Innovation Strategies

Category: Management

There is a constant debate on the effectiveness of innovation strategies as they are perceived as high risk. Many organisations fail to embrace innovation and this damage the company’s financial position. This paper will focus on the importance of innovation in an organisational context. It will look at some companies that have embraced innovation as a component of their business strategy. Regardless of the company’s size, it is possible to be innovative in both small and large businesses. A company like Apple Inc. started as PC manufactures, but today it has grown to be a leading organisation in the manufacture of electronic gadgets such as phones and laptops. Innovation begins with good leadership and is prioritised as an important aspect of the business. Organisations need to come up with comprehensive mechanism to enhance innovation. Companies should identify obstacles and barriers that prevent innovation. Additionally, methods of promoting and encouraging innovation ought to be identified. Those can include rewarding employees who are innovative in an organisation. What is important, it is always to ensure that innovation is sustainable. This is because some enterprises become innovative short time. Staff in an organisation that seeks to be prosperous should be encouraged to contribute, have a culture of innovativeness, and have an innovative mindset. A company that is innovative will attract a large pool of extremely competent staff and retain most of the talented staff.  Innovations can be in the form of new services, new products or cost-reduction processes. New ideas implementation can also be manifested through innovative business models, improvements in responding to customers’ concerns or innovative business methods. The benefits of innovation strategies in a company can be immense. In addition to financial benefits, innovation strategies lead to environmental sustainability. The considered process is linked to more positive changes of quality, larger market share, industry leadership and increased productivity.

Literature Review

An increasing number of countries in the world today are faced with declining populations and stagnating economy (Afuah 2009). Therefore, investments, labour inputs in physical capital face diminishing returns. What is worrying is that these challenges come when there is a vast political requirement to make improvement alongside a number of common trials. Some of these challenges are global in nature such as global warming. However, the good news to these countries is that innovation strategies in terms of delivery of improved and technologically up-to-date products can be of exceptional help (Afuah 2013). Having the correct and effective innovative strategies will ensure and accelerate the recovery of these nations. Innovative strategies will thus put these countries back on the path of development. Innovation strategies mean various things to many different people and companies. For Apple Company, innovations strategy has been the production of more advanced goods and services. When it was first established in 1976, Apple Company’s founders started by building a computer circuit that they named Apple 1 (Berg, Duncan & Friedman 2013). In several months’ time, they made 200 units and taken a new partner. Hence, innovation strategy to the company founders was based on new improved products and partnership. 

Since 1976, Apple Inc. has come up with the best mobile and Mac computers in the world. As early as 1990, Apple Company was able to offer its customers a complete desktop solution. This included peripherals, hardware and software that permitted the customers to plug in and play (Baldwin & Betts 2009). Business was capable to coming up with exceptional product designs. It built its products from scratch using disk drives and unique chips. In 1997, Apple Company’s CEO Steve Jobs undertook an innovative strategy to reshape the future of the company. He invested heavily in innovative technology. He sorted external investment into his enterprise, and Microsoft pledged to invest $ 150 million in his company. Since that time, this multinational corporation has come up with very innovative technologies and products that have made the company a global market shareholder in the sale of electronic products. The organisation has come with unique products such its own operating systems, iPads, and iPods. All of these are products of an innovative strategy adopted by the company (Maital & Seshadri 2007).

However, it must be acknowledged that no company is ever successful with its innovations. Companies today considered as innovation asters such as Apple, Sony and Samsung had challenging periods with their innovation strategies. At times, innovation strategies are uncertain and often challenging. Launching new products, services or business models in the market is always not a guarantee that there will be a success. Nevertheless, a company with a systematic and robust innovation strategy will have higher probabilities of success on any one new innovation strategy (Maital & Seshadri 2007). For Apple Company, the launching of the iPad was very successful, as well as that of Macintosh, iTunes, iPods and iPhones. In a business set up, innovation strategy takes the road that most people of company leaders are not willing to take (Baldwin & Betts 2009). It involves heavy investment in acquiring and installing the most recent technologies in the market. It challenges an organisation to look beyond its established mental models, business boundaries. It seeks to participate in an open-minded and a creative approach to exploration of the realm of possibilities. Some organisations may constantly feel that seeking breakthrough is to lavish an objective and that they end up being satisfied with merely growing the business (Baldwin & Betts 2009). Through experience, companies have learnt that investing in short-term innovative strategies will only yield short term results. For companies that seek long-term and sustainable innovative strategies, they must generate incremental and innovative ideas. Companies like Sony, Samsung, Microsoft, and Nokia have remained competitive in the market because they always come up with an innovative technology.

Effectiveness of Innovation and Contribution to Modern Organisations

There is a strong agreement among organisational researchers on the importance of innovation to an enterprise. To make this point, innovation has been related greatly with organisational effectiveness and competitiveness. To achieve successful innovation, there should be constant efforts and breakthroughs. These breakthroughs ought to run in every aspect of the company’s activity (Sundbo 2001). There are a lot of constituents of innovation that have to be considered together for gaining success in fostering. Innovation is not just about developing new products, but it is about reinventing the business process and building completely new markets that meet the untapped customer’s needs (Baldwin & Betts 2009). It is also about selecting and executing the right decisions and ideas so as to bring them to the market as soon as possible. Companies that have successfully strived for this and achieved include Procter and Gamble, IBM, Google, Apple and Toyota (Sundbo 2001). These companies have prioritised innovation in their daily business activities. They have created a new value in their products and services, which is a key component in increasing the financial stability of any company.

For an automaker like Toyota, it has a practically obsessive concentration on making and developing innovative products. An example of one its innovative product is Toyota Prius. Initially, Toyota Company had been considered a relatively conservative and risk-avoiding company (Tidd 2009). It was seen as a corporation that only concentrated on productivity improvement rather than developing new radical products. However, with the introduction of Prius, which is currently the world’s most successful hybrid vehicle, Toyota is now viewed as one of the world’s excellent innovative companies and exceptional manufacture. Consequently, it can be said that innovation is a vast tool that leads to the effectiveness in the modern organisations. It is as an effect of this revolution that Toyota now controls a significant portion of the motor industry. With the introduction of the Prius, sales increased, and the company’s financial base has grown considerably (Maital & Seshadri 2007). Besides, through innovation Toyota Company has gained more customers globally. Therefore, innovation can lead to an increase in the number of buyers. Toyota achieves more than just financially through its innovation. It can be considered as the master of a constant process of innovation. These improvements raise the value to its shareholders and customers, benefits (Berg, Duncan & Friedman 2013). On the other hand, being innovative does not always mean success. Toyota has experienced some products’ recall, but these are only the edge of innovation. Apple Company has also had some hitches in its products and services. Google has had related service malfunctions and difficulties. Nonetheless, because of being innovative, these companies have always been able to factor out their problems (Baldwin & Betts 2009).

Benefits of Innovation to an Organisation

In an organisational context, innovation will have more than financial benefits to the company. It is linked to more positive changes of quality, larger market share, industry leadership, and increased productivity (Sundbo 2001).

Leadership

Organisations that exhibit innovation will always be the leaders in their respective industries. For example, Apple Company is always on the news headlines for making and coming up with the latest innovations. The company was founded by some school drop outs, but due to their innovativeness, the corporation is a leader in the market of selling phones and laptops. Innovative businesses set the bar higher for other companies with similar products and this promotes competitive innovation (Kodama 2007). Apple Computer, Inc. introduces innovations in the market, and before other companies catch up, Apple creates another innovative product. This ensures that the manufacturer is always on the lead. Small organisations or businesses may not take advantage of these types of control. However, they can always develop their status over the course of time. They can produce an innovative product at a time.

Creativity

Innovation organisations normally employ a large number of competent and creative employees. This means that such companies are guaranteed the introduction of new innovative products (Kodama 2007). Additionally, an innovative firm will always attract talented employees. Such employees oversee all steps or processes of product development. They ensure the product’s success in the market through a process of design, conceptualisation and implementation that result in a finished product (Kodama 2007). Such a product will always be attractive and desirable to consumers. For small businesses that wish to be conspicuous in the crowd, they need to hire the most creative and talented minds because this is an essential component of innovation.

Experience

Innovation companies enjoy the advantage of experience on their side. They naturally get the process of product or service development down to an exact science, which can be repeated over and over again (Duffy & Association of Records Managers and Administrators 2010). This ability to repeat this process with efficiency sets them or makes a distinction between them and other companies in the market (Baldwin & Betts 2009). Small business or companies without talented employees can only engage in trial and error methods. This takes a grand toll on their financial foundation because trial and error methods to innovation are expensive.

Brand Name Recognition

Simply since innovative companies are always on the lead, they do not carry out a lot of advertisement (Kodama 2007). Their name alone carries considerable weight in their line of production and customer will always be eager get a new product from such organisations. A company like Apple does not do alto of advertisement. It only needs to launch a new product. When it launched the iPad, the product became a product hit (Baldwin & Gellatly 2003).

How to Ensure that Innovation Does not Become a Financial Risk

Many organisations fail to innovate, and this damages the company’s financial position. Some make innovative attempts, but only end up making more and more loses. Nevertheless, to achieve or develop innovation competency normally, both external and internal organisational perspectives are required (Kodama 2007). Therefore, to ensure that innovation does not damage the organization financial position, various things need to be done.

Manage the Risk

Innovation strategy should not be monolithic; it is to be sufficiently varied to allow for organisational flexibility. It is always good to bear in mind that not all innovation will be successful (Kodama 2007). Thus, organisations’ management needs to think much in terms of funding any innovative idea. Low-risk testing or experimentation is a key component in managing the risk incurred during innovation (Baldwin & Gellatly 2003).

Partnership

Most of the innovative organisations benefited from forming partnerships. For instance, Apple partnered with Microsoft. In the year 1997, Microsoft pledged to invest $150 million in Apple and made a five-year commitment to develop core products such as Microsoft Office for the Mac computer. Many companies attempted to acquire innovation through acquisition of other related companies (Drucker 2011). Other firms that have achieved through partnership are IBM, Cisco, and SAP. Cisco is a large company and uses a strategy of waiting for projects’ investors to capitalise corporations with favourable expertise that can be beneficial. Later, Cisco ends up buying companies that succeed. IBM took its time and waited for Cognos to succeed and innovate, later it purchased its key innovations and business objectives.

Innovation Competitions

Other companies have implanted what can be termed as innovation competitions. These competitions reward and encourage innovation. For example, Tata a very large and successful enterprise I India has come up with various initiatives of spurring and encouraging innovation. The organisation has a yearly competition known as Innovista. Teams from the company’s subsidiaries and groups apply and present their innovation projects to a team of judges.

Having a Talented Pool of Employees

Hiring or employing the right people for the right job is a key component to innovation. There has been a lot of debate on the employees that companies should hire to develop efficient innovation (Baldwin & Gellatly 2003). The great challenge that most organisations encounter may be past the range of a single individual in a company. However, having a team of cross-disciplined employees is essential and more likely to bring effective and efficient innovation. Microsoft Company has an elaborate process of hiring its staff. It describes its employees as T-shaped people. The perpendicular feature of the T characterises the depth, and the horizontal bar represents the breadth. Therefore, hiring a T-shaped person will ensure that the employee has basic knowledge in a broad domain of relevant qualifications (Loveridge & Pitt 2003).

Creating a Structure and Culture that Promotes Innovation

Organisations aspiring to be innovative in nature should have an elastic business definition that will help against protectionist drives. Senior executives must be willing to spend a significant amount of their periods considering prospects outside the frontiers of the firms they lead. They ought to deconstruct business mission, business models, relevant services and products. For Apple Company, Steve Jobs can be credited for the company’s success. When Microsoft pledged to invest in his company, Steve Jobs made abrupt decisions. He halted the licensing of Macintosh program; he also refused to license the latest Mac OS. He slashed Apple’s products from 15 to just four categories. That is portable and desktop Macintoshes. Additionally, innovation can be promoted by opening up innovation opportunities to all staff and engage suppliers, competitors and complementary organisations. Failing to deconstruct the innovation strategy can lead to vast financial loss. For example, Sears Roebuck was the company that pioneered several important innovations in the retail market in the 1960s. As a result of ignoring the advent of discount retailing, financial innovations and home centres, the organisation’s credibility has been shaken. To avoid such scenarios, innovative companies can focus on sustaining innovation (Maital & Seshadri 2007).

Obstacles to Innovation

Organisations perceive various obstacles in an attempt to undertake innovative strategies. These obstacles make it hard for such companies to achieve targeted objectives and goals (Baldwin & Gellatly 2003). In the process of developing an innovation, some companies fall short of resources. Additional hampering effects are related to lack of information about the technology available in the market. Other obstacles to innovation are related to organisational rigidities (Berg, Duncan & Friedman 2013). Other firms fail to motivate their staff so as to remain innovative. Another notable obstacle to innovation in many companies is risk avoidance. Organisations prefer to have peace of mind by avoiding innovative ideas. They want to maintain their profits without investing in innovation. Such organisations end up by only finding things that could go wrong with an innovation (Berg, Duncan & Friedman 2013).

How to Overcome Innovation Barriers or Obstacles

In today’s world, innovation is no longer a choice, but it is the engine that will determine the success of many organisations. To overcome barriers to innovations, companies must offer rewards and incentives to their employees to make them innovative. Businesses also need to reshape their perceptions about the idea of risk-taking. Partnership and collaboration must be sorted to ensure the risks involved in big innovations are spread (Montano 2005). That means that organisations must improve on their external collaboration. Finally, firms need to develop a culture of innovation.

Conclusion and Recommendation

In the modern world, innovation is a vital component to a company’s success. Although innovation in an organisational setting which is hard to achieve, businesses can use the experience gained. Organisations need to learn from companies that have successful embraced the idea of innovation into their business plans (Berg, Duncan & Friedman 2013). Corporations like Apple, Sony, Toyota and Samsung have achieved success through innovation of new products. Research has indicated that more than 50 % of most prosperous organisations in the present day have realised through innovation (Nystrom 2010). The latter can be hard to measure within an enterprise. If measured on the basis of short-term returns on the stock price, many organisations will not invest enough in innovation and development. This is so because many companies assume that stock markets respond immediately to the announcement of immediate earnings (Burgelman & Maidique 2008). They also believe that immediate earnings respond negatively to any announcement of investment in innovation that has long-term benefits.

So as to gain from a culture of innovation, which fosters new ideas and innovation, organisations need to communicate the importance of innovation to their employees (Shetty & Buehler 2008). Communication programs in firms must ensure that all employees are made aware of the precise role in the innovation process. The executive or the management also must articulate the link between business value and innovation (Drucker 2011). Hewlett Packard (HP) is a good example of a company that has used effective communication to communicate the importance of innovation. The company has hosted a series of Power-Up events to communicate and demonstrate the importance of innovations. Organisations need to identify the obstacles or barriers inhibiting innovation. They must open up to their suppliers, customers, and competitors and learn from the mistakes of most successful companies today. They have to conduct or collect customers’ feedback at all times so that the management is made aware on its weaknesses and areas that need improvements (Drucker 2011). This is because embracing innovation strategies is the only way that will make organisations remain competitive in the market.

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