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Embracing Innovation: A Must For Business Organizations
Firms need to embrace innovation if they are looking for a sustained competitive advantage in the dynamic environment that exists today
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Innovation is defined simply as a "new idea, device or method". This can include the process of creating and implementing a new idea in the form of useful products, services or operations. Innovation can also be viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs.
Innovations have been happening since humankind came into existence. Domestication of horse and discovery of fire was an innovation for the early man. Many innovations subsequently transformed this world. Johannes Gutenberg’s printing press developed around 1440 in Germany improved on already existing presses through the use of a mould that allowed for the rapid production of lead alloy type pieces. The assembly line production of Ford enabled mass production. The invention of the steam engine gave a new dimension to logistics. Life without the electric bulb invented by Edison would be unthinkable.
Innovation is of strategic importance to any firm whether it is involved in providing products or services. We live in a world which is volatile, uncertain, complex and ambiguous. Change is the only constant today. Customer requirements change quickly, technologies get obsolete in less time than they did a few decades back and product life cycles are getting shorter. This does not hold true only for products but is equally applicable to services. Banking is the most obvious example. Banking services have changed dramatically in the last decade from using credit and debit cards to use mobile wallets. Survival in this VUCA world is not easy. One thing which can help companies survive today is innovation.
An uncertain environment requires companies to be agile. Innovation can help companies develop this capability to respond quickly and suitably to external changes. Innovation is, therefore, not just desirable; today it is almost a necessity. Traditionally, a firm’s competitive priorities have been one of the following: cost, quality, time and flexibility. However, we need to add innovation as the fifth competitive priority. Companies like Samsung and Apple focus on innovation as their basis of competition.
Innovations in final products which customers use are termed as Product Innovation. The process used for making these products may also undergo innovation and this is termed as Process Innovation. Often, behind both Product and Process Innovation, there is an innovation in technology which we may be termed as Technological Innovation. Every company uses technology in some way whether it is a product focused or a service focused industry. Managing technology, therefore, becomes important for any company. Managing technology requires that managers be aware of upcoming technologies and explore the application of new technologies for their firms. Technology can greatly affect an organisation’s competitiveness and a technology strategy has to be integrated with a company ’s business strategy. Established companies can be lost into oblivion if they do not manage technology well. A case in point is Nokia which was the established leader in mobile phones about two decades ago. However, it failed to innovate and keep pace with technology. In no time the company not only lost its leadership position but seems to have been relinquished into history.
Another factor which can lead to innovation is creativity. Creativity is the ability to combine ideas in a unique way or to make useful association among ideas. Creativity can help in bringing in innovation. Companies need to foster creativity and innovation by allowing employees to make mistakes when trying new ideas. This could be in direct contradiction with standardized processes in a firm. Firms need to find a way to balance between these two. Standardization brings in efficiency while creativity and innovation can bring about breakthroughs in products and processes.
Firms can set up processes which could encourage innovation and creativity. For product-based firms, investment in research and development is a way to do this. The amount of money invested in R & D may have a correlation with the innovations being brought about by a company. However, investment in R & D is not the only way to bring about innovation. According to William Maloney of the World Bank, there can be many other ways to promote innovation in a firm: the adoption of better practices and products, upgrading the quality and licensing the existing technology. Licensing may seem to be contradicting our efforts to upgrade our technological capabilities. However, reinventing the wheel is not exactly what we should do. We may fall behind even further we do that.
In conclusion, it can be said that firms need to embrace innovation if they are looking for a sustained competitive advantage in the dynamic environment that exists today. This can be brought about by bringing in a culture of innovation: giving space to employees for creativity and experimentation, investing in R & D and managing technology for the benefit of the organization.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.