viagra like sex stimulating products and the history of the company has been rewritten by this product. There are plenty of other companies such as Samsung, Sony, TATA etc which were able to taste huge success with the help of product based innovations. Innovations based on processes Many see Nanotechnology as the technology that will underlie the next Schumpeterian wave creating new opportunities for wealth and job creation. Further it is a process based or materials technology. Yet all currently used models of innovation are based on assembled products or service products and these simply do not recognize the differences in materials products nor the “enabling” nature of Nanotechnologies (Linton & Walsh, 2005). Just like Nanotechnology, there are plenty of other innovative processes which can bring huge changes in the organizational world. Globalization itself is a process rather than a product which created huge changes in this world. Different companies adopted different processes or marketing strategies to exploit the opportunities presented by globalization. It should be noted that offshoring and outsourcing like innovative business processes were the contributions of globalization. There are plenty of American and European companies which reap the profits out of outsourcing and offshoring like innovative business processes. India and China are cheap labour oriented companies whereas America and European countries are expensive labour oriented countries. In a heavy globalized modern business world, it is almost impossible for the American and European companies to compete with Indian made or Chinese made products in terms of price. In order to neutralize the advantage of cheap labour oriented companies in selling products for cheaper prices, Western countries introduced the revolutionary idea of outsourcing and offshoring like innovative business processes. American companies are currently saving billions of dollars with the help of outsourcing. At the same time it should be noted that thousands of Indians and Chinese people are getting better employment opportunities as a result of outsourcing jobs from America and Europe. In short, innovations based on business processes can bring huge changes in the business world. The story of facebook also shows how process based innovation can bring success to business people even at recession times. Even though there were plenty of other social networks before the introduction of facebook, none of them were able to identify the business prospects of social networks. All the other social networks concentrated only on the socialization aspect whereas facebook concentrated more on the business aspects of social networking websites. Facebook was launched in February 2004. It gained significant growth in a period 2007 – 2010, even though recession hit the entire world drastically. In other words, facebook was successful in value creation even during difficult times. Innovation is both a vaccine against market slowdowns and an elixir that rejuvenates growth. Imagine how much better off General Motors might be today if the company had matched the pace of innovation set by Honda or Toyota. Imagine how much worse off Apple would be had it not created the iPod, iTunes, and the iPhone. But when times are hard, companies grow disillusioned with their innovation efforts for a reason: Those efforts weren’t very effective to begin with. Innovation isn’t integral to the workings of many organizations. The creativity that leads to game-changing ideas is missing or stifled (Rigby et al, 2009). General Motors was the leader in automobile industry until recent times. However, they failed to sustain their market leadership because of their reluctance in making innovations in its car making processes. While most of the competitors started to test new technologies in the car making processes, GM tried to stick with the old way of making cars. In other words, competitors such as Honda or Toyota were able to reduce the prices of their cars because of the innovated processes of car making whereas GM failed to do so. Apple used product diversification like business processes during difficult times to survive in the market. They have realised during the latter part of twentieth century that they cannot survive in the market with the help of computers and operating systems alone. Microsoft was successful in monopolising the computer and operating system market in the 80s and 90’s and hence it was extremely difficult for Apple to counter the challenges of Microsoft and penetrate deep in to the computer market. So, they deliberately changed their name from Apple computers to Apple Inc and started to diversify its business activities into the consumer electronics market. The rest is history. Apple’s diversification strategy brought huge dividends to the company and it is currently the second largest company in the world. Innovation is a process which is controlled by both the halves of brain. According to Rigby et al, (2009) “Any executive with half a brain knows innovation is essential to success. The problem is that it takes both the halves of brain to make it happen- the imaginative, holistic right brain and the rational analytic left brain” (Rigby et al, 2009). There are plenty of prominent companies owned and controlled by more than one person. Hewlett Packard, Procter and Gamble, Johnson & Johnson etc are some of the companies which is owned by more than one person. In the case if Hewlett Packard, the company is taking advantage of the right brain of Hewlett and left brain of Packard. The success of the company remains in how cleverly these brains are blended together. In other words, innovative business processes are often been controlled by different people. The success depends on the chemistry between the contributors of such processes. Innovations based on markets Innovations are taking place based on markets also. Earlier, American companies were reluctant to enter India and China like markets since these countries were economically poor. However, the scenario has changed a lot in recent times. These countries are the most rapidly emerging countries at present. Moreover these are the most heavily populated countries in the world and hence the market opportunities are huge. Realising the potentials of Indian and Chinese markets, many American and European companies have already established their business units in these countries. In fact China is the second largest market for Apple Company now. Culture plays an important role in controlling international or cross cultural business. It is illogical to use same marketing strategies everywhere in the world even if the product remains the same. In a culturally different global market, customized marketing strategies are necessary for the success. For example, David Beckham could be an outstanding brand ambassador in Europe whereas he may not be so in India or China. In India, Sachin Tendulkar or Shah Ruk Khan could be a better brand ambassador than Beckham. In short, innovations in marketing strategies are necessary for a global company to excel in international market. Incremental vs. Radical Innovation Innovations are usually classified into two distinct categories; radical and incremental. “An incremental innovation will build upon existing knowledge and resources within a certain company, meaning it will be competence-enhancing. A radical innovation, on the other hand, will require completely new knowledge and/or resources and will be, therefore, competence-destroying”(Incremental vs. Radical Innovation, 2006). Both incremental and radical innovations are capable of bringing huge changes in the organizational world. However, radical innovations seem to be extremely powerful in the making or breaking of an organization. For example, Kodak was the leader in the photography market until the intrusions of digital technologies in photography industry. Analogue technologies were the main stay in the photography market until a decade before and Kodak never anticipated that a breakthrough in technology may cause damage to their business interests. “As soon as the market experienced a radical innovation, the entrance of the digital technology, Kodak struggled to defend its turf against the new entrants. The new technology required different knowledge, resources and mindsets” (Incremental vs. Radical Innovation, 2006). The cases of Nokia and Parker Pen Company are also similar to the case of Kodak. Until the introduction of touchscreen phones by Apple Inc Nokia was the leader in the mobile phone business. However, the introduction of iPhone by Apple during the beginning of the twenty first century caused huge problems to Nokia in maintaining its market leadership. In other words radical innovation taken place in the form of touch screen phones caused problems to Nokia. At the same time, it should not be forgotten that incremental innovation is currently causing problems to Apple’s iPhones and iPads. Even though Samsung entered the smartphone and tablet market a little bit late, they are currently the leaders in this sector. Their galaxy series smartphones (Galaxy S2 & galaxy S3) are causing all sorts of problems to Apple’s iPhones. Even though Apple is using its own operating systems in its smartphones and tablets, the android driven Samsung smartphones and tablets seem to be better than the Apple phones and tablets. According to Madden (2012) Samsung S3 has the option of wireless charging, removable battery and SD card support whereas Apple’s latest iPhone 5 does not have these facilities (Madden, 2012). Moreover, Google is constantly making changes in its android operating system which is a blessing for Samsung like companies. The latest Jelly Bean operating system from Google is another example to prove how incremental innovation can make changes in the organizational world. Radical innovation caused huge problems to Parker Pen Company also. It should be noted that Parker Pen was the leader in the writing equipment industry until recent times. At present they are not so because of its failure to implement suitable marketing strategies in this heavily globalized business world. Same marketing strategy may not work everywhere even if the product is the same. When globalization was introduced in the world, Parker Pen Company has tried to implement same marketing strategies to market their writing equipment all over the world. They thought same product needs same marketing strategies everywhere in the world. However, their perceptions of the globalized market were totally wrong. The idea of selling pens the same way everywhere did not sit well with many parker subsidiaries and distributors. Pens were indeed the same, but markets, were different. France and Italy fancied expensive fountain pen while Scandinavia was a ball point market” (Marketing across cultures, 1990, p.195) Globalization can be considered as an example of radical innovation. It has brought radical changes in the business world. Companies which were able to identify these changes were successful whereas companies which failed to identify the changes caused by globalization failed to survive. Tellis et al (2009), mentioned that “Radical innovation is crucial to the growth of firms and economies. Firms at the leading edge of innovation tend to dominate world markets and promote the international competitiveness of their home economies” (Tellis et al, 2009). Incremental innovation modestly improves a firm’s products or processes or fine-tunes its business model, e.g., how it creates value for its customers. Radical innovation significantly improves existing products and services or replaces them with new ones. Radical innovation occurs less frequently than incremental innovation in part because most firms don’t have the technical and human resources required for radical innovation, and don’t accept or aren’t prepared for the risks and uncertainty associated with it (Susman et al., 2006, p.16). It is difficult for smaller firms to introduce breakthrough products in the market because of their inferior financial abilities compared to that of the large scale organizations. The development of new or innovative products is a costly act. It is difficult for smaller firms to utilize a substantial portion of their revenues for the development of innovative products. “The positive effects of firm innovativeness on market position and financial position are stronger for larger firms, for firms that invest more in advertising, for firms in high-tech industries, for innovativeness outputs and for radical innovations” (Rubera, & Kirca, 2012, p.130). There are plenty of organizations which sustain monopoly in the market with the help of incremental innovation. For example, Microsoft is one company which is able to maintain its supremacy in the operating system market with the help of incremental innovation. They have started with Windows 3.1 followed by Windows 95, 98, 2000, XP, Vista, Windows 7. Windows 8 is currently on the verge of introduction. Microsoft has already declared that Windows 8 will support touchscreen facility. In other words, Microsoft is able to introduce technologies needed for the modern world and hence they are able to sustain their supremacy in the operating system market. On the other hand, it should not be forgotten that they failed to keep their dominance in the IT industry even though there are the leader in the OS industry. Apple is currently the leader in IT industry. They are successful in pushing Microsoft far behind. Kim (2010) has pointed out that Apple is currently the second largest company in the world in terms of market capitalization and also the most valuable technological company in the world (Kim 2010). Innovation and changes in growth perspectives of an organization Bordia, et al (2005) pointed out that “The health of a company’s innovation can be directly linked to a company’s ability to generate value and growth. In their research, companies with healthy innovation reported stronger financial per­formance than those with unhealthy OrgDNA (Bordia, et al, 2005, p.2). Innovation is extremely important in making positive changes in the organization. Timely introduction of innovative products is extremely important in bringing positive changes in an organization. “Missed opportunity is the primary effect of slow innovation processes. Companies that are fortunate enough to have robust idea creation capability may be unable to capitalize on the value of their innovation”(Bordia, et al, 2005, p.3). As mentioned earlier, Apple’s tablets are moving well in the market now. It should be noted that Microsoft was the first company which introduced tablets in the IT market much earlier than Apple. However, Microsoft’s tablets failed to taste success in the market because of the untimely introduction. “Once Apple's tablet hit the scene, there was a sharp drop-off in Windows tablets” (Ackerman, 2012). At the time of the introduction of Microsoft tablets, the technological developments were not as good as it now. So, the customers did not feel the need for a tablet at that time. On the other hand, Apple was successful in reading the pulses in the modern market well and introduced their tablet models at the beginning of the twentieth century. In short, innovation should keep in pace with the technological advances; otherwise it can bring more harm than good which is evident from the failure of Microsoft’s tablet and the success of iPads. In recent years corporate managements have faced a technological tipping point: integrated management (ERP) software packages are becoming the central component for collecting and applying management information. In the fifteen years from the emergence of ERP to the widespread use of this tool, the majority of major companies have adopted or attempted to adopt its software. At both the practical and technical levels, this represents a substantial innovation which requires a comprehensive integration of the information process. One of the main benefits of integrating ERP into the organization is the ability to manage large quantities of data within a single, shared system. Over and above this significant technical advance, the installation of an ERP system presents a real opportunity for improving the firm's organization! In this regard the adoption of ERP constitutes a significant incursion into the firm's organizational life, and as such it is viewed as a real agent and actor for organizational change (Simon & Pierre, 2012, p.51). The introduction of computer related technologies have made revolutionary changes in the corporate world. Until the entry of computers and internet, many of the document preparation functions were accomplished with the help of typewriters. Computers and internet have simplified the complex communication process. If communication is the blood of organizations, computers and internet are the body of the organizations. It is impossible for the modern business organizations to survive without the assistance from computer mediated communication technologies. At the same time it should not be forgotten that these organizations were survived in the past even though rapid and instant communication technologies were not in place at that time. When computer was introduced in the corporate world, many people had some reservations about the consequences of a computer controlled corporate world. They thought that computers may destroy job opportunities and many people may lose their jobs. In India like countries left parties organized several protests against the implementation of computers in the corporate world. However, later it has been proved that computers are not at all a curse but a blessing to the corporate world as well as to the employees. In fact computers brought more job opportunities even though ordinary people had many concerns about losing of their jobs. Imbrication of human and material agencies creates infrastructure in the form of routines and technologies that people use to carry out their work. Routine or technological infrastructure used at any given moment is the result of previous imbrications of human and material agencies. People draw on this infrastructure to construct a perception that a technology either constrains their ability to achieve their goals, or that the technology affords the possibility of achieving new goals. The case of a computer simulation technology for automotive design used to illustrate this framework suggests that perceptions of constraint lead people to change their technologies while perceptions of affordance lead people to change their routines (Leonardi, 2011, p.147). Conclusions Innovation is the pillar upon which many of the organizational changes were built. The success and failures of organizational changes depend on the strength of innovation. Innovations are usually taking place in the form of product, process, market, strategy etc. In any case, technological advances are the major contributors of innovations of different types. Changes caused or triggered by the innovations are long lasting in organizations. Innovations are usually classified into two different categories such as incremental and radical. Incremental innovations are the modifications of the existing products, services or strategies whereas radical innovations are completely new products, processes or strategies. Both Radical and incremental innovations can contribute heavily to the growth of an organization. Apple is one company which experienced huge growth as a result of radical innovations. The revolutionary “I” series products have brought huge success to the Apple Inc. On the other hand Microsoft is one company which experienced growth because of incremental innovations. A series of window based operating systems were instrumental in the success of Microsoft. Failure to implement innovative business strategies can cause huge problems to companies. Parker Pen and Nokia are examples for this category. Both these companies were leaders in their business fields; however, they failed to respond positively and quickly to the changes happened in the technological world. Facebook is one company which showed the potential of service based innovation. While most of the other social networks concentrated only on the socializing dimensions of social networks, facebook thought differently and unveiled the potentials of social networks to the business world. In short, identification of opportunities and the timely introduction of new products or services are the key to the successful management of innovations and change in the organizational world. Recommendations Product, process or strategy based Innovations should be introduced only after the identification of the opportunities in the market. Value creation should be the primary agenda of every innovation. In other words, customers should feel the value of an innovation; otherwise they will reject even innovative products or services. Innovative products should present totally new experiences to the customers. Mere modifications of existing products cannot be cited as examples of innovations. Only the true innovative products bring desired changes in the organization. Innovations should be implemented at the appropriate time. Untimely introduction of innovative products or services may bring more harm than good. For example, Microsoft’s tablets failed in the market because of the untimely introduction whereas Apple’s tablets were successful in the market because of its timely introduction. Innovation based changes should reach even at the grass root level of the organization. Even a worker can spoil all the efforts of the top management to introduce innovative strategies in an organization. So, the idea and the benefit of innovative products, services, and strategies should be conveyed to the bottom level from the top level of an organization. Innovations should be meaningful to all, to bring desired changes in an organization. References Anjani, P. K.& Dhanapal, D. A. (2011). Study on the Types of Organizational Change of the Banking Sector in Salem District. European Journal of Social Science. Oct2011, Vol. 25 Issue 1, p103-113 Ackerman, D. (2012). A brief history of failed Windows tablets. Retrieved from http://reviews.cnet.com/8301-3121_7-57456088-220/a-brief-history-of-failed-windows-tablets/ Bordia, R., Kronenberg, E & Neely, D. (2005). Innovation’s Org DNA. Retrieved from http://www.booz.com/media/uploads/Innovations_OrgDNA.pdf Incremental vs. Radical Innovation, (2006). Retrieved from http://innovationzen.com/blog/2006/08/04/innovation-management-theory-part-2/ Kim R (2010). Apple Passes Microsoft As Top Tech Company, Retrieved from http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/05/26/BUDJ1DL0IU.DTL Leonardi, P M. (2011). When Flexible Routines Meet Flexible Technologies: Affordance, Constraint, And The Imbrication Of Human And Material Agencies. MIS Quarterly. Mar2011, Vol. 35 Issue 1, p147-168. Linton J.D. & Walsh, S.T. ( 2005). A theory of innovation for process-based innovations such as nanotechnology. Retrieved from http://www.sciencedirect.com/science/article/pii/S0040162507000510 Marketing Across Cultures. (1990). Retrieved from http://www.sam.sdu.dk/undervis/90434.E04/Spoergsmaal_til_Case_Tekst_Parker_Pen.pdf Madden D. (2012). Samsung Galaxy S3 vs iPhone 5: Why It’s S3 For Me. Retrieved from http://www.autoomobile.com/news/samsung-galaxy-s3-vs-iphone-5-4/1001221/ Rigby, D.K., Gruver, K and Allen J. (2009). Innovation in Turbulent Times. Harvard Business Review. June 2009. Retrieved from http://hbr.org/2009/06/innovation-in-turbulent-times/ar/1 Rubera, G & Kirca, A H. (2012) Firm Innovativeness and Its Performance Outcomes: A Meta-Analytic Review and Theoretical Integration. Journal of Marketing. May2012, Vol. 76 Issue 3, p130-147. Simon, E & Pierre N J. (2012) Integrating ERP into the Organization: Organizational Changes and Side-Effects. International Business Research. Feb2012, Vol. 5 Issue 2, p51-58 Susman, G., Jansen, K & Michael J. (2006). Innovation and Change Management in Small and Medium-Sized Manufacturing Companies. Retrieved from http://www.smeal.psu.edu/cmtoc/research/nistcm.pdf Tellis, G., Prabhu, J., & Chandy R.K. (2009). “Radical Innovation Across Nations: The Preeminence of Corporate Culture. Journal of Marketing. 1/1/2009. 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