Discuss about the Profitable Product Innovation.
In case Australia has to become a “clever country’ in true sense of the word, then the organizations should think of innovation as their core business (Härtel & Fujimoto, 2014). The discussions that were held with Mr. Tony Smith have shown that innovation is a very vital issue for the CEOs of Fortune 500. The findings have shown that even the CEOs from all around the globe have listed innovation as a significant challenge and as per them it is second only to human capital in terms of priority. However, the Australian CEOs rate innovation as a priority of the fourth order. Therefore, it is the responsibility of the entire organization to build an innovation capability. This requires a strong commitment in several areas which include strategic leadership. Additionally, three reasons contribute to the benefits that innovation provides. These are its influence on strategic planning, enhancement of productivity and competitive advantage. The capability of innovation cannot develop by itself. It has to be formulated consciously and planned, organized, controlled as well as “driven into place” (Härtel & Fujimoto, 2014). Hence, innovation forms the key to the challenges that are being faced by contemporary management.
This report will be discussing the management challenges which will be faced by the Australian mangers in future in terms of innovation capability, the environmental factors in the external environment that will influence managerial decisions in future and the processes and priorities of the organization in the next five years.
In any organization, innovation is a core process for renewal and until the managers are prepared for working constantly towards what is offered by renewing, how that offering is created as well as delivered, there is a high probability that the organization will not be able to survive in the turbulent environment that exists today. For firms to remain competitive innovation is essential. For enhancing success of innovation, its readiness for innovation needs to be assessed (Holt & Daspit, 2015) Management of innovation is among the strategic tasks that contemporary organizations face and managers have to take into account a number of key challenges for this in the next five years and these are as follows -.
Why Change?
Innovation requires learning as well as unlearning and strategic direction is needed for focusing on the innovative process (Tidd & Bessant, 2001). Accumulation of a large knowledge base is not enough rapid innovations are needed with the capability of the management to coordinate effectively and also redeploy external as well as internal competencies. It has been observed that though it lip service can be easily paid to this sort of challenge, evidence has suggested that firms are usually not good in terms of learning (Wladawsky-Berger, 2008). Besides this, seeing and also responding to the requirements of continuous learning is a capability that is not distributed widely and hence it innovation presents a challenge to mangers (Hamel, 2000).
What to Change?
Challenges may be faced in putting together an appropriate agenda for innovation even if the managers are able to recognize and also accept the need for innovating continuously. The firms need to have awareness regarding the extensive space inside which the possibilities of innovation are present and consequently attempt the development of a strategic portfolio which can provide effective coverage to this territory and balance both resources and risks (Francis, 2001).
The way in which innovation is thought about by people is another challenge. Even though it is a term that is used commonly, the meaning that is attached to it by people differs and therefore their behaviour towards innovation will also differ widely (Tidd & Bessant, 2001). For instance people might confuse innovation with invention. For invention to become innovation numerous steps are involved and it involves multiple resources along with problem solving. Innovation may also be thought of as being about science and technology which leads to the creation of new opportunities but at times technological possibilities fail to become innovations.
Innovation presents a set of puzzles which keep mutating constantly. There is no clarity regarding the rules of this puzzle and there is no one correct answer as there is a continuous change in questions. At times a particular firm might come up with an answer that might work for them. However, if other firms attempt to follow them, they may not be successful to the same extent as the previous firm was and the problems might become worse. Although innovation routines contribute to competitive advantage, they cannot be copied easily from one firm to another. They need to be learned and then practiced for a sustained time period (Pavitt, 2001).
There is a constant shift in the innovation agenda and for dealing with the major challenges, that the environment poses, routines have to be developed by the firms. All the things need not be engineered right from the start. There are differences between copying blindly and also developing as well as adopting a good practice that is used by somebody else (Cooper, 2003). The organization should have the ability of repeating by having relevant routines in place. Since innovation is not a problem that is static for which a specific solution will fit, thus firms need to keep finding their solutions constantly to the shifting puzzles.
Innovation is basically concerned about “creative problem solving” and with increase in the uncertainty and turbulence in the environment, the need for such a capability rises. With markets becoming uncertain, increase in regulatory pressures, technological opportunities and threats changing rapidly, shifts in the competitive and customer requirements and numerous other variables that have to be dealt with, the probability of obtaining the correct innovative response decreases. It becomes essential for the organizations to enhance their capacity of innovation and this requires mobilizing large amounts of participation in innovation and implementing this concept becomes challenging as the process is unfamiliar, risky and untested for several organizations (Bessant & Caffyn, 2001).
There are seven ways in which innovation can be fostered by the managers which include being on purpose, questioning and listening, risk experimentation, reflecting and synthesizing, considering the dynamics of “inside out and outside in”, fostering generativity and being authentic (Cashman, 2013).
Organisational capability is an approach that is usually employed by the managers to foster innovation and manage it. As per this approach, product innovations over a period of time are managed better by nurturing as well as enhancing the organisation’s capabilities as an engine of innovation. Superior performances of businesses of the organizations are dependent on investments made in innovation capability on a large scale rather than the investments made in creating physical assets. The stronger the form’s innovation capability, the more will be the effectiveness of their innovation performance (Lawson & Samson, 2001). Three factors help in determining the way in which the managers can associate capability with innovation. These are –
The seven elements of the capability of the organization that mangers need to keep a watch on in the next five years for fostering innovation consist of vision and strategy, competence base being harnessed, organizational intelligence, idea management and creativity, organizational structures, climate and structure and technology management (Lawson & Samson, 2001).
An shift that is ongoing in the economic activity globally from the developed to the developing economies, coupled with rise in the consumers in the markets of the emerging nations, are the major global developments that are viewed by executives worldwide as most significant for businesses and also very positive for the profits of the organizations globally in the coming five years. Two other critical positive aspects of globalization have also been identified by the executives. These comprise technologies enabling information to flow freely across the world and an increasing number of labour markets globally (Dye & Stephenson, 2010). Apart from this, tomorrow’s company will be operating in a capital market with a different imperative wherein the rewards will be in the form of responsible business that is able to create value both for itself and also for its shareholders in a longer time period. Hence, sustainability will be a crucial aspect in the future business environment that mangers will have to consider (Adams, 2014).
As per the “Contingency Theory Model” of Fiedler, the style of leadership reflects the personality as well as behaviour and the styles of leadership are generally constant. Styles are not changed by leaders, rather they change the situation. For effective leadership, an appropriate fit is required between the behaviour and style of the leader and the followers as well as the situation (Fiedler, 1976). Thus, as per this theory, the design of organizational structure that is most significant is the one wherein the structure fits into the contingencies (Donaldson, 2006). In the global economy of today, contingency leadership is very essential. Successful styles of leadership vary from one place to another (Peretomode, 2012).
Innovation provides several benefits in the form of enhancement of productivity, strategic planning and competitive advantage. The responsibility of building innovation capability rests on the entire environment and it needs a strong level of commitment from ever quarter of the organization which also consists of the strategic leadership. Innovative capability cannot develop by itself and needs conscious formulation along with planning, organizing, controlling as well as being driven to its place. The main challenges posed by innovation to the managers are related to its proper understanding, developing an appropriate culture, learning continuously and getting the organization highly involved in the innovative process. For fostering innovation the managers need to consider it more than just a process of R&D, it should be thought of as a competitive advantage and divergent behaviours need to be accommodated. For operating in the external environment the managers need to make adjustments of the main variables that are presented before them and also to the priorities and processes of the organization. They can also make use of the “Competing Values Framework” for guiding the management decisions under certain types of environments.
The firm needs to adopt the given three recommendations in the coming five years for ensuring that the “management organizational processes” as well as priorities are flexible and also adaptable.
References
Adams, C. (2014). Sustainability and the company of the future. Retrieved September 26, 2016, from drcaroladams.net: https://drcaroladams.net/sustainability-and-the-company-of-the-future/
Bessant, J., & Caffyn, S. (2001). An Evolutionary Model of Continuous Innovation Behaviour. Technovation , 67-77.
Cashman, K. (2013, August 21). 7 Ways Leaders Can Foster Innovation. Forbes .
Cooper, R. (2003). Profitable Product Innovation. In L. Shaivinina, International Handbook of Innovation. Oxford: Oxford: Elseiver Science.
Donaldson, L. (2006). THE CONTINGENCY THEORY OFORGANIZATIONAL DESIGN: CHALLENGES AND OPPORTUNITIES.
Dye, R., & Stephenson, E. (2010). Five forces reshaping the global economy: McKinsey Global Survey results. McKinsey and Company.
Fiedler, F. E. (1976). The leadership game; matching the man to the situations. Organizational dynamics , 6 – 16.
Francis, D. (2001). Developing Innovative Capability. Brighton: University of Brighton.
Hamel, G. (2000). Leading the Revolution. Boston, MA: Harvard Business School Press.
Härtel, C., & Fujimoto, Y. (2014). Human resource management. Frenchs Forest, NSW: Pearson.
Holt, D. T., & Daspit, J. J. (2015). Diagnosing Innovation Readiness in Family Firms. California Management Review .
Kaiser, R. B., Lindberg, J. T., & Craig, S. B. (2007). Assessing the flexibility of managers: A comparison of methods. International Journal of Selection and Assessment , 40 –55.
Lawson, B., & Samson, D. (2001). Developing Innovation Capability In Organisations: A Dynamic Capabilities Approach,. International Journal of Innovation Management , 377-400.
Pavitt, K. (2001). Technology Management and Systems of Innovation. London: Edward Elgar.
Peretomode, O. (2012). Situational And Contingency Theories Of Leadership: Are They The Same? Journal of Business and Management , 13-17.
Razavi, R., & Attarnezhad, O. (2013). Management of Organizational Innovation. International Journal of Business and Social Science , 226=232.
Tidd, J., & Bessant, J. (2001). Managing Innovation. Chichester, UK: John Wiley.
Wladawsky-Berger, I. (2008, August 23). The Challenges of Innovation. Bloomberg .
Yukl, G., & Mahsud, R. (2010). Why Flexible And Adaptive Leadership Is Essential. Consulting Psychology Journal: Practice and Research , 81-93.
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