Can Any Organisation Learn to be Innovative - Essay Example

? Innovation & Change Critically evaluate the claim that any organisation can learn to be innovative Contents Introduction 3 Definition and Profile of Innovation Theories 4 Diverse Approaches, Strategies and Techniques of Innovative Organizations 6 Organizations that Opt Not to Innovate 11 Can any Organization Learn to be Innovative 15 Conclusion 18 Reference List 20 Critically Evaluate the Claim that any Organisation can learn to be Innovative Introduction The factors that influence an organisation’s success and survival depend on adapting and adjusting to changes, both in the internal and external environment. Organisational theories have been examining the forces that lead to change and innovation requiring some qualifications between the two. Anderson (2011, par 2) suggests that “innovation brings change”. From his point of view, Anderson defined innovation as “being willing to look at what you’re doing from a fresh perspective or to think outside the box. Innovation fuels improvement: improved products and features, improved methods, and improved knowledge”. In this regard, the essay aims to address the following crucial issues: (1) to define ‘innovation’ and to explore the extent to which it can be promoted and embedded in an organisation; (2) to determine diverse approaches, strategies, techniques and issues around this issue; (3) to respond and address the question: can any organisation draw on them and learn to be innovative? (4) To find out which approaches, strategies and techniques deemed particularly interesting or significant or important vis-a-vis the question and the rationale for one’s choice. Definition and Profile of Innovation Theories According to Tucker (2008), when asked by different organisations what their definition of innovation was, one of the responses that emerged was “the freedom to think differently and to create ideas, initiatives, products and services that add value to current and future business” (Tucker, 2008, p. 39). Still from the same author, taken from another perspective, innovation was defined as “the ability and willingness to look at better ways of doing things; new products that improve how people work, or live or dress; new, easier, more efficient ways to deliver those products to market; new and more profitable ways to produce or procure those products or run the company” (Tucker, 2008, p. 39). Tucker’s suggestions also tie in with the incremental innovation strategy, suggesting ‘Building on current resources can increase product innovation’. Therefore it could be argued that any organisation can learn to be innovative with the appropriate resources. The experience of Mark Zuckerberg founder of Facebook is a prime example of an individual’s pursuit to introduce an innovative method of networking. His foundation was instrumental in launching Facebook, a social networking site that revolutionized online interconnections and interface (Carlson, 2010).The application of his innovative design could be synonymous to the concept of fordism, where mass consumption as combined with mass production, produce sustained economic growth and widespread material advancement. Despite the controversies and challenges that Zuckerberg encountered, he remained steadfast and determined to take accountability to adhere to the ideals and philosophies he believed in. Carlson (2010) has revealed that “the site has become one of the biggest web sites in the world, visited by 400 million people a month” (p. 1). This would also suggest that entrepreneurial talent is required in order to make an innovation successful. Likewise, learning about innovation theories is a matter of decision and commitment. The theories on the 4Ps of innovation (product, process, position and paradigm) (see diagram 1) could easily be learned from academic sources (Kostic, 2003, par. 3). But the experience of Facebook exemplifies innovation as a paradigm due to the major shift in thinking demonstrated by Zuckerberg that has beenradical in revolutionizing social networking on a global perspective; thereby concurrently manifesting the application of the radical innovation theory popularized by Abernathy and Clark.This example confirms that innovation is something that is built on with resources, reinforcing the opinion that any organisation can learn to innovate. (Diagram 1) https://innovatorium.wordpress.com/tag/4-ps/ Drucker(2006) defines innovation as “whatever changes the wealth-producing potential of already existing resources” (Citywire, 2008, par. 12). Innovation is seen as a process, a transformation to improve current resources into something more productive and rewarding. The definition from the Business Dictionary (2011 validates that innovation is the “process by which an idea or invention is translated into a good or service for which people will pay. Both Tucker (2008) and Zuckerberg believed in the ability of innovative processes to deliver new ways and approaches that would be beneficial to a greater number of people. Using these definitions, from amongst the most successful contemporary organisations manifesting the innate talent to innovate is the ‘Apple’ brand. According to Breillatt (2011, par 1), “Apple is clearly the “Most Admired,” the “Most Innovative," and the “Master at Design”. He indicated that Apple’s innovative techniques and approaches could be considered unique, distinct and could sometimes be contrary to traditional innovation theories. Whilst most organisations rely on research and development to find out ways and means to implement innovative processes, Apple has been reported to do things differently by: consistent with elements stressed in the definition, Apple continually strives to perfectly improve their current products that have seen competitive advantage in the industry (Breillatt, 2008, par. 37). By focusing on their strengths and core competencies, through the professional competence and expertise of a small team of top of the line, world caliber product designers, the organization continues to deliver innovation in products and services to clientele globally. By recognizing the success of Apple and practicing their innovative techniques it could be argued thatother organisations could learn to innovate from the teaching of Apples success. Diverse Approaches, Strategies and Techniques of Innovative Organisations Bloomberg Businessweek (2006) published a special report listing the world’s most innovative companies. At the top of their list, ‘Apple’ was deemed to have instituted and implemented diverse strategies and techniques to render them best in the field of innovation. From among the critical elements that were evaluated in the rankings are effective approaches that use diversity in innovative methods through the use of technology, business model applications, and process innovations (Bloomberg, 2006, par. 8), consistent with the Incremental Innovation of Henderson and Clark (1990) (See below table). http://innovationzen.com/blog/2006/08/11/innovation-management-theory-part-3/ For instance, the maker of Blackberry was successful in using technology through extensive research and development (Bloomberg, 2008). The theories of needing to balance technology push and market pull strategies were applied in the Blackberry experience (Carayannis and Alexander, n.d, 1). As revealed in Bloomberg (2008) when BusinessWeek interviewed the CEO of Blackberry, the final statement was: “if you really want to build something sustainable and innovative you have to invest in R&D. If you build the right culture and invest in the right facilities and you encourage and motivate and inspire both young and seasoned people and put them all in the right environment” (Bloomberg, 2008, par. 6).This statement suggests that investing in R&D is key to an organisation succeeding in innovation. Apple revealed that to excel in innovative applications among the best organisations globally, their strategy to launch the iPod was a product of seven types of innovation that range from networking, business model, and branding (Bloomberg, 2008, par. 9).Apple’s application of innovation theories could parallel to that of Abernathy- Utterbuck model tracing four phases through the innovative process. The success of the iPod has been influential in terms of the number of consumers who have idolized the product and appreciated the improved features and functions offered. Apple being the market leaders of innovation are at risk of organisations duplicating their ideas, therefore strong patents and copyright infringements should be displayed in all their products. Teece’s model explaining the imitability concept is applied herein. (See diagram below) http://innovationzen.com/blog/2006/08/11/innovation-management-theory-part-3/ For example Reuters (2011) reported that “Apple sued Samsung claiming the firm's Galaxy line of mobile phones and tablets "slavishly" copies the iPhone and iPad”. On the other hand, Nokia, has been recently entangled with Apple’s claims that Nokia has copied the antenna designs for the mobile phone technology (ProductsUSP, 2010). The experience could categorically be analogous to Schumpeter’s gale of creative destruction which is formally defined as a "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one" (Investopedia, 2011, par. 1) By strategically marketing this product initially in the US, and eventually across other nations, the extent of innovation and globalisation is clearly acknowledged and established. Cook (2011) has conducted a study that identified nine common characteristics of innovative organisations. From among the characteristics enumerated, the most relevant and applicable to contemporary organisations’ innovation experiences are clear and accurate definitions of goals, and the commitment to develop and maintain cross functional teams (Cook, 2011, par. 2).Schindlholzer (2008) shared Cook’s contention that definiing goals stimulates innovation in organisations. Most globally strong organisations begin with a clear and explicit stipulation of mission, vision and values concurrent with their design and creation of company policies and procedures. P&G for example, indicated that clear written and well communicated organisational goals “identifies the strategic choices to achieve them” (Pepper, 2007, p. 147). In order for organisations to implement innovation they must proceed through unique strategies and techniques, the essence of defining goals and objectives are crucial to give direction and guidance to people who are expected to implement and adhere to new processes and systems deemed to improve performance. Each individual has a specifically defined role, task, responsibility that is crucial in the achievement of organisational goals. For purposes of instituting innovative approaches, different organisations have disparate philosophies in taking into account the people who are active in conceptualizing designs for new products or services and in implementing them (Martires, 2004). As discussed above ‘Apple’ have openly acknowledged that only a small workforce for designing major products is employed. The threat however, could be the key individuals could be attracted away from the company by competing organizations, loyalty to the company is essential. By using the core technical group of experts to design and think of innovative strategies for major products, the organisation is ensured that crucial details are perfectly incorporated in all areas of the development and innovative processes, making them the most qualified with holistic knowledge, skills and abilities in their respective craft. Furthermore, Apple indicated that the organisation does not do any market research; contrary to P&G’s practice (Bloomberg, 2008, par. 15). Both Apple and P&G are in the list of the world’s most innovative organisations. This suggests that what apparently works for one organisation could not be deemed equally applicable to another given the diversity in products and services, the target markets, the environment they operate in and the competitive advantage over other organisations within the same field. The shared characteristics of developing and maintaining cross functional teams is essential for innovative organisations to succeed; this is clearly manifested and exemplified through the experience of Southwest Airlines. As revealed by Bloomberg, the experience of Southwest Airlines attests to applying cross functional collaborations from various personnel ranging from their in-flight crew, the staff in charge of grounds and maintenance, as well as those from operations involved in dispatch work. It took the company six months of 10hours weekly training to brainstorm with focus on the central theme of improving aircraft operations. However, the unexpected innovative response came from a director of the schedule planning division that spurred a creative idea and enabled them to apply new directions to their aircraft operations. The experience of Southwest has proven that innovative ideas emerge from unexpected people in the most unlikely circumstances. If Southwest had not encouraged brainstorming through cross functional teams, across individuals from diverse cultural orientations, the idea that had been instrumental in innovating a crucial phase in aircraft operations could not have been identified. Therefore organisations need to recognize individuals with entrepreneurial traits as these people could increase the possibilities of the organisation becoming innovative. Organisations that Opt Not to Innovate Despite the obvious benefits to organisations that innovate, still some business enterprises opt not to innovate for a number of reasons. Phillips (2010) gathered the most plausible reasons to justify their respective positions in deciding against innovation. For one, most organisations expressed satisfaction with their current operations that any perceived approach to innovate would create fear for tarnishing the organisation product and reputation. This reason is also consistent with the organisations’ satisfaction to retain or the existing state of current operations and activities that have been proven to be successful, so far. An example of this being NPower’s implementation for a simplified customer database software that was meant to provide efficiencies within their call centre operations, however due to some unknown glitches in the system, the software continually failed, upsetting their customers by exposing their personal data as well as the increasing stress in their call centers between employees. Eventually Npower reverted back to their old system losing millions of pounds of their investment in the software as well as the trust of their customers. Other organisations do not want innovation for the simple reason of anticipating the resistance to change, Tobin (1999; p24) shares this view and states it is“a naturally occurring reaction”. The need to address any resistance is not within their line of expertise or experience; and therefore, rather than facing it, some firms would rather avoid it. Think IP (2011, par. 2) indicated that “IBM’s decision focus on mainframes sales in the era of personal computing” caused a resistance to adapt and adjust to the demands of the changing environment. Therefore it could be argued that the possibilities of innovation are present, however these organisations fail to act upon these opportunities resulting in the their competitors acting first and gaining competitive advantage. Another reason why organisations opt not to innovate is ingrained in their organisational culture that innovation and change is not a future alternative. The instrumental transformation of the way people accessed music through Apple’s mobile technological gadgets have drastically affected the music industry. The entertainment industry’s delayed reaction and stubborn stance “to deny acting ahead of the long growing trend of online streaming of copyright material” (Think IP, 2011, par. 2), perceived as contrary to organisational culture, cost them unanticipated declines in sales and profits. Another example is Motorola. According to Finkelstein (2006, p. 158), “a culture as strong and successful as Motorola’s is resistant to new ways of thinking”. The result of their resistance has been the demise of a once powerful organisation. There are some organisations that are satisfied with the success of their present products or services and there are no future plans to innovate or change. As reported by Scofield (2011), success is apparently the number one reason to inhibit innovation. Aside from Motorola, where culture played a significant role in resisting change partially due to their successful status, Sony’s decisions, on the other hand, to diversify into other activities beyond their core competencies resulted to their loss of business (Finkelstein, 2006, pp. 158 – 162). This suggests that some organisations may not innovate due to the fear of being unsuccessful. Likewise, there are organisations that have a fear of failing. Generally, these organisations possess authoritative leadership styles that does not encourage creativity and thinking outside the box(reference). The experience of Wang Labs clearly shows that the Director of the organisation created a dictatorship and his stubborn decision making style without encouraging participation and consultation from others caused a tremendous mistake of “selling valuable technology to IBM, this resulted in operating funds lacking and losing partial control of the company he founded” (Finkelstein, 2006, p. 169).Therefore, any detrimental effect of innovation is easily attributed to the leaders and they do not want to be tagged as failures in innovation. Finally, there are tendencies of cannibalization of existing products and services (Phillipps, 2011). This means that when new products or services emerge, there is a danger that market shares for the current products would decline. As identified by Phillipps (2011), “cannibalization is frowned on, since it disrupts an internal product offering that is currently generating revenues and profits.  Whilst the motto of ‘cannibalize your own products or someone else will’ may make sense to some innovators, it is hard to sell to executives.  Cannibalization is probably the easiest innovation to do, because we already understand the issues, needs and challenges, and already participate in those markets, but is the hardest to accomplish, because of the internal constraints and pressures”. Anthony (2011) recognized the impact of cannibalization in innovation efforts but addressed ways to combat it through turning threats into opportunities, working on something uniquely legitimate and acknowledging that this is beyond one’s control. Brisbourne (2009) interestingly indicated that “Public companies are not set up for innovation”. An example of this could be General Electric (GE). His explanation is hereby quoted, “this GE story is remarkable because the average tenure for a large public company CEO is somewhere around three years, and three years is too short a period to think about innovation (Brisbourne, 2009, par. 1). Aside from the technical details of tenure, organisations from previous experiences such as Xerox, IBM, Motorola, Sony and Wang Labs, that were precluded from innovation for diverse reasons as indicated above, somehow rationalize that the perceived slow development of the times justify staying put and be conservative in growth strategies. Further, lack of coordination among groups and functions likewise pose as barriers for innovation. As indicated in Bloomberg (2008), “the best innovators reroute reporting lines and create physical spaces for collaboration. They team up with people from across the organisation chart and link rewards to innovation. Innovative companies build innovation cultures” (par. 13). Aside from the internal factors that prevent organisations from innovation, environmental factors also play a significant part in inhibiting this process. In the recent financial crisis that besieged organisations globally, the effects on investing on efforts to innovate are significant. The report published by the Organisation for Economic Co-operation and Development (OECD) (2009) exposed the effects of the current crisis in terms of lesser spending by organisations on research and development. As indicated, “business R&D is also being re-oriented towards short-term, low-risk innovations, while longer term, high risk innovation projects are being cut first” (OECD, 2009, p. 6). Innovation efforts require extensive amount of funds and resources to conceptualize and implement in the long term. The perceived crisis that affected economies worldwide has resulted in various organisations opting to retrench, cost-cut, and employ drastic measures to survive. With consumers likewise affected by the financial crunch, the reduced purchasing power of consumers’ results in lesser products and services being available leaving declines in overall productivity and in financial performance that affected the bottom line. This reinforces that organisation can learn to become innovative, however due to the lack of disposable income organisations opt to use their capital for other more important operations. Can any Organization Learn to be Innovative Just like any other relevant management and organisational theories, innovation can be learned (Morris, 2010; Todhunter, 2008). However, it is not merely the learning in itself that is to be considered by any organisation for it to be applied to the current situation and setting. The theories and concepts presented by Schein (1992) are most applicable to explain an organisation’s decision to learn to be innovative. Schein (1992, p.9) indicated that “accumulated change theory tells us that human systems seek homeostasis and equilibrium. We prefer a predictable stable world, and we do not really let our creative energies out, unless most of our psychological world is reasonably stable. We seek the largest possible black platform on which to rest comfortably, and only step off into gray areas once in a while to satisfy our curiosity or our creative energy. For an organisation to change, therefore, it must first be destabilized or in Lewin's(1951) old phrase ‘unfrozen’”. By the theory of applying distinct steps towards the change process, experts in the field of organisational management and business innovation could affirm that any organisation can learn to be innovative when given the appropriate resources and by following structured procedures. However, contemporary experiences and upon examination of reasons why, despite the advantages of innovation, some organisations such as Xerox, IBM, Motorola, Sony and Wang Labs, continue to remain cognizant to the fact that status quo is the most viable solution, external factors have profound impact on an organisation’s decision for innovation. One of the most relevant lessons shared by Schein (1992) to assist organisations in leading towards innovation is to form a steering committee as a pilot group to immerse themselves through the learning experience. The goal of the group is to facilitate in the development of a new culture, needed to apply the identified change process. The influence of environmental factors is crucial in an organisation’s decision for innovation. As stated by an OECD (2009, p.8) study, “economic downturns can have a detrimental effect on the creation of new, innovative businesses when access to financing dries up”. Organisations could be deemed equipped and capable to innovate in terms of internal resources and processes, but when external factors impinge on their operations that drastically alter the composition of internal funds, human resources, and drive for research and development, despite the ability and capacity to learn how to innovate, external barriers prevent relevant implementation. Still, this is not the rule of the game. If, on the other hand, organisations are looking to be innovative but are besieged with low finances, there is a need to evaluate strengths and competencies and capitalize on them. Chakravorti (2011, p.3) revealed that: “low-cost airlines such as Southwest Airlines, JetBlue Airlines and Ryanair all grew during recessions”. This suggests that innovation is possible for organisations even during economic downturns. Another scenario was “International Business Machines Corp who outsourced key components in its initiative to produce the personal computer in record time during the early 1981 slump” (Chakravorti, 2011, p. 10). These instances indicate that despite lack of financial resources, organisations can still opt to innovate with appropriate evaluation of core competencies and strengths, in conjunction with awareness of opportunities in the external environment that can be tapped and matched to generate improvement and transformation in current products, services, products or business models. The same OECD (2009) discourse revealed some organisations that successfully initiated antithetical innovative applications during economic downturns, but actually succeeded. “many of today’s leading firms such as Microsoft or Nokia were born or transformed in “Gales of destructions” such as economic downturns. Several of today's leading technology firms such as Samsung and Google strongly increased their R&D expenditures during and after the “new economy” bust of 2001” (OECD, 2009, p. 6). These organisations must have built substantial resources to apply strategies boosting their research and development efforts in times of economic crisis. However, for some small organisations such as Microfinance Enterprises that has limited financial capacities to continue pursuing plans for innovation, despite learning the fundamentals of the trade, more pressing factors present barriers for innovation. However, the factors identified above that either encourages or inhibits organisations to implement and decide on innovation are weighed and analyzed given their current internal resources, the lure of profitability from the planned innovation and the potential costs associated with it. Like any other decision making process, benefits are weighed against costs to determine the net effect on the organisation’s financial condition (ADB, n.d.). If the potentials for innovation greatly exceed the costs or disadvantages, definitely organisations would have the commitment, not only to learn but to apply innovation theories to future requirements. Conclusion Organisations need innovation to survive and succeed in the ever changing competitive environment. The essay has initially proffered a brief historical background of the evolution of innovation theories prior to delving into the diverse definitions of innovation from scholars’ various points of views and organisational perspectives. Innovation was seen as a process, ability, a freedom to create improved products and services from current resources. As organisations defined the need to change and to transform products/services they currently have to a newer alternative. The factors that steer these organisations to excel in innovation were discussed through approaches, strategies and techniques applied by most innovative organisations that have proved their worth. Despite the obvious and eminent benefits gained by innovative organizations, some barriers, predominantly internal factors ranging from satisfaction to current status, management style and conservative stance, as well as the fear for failing and addressing resistance to change, justify other companies to decide on retaining equilibrium. Furthermore, external factors, particularly environmental concerns and economic difficulties, justify their stance to decide on staying put and deferring or out rightly avoiding innovation efforts. In response to the issue that the essay aimed to address: can any organisation draw the theories and applications of innovative organisations and actually learn to be innovative? The appropriate response is yes, any organisation can learn to be innovative. There are various theories on innovation such as the 4Ps of innovation (product, process, position and paradigm), the need to balance technology push and market pull strategies, the incremental – radical spectrum of innovation, among others crucial concepts that are easily available and accessible through various academic modules and references. But that does not mean that all organisations that learned innovative theories and techniques to transform current resources to new products, services and processes would apply them. It takes more than the knowledge in theoretical frameworks to decide on undergoing innovation when all other factors indicate that by doing so, the end result would put them in a more disadvantaged position than where they were in the first place. 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