Theories of organizational change suggest that organizations must be ready to recognize the need to embrace change by applying technology to improve competitiveness. The advantage of any technology cannot be purchased from shelves in technology shops but rather tailoring and developing the existing technology to meet the strategic needs of the business (Rainey, 2010). Organizations have to either adapt the technology to fit their own needs or develop their own technologies. The ability to recognize new technologies opportunities is an entrepreneurship ability that every business must have (Vemuri & Bertone, 2004). Firms that are leaders in technology can spot new technologies and tap them before they can be seen by their competitors. This essay is based on an action plan that can be used to recognize new technological opportunities.
The first step is examining the innovators and early adopters that exist in the market to track the Gartner Hype Cycle. Through examining stages of major transformations that have existed in the market and determining the shifts in technology that have been witnessed in the industry, it is easy to determine the direction that the new technology may come from (Tyre & Orlikowski, 2003). In most cases, technologies arise due to an inefficiency in the market that entrepreneurs discover and seek to solve. The role of the entrepreneur is to offer so track the annual Gartner Hype Cycle to understand the net innovation within the industry thus allowing the organization to work on it. Johnson (2010) suggests that innovations come as a network of things happening in the brain which are later turned into new ideas when someone else learns what people are thinking. Technological advances keep on changing as customer expectations also keep on rising. For example, companies working with information technology have to stay at per with very innovation that comes up.
Management then needs to look for directions of change within the industry since technological changes take place at intersection points of technology, business and consumer behavior (Kane, Palmer, Phillips, Kiron, & Buckley, 2015). For example, the IT industry trends change based on the demand from the consumer and the surrounding environment around business. Penin, Hussler, & Burger-Helmchen (2011) argue that as technology changes, IT also evolves to adapt to such changes. The business model canvas can be used to understand the technological components of the organization that need to be changed. For example, Microsoft seeks to understand consumer trends in the use of computer systems and ensures that it aligns its program to this charges. Before other organizations release certain software into the market, Microsoft ensures that the programs are compatible with their computer systems as a way of closing up on the technology gap. Anderson (2004) Suggests that in the past predictions were made about certain technologies that will come up like e-commerce or internet traffic which are a reality today. Which means following prediction trends can form the path to new inventions.
Every technology that arises does not have long-term effects on the organization but rather some have short-term fads that may not influence the market. Technologies that work well must adapt the collaborative model of consumption sharing to survive the changing trends in the market (Don, 2010). One factor behind IT solution is its ability to have user-friendly effects. Management has to weed out technological trends that may not be long-lasting. Managers need to analyze all the available technological options and ensure that they fit within the existing context of the business environment and meet the future needs of the organization. The mode allows for analyzing the technological options that exist and determining if they are viable. The external environment like consumer trends shape the technological future of the organization in determining the future of innovations. As organizations compete and consumer trends change, technological leaders have to develop innovations that will lead the future. Microsoft enjoys limited market for its products since what is released in the market is viable and meets the needs of the market. Every innovation must be tested to ensure that it stands the test of time.
After assessing the consumption level of the technology the next step is to study the pipeline of change that is occurring within the industry. Every industry has technological changes that are taking place. For example, in the IT industry, programming software are evolving every time while technology companies like Microsoft are also evolving every day. There is need to study adjacent industries that can impact your business. Here leaders and organizations that drive progress need to be developed and strategies for developing new alliances with them identified. For example, custom application can be tailored during processing based on the business specifications of the organization.
The action is to take the future for a test drive by ensuring that the organization canto adapt to any new challenge that may arise from the use of the new technology. Just like a family that is expecting a new baby, the house needs to adjust to accommodate the baby since the baby will come with specific needs that may not be existing in the organization. Education channels like Coursera or Udemy can be helpful in determining the best options that the organization can take in developing viable options in a new technology. This will assist management in putting adequate structures in place to meet the changing needs of the organization.
The next step is to involve people within the organization that may make great things. For example, technological innovations mostly come out of employee creativity. All the discoveries that have existed in history arises from the need to solve an existing business problem. Analyzing the ideas that such people have and taking a step further can lead to a new technological innovation in the organization. Employees play a crucial role in determining the direction that the organization goes can technological innovations. Organizations that have enough resources channeled to research and development allow employees to develop business ideas that meet the needs of the technological needs. Through training and development, human resource develops competencies required in adopting available technologies.
Lastly, there is need to connect all the dots and adopt the required technological direction. Management needs to develop new lenses in which to identify trends in technology and shifts in consumer behavior (Lichtenthaler & Lichtenthaler, 2009). This process will allow envisioning of the future preparing the business to accommodate the changes. Microsoft works on different projects but only a few are accepted are launched as part of the company’s technology component.
2.Open innovation is the use of inflows and outflows of knowledge to accelerate innovation internally and at the same expanding the markets for using the same innovation. Information is strategically exchanged with outside actors beyond the organization to integrate other resources and knowledge into the organization (Chesbrough, 2003). The approach is grounded in recognizing impact of external ideas and internalizing them with internal ideas to advance their technology. The knowledge flows are purposively managed. Proponents of the idea suggest that boundaries between the firm and its environment are more permeable thus making it easy to transfer them inwards or outwards. Thus companies cannot only rely on their own research but rather can borrow or buy ideas from other organization. According to Chesbrough, Vanhaverbeke, & West (2008) suggest that the method is opposed to traditional closed models where companies primarily use internal resources to drive innovation but rather adopts strategies like mergers and acquisitions, strategic alliances, licensing, joint research and development, and user involvement. The approach can be applied in organizations to develop new strategies for meeting the needs of a changing world. This essay analyses the application of open innovation.
Principles of open innovation
The first principle of open innovation recognizes that not all smart people exist in the organization and smart people outside the organization may have much to offer (Gassmann, 2006). This means the organization needs to consider ideas from everywhere to develop alternative routes to innovation. For example, Microsoft uses projects from third parties like students to assess the future of technology and determine which projects to choose. Johnson (2010), gives an example, of how Prestero and his colleagues and how they discovered manufacturing of incubators through taking ideas from what they learned from the people that were around the coffee shop that day.
The second principle balancing both external and internal research development activities to attain higher innovations. Microsoft funds student project in higher education institution to allow them bring in external ideas for innovation (Duijsters & Dittrich, 2007). On the other hand, internal employees engage in research to determine ways of improving the existing products. Anderson (2004) proposes the grand unified theory of predicting the future which can be used in determining how certain technologies will perform. This means that any new technology must balance between internal and external ideas to affect any industry.
The third principle is the use of external knowledge to improve internal innovations. Most companies develop new ideas but require the support of external knowledge and partnerships to execute such innovations. For example, Microsoft relies heavily on partnerships with other companies to develop products that meet the needs of the consumer. Leadbeater (2005) suggests that improvements in technologies like the mountain bike came from the challenge to creativity from consumers who wanted better products from the company.
The fourth principle is use of business model trumps to deliver value to customers and make profits. Microsoft uses its existing office software to upgrade any innovation that they invent as way of launching it into the market. This principle focuses on developing an innovation that may serve the present and future need of the customer. Anderson (2004) suggests that the DVD was launched in 1990 as an expensive commodity which later fell in value by 1998. However, it is still on the market because it has overcome business trumps to deliver value to the customer.
Barriers to applying open innovation
One biggest barrier to open innovation is legal and government regulation. Today there exists different laws that govern use of software and information technology (Chesbrough, 2011). Laws like copyrights and patents may limit the extent to which companies may adopt open innovations from other companies or third parties.
Organizational or administrative barriers may also exist from external organization that a company may wish to source information from (Johnson, 2010). Competition has created secrecy and information withholding as a way of controlling the market. Such barriers hinder access to such innovations thus making it difficult to innovate openly.
Management support may also be another barrier that limits access to open innovation. Burgelman, Christensen, & Wheelwright, (2009) add that since managers only create the environment for such activities, limited access may mean that they cannot approve or allocate resources to some activities which may limit the innovation process.
Benefits of open innovation in an organization
There are several benefits that organizations may reap from open innovation that include the following
Downsides of open innovation
Some innovations may be too expensive to the organization and fail to pay off in the long run due to their inability to yield the expected profit. For example, Microsoft is a large company that require high technology innovations to be compatible with its systems. This means that a lot of resources may be pumped into such projects with high expectations.
Open innovations my not survive competition since they arise as a result of shared knowledge among different partners in the industry. Anderson (2004) suggests that technologies must survive the test of time to serve the need of the customer. Therefore some technologies may be invented but fail to meet the needs of the market and become obsolete.
Conclusion
Open innovation is a viable model for any organization that puts proper strategies in place to develop a technology that meets their needs. Since innovative idea in the software industry come from external sources, companies like Microsoft can invest in such approaches to develop solutions that meet the changing needs of the market. Consumer trends keep on changing thus the need to adapt the open innovation approach to develop better strategies for meeting the needs in the market.
References
Anderson, C. (Producer). (2004). Technology’s long tail [Motion Picture]. Retrieved from https://www.ted.com/talks/chris_anderson_of_wired_on_tech_s_long_tail/transcript
Burgelman, A., Christensen, M., & Wheelwright, C. (2009). Strategic Management of Technology and Innovation. NewYork: McGraw Hill.
Chesbrough H., W. (2003). Open innovation: the new imperative for creating and profiting from technology. Boston: Harvard Business School Press.
Chesbrough, H. (2011, March 21). Everything You Need to Know About Open Innovation. Forbes.
Chesbrough, H., Vanhaverbeke, W., & West, J. (2008). Open Innovation: Researching a New Paradigm. London: Oxford University Press.
Don Rainey. (2010). 4 Ways To Recognize Opportunity When It Knocks. Business Insider.
Duijsters, G., & Dittrich, K. (2007). Networking as a means to strategic change: The case of open innovation in mobile telephony. Journal of Product Innovation Management, 24(6), 510-521.
Gassmann, O. (2006). Opening up the innovation process; towards an agends. Research and Development Management, 36, 223-228.
Johnson, S. (2010). Where good ideas come from [Motion Picture].
Kane, G. C., Palmer, D., Phillips, A. N., Kiron, D., & Buckley, N. (2015). Strategy, not Technology, Drives Digital Transformation. MIT Sloan Management Review.
Leadbeater, C. (Producer). (2005). The era of open innovation [Motion Picture].
Lichtenthaler, U., & Lichtenthaler, E. (2009). A Capability-based Framework for Open Innovation: Complementing Absorpttive CapaCITY. The Journal of Management Studies, 46, 1315-1338.
Penin, J., Hussler, C., & Burger-Helmchen, T. (2011). New shapes and new stakes: a portrait of open innovation as a promising phenomenon. Journal of Innovation Economics, 7, 11-29.
Tyre, M. J., & Orlikowski, W. J. (2003). Exploiting Opportunities for Technological Improvement in Organizations. MIT Management Review.
Vemuri, V. K., & Bertone, V. (2004). Will the Open Source Movement Survive a Litigious Society? Electronic Markets, 14(1), 114-121.
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