Question:
Select an organisation; describe the sources of innovation obtained by the chosen organisation. Identify and discuss barriers to innovation faced by the management of the organisation. Recommend improvements that can be made by the organisation in inculcating innovative culture among the employees.
Innovation is the key of sustainable business run by an organization. It is usually refers to the changing implementation in the organization processes, perspectives or products. Usually innovation is implemented in the organization for improving the organizational status which can be by creating dynamic products or improving the operations. There are various reasons behind the importance of business innovation in an organization. However, organizations would have their own priorities specific to different sectors related issues for balancing the business, to reduce the risk from competitor, to reduce risk of losing important employees or only for operating the inefficiencies of the organization (Schaltegger, Lüdeke-Freund & Hansen, 2012). Therefore, through innovation, the marketer can be differentiated from their rivals. Innovation is important for discovering the current opportunities existing in the industry or which are likely to emerge in the future (Arora et al., 2016). A successful organization not only works for satisfying their current customers, rather have prospects of future trends in some areas, ideas, products or services which would help them to meet the vision set by the organization effectively. Innovation helps the organization to stay ahead of the competition in markets, trend shifts and technology advancements.
While implementing innovation in the organizational operations, the customers would be able to see something in the organizational context who can add value to the organizational product, thereby providing commercial advantage to the business, especially in rapidly shifting market. However, besides, all of these advantages of innovation implementation in the organization, there are negative aspects also (Lui, Ngai & Lo, 2016). Organizational management team often faces wide ranges of issues while implementing innovation in the business settings. These issues or barriers can interfere with successful implementation of the innovation; sometimes these internal and external barriers can resist change or innovative e practice in the organization. In this study, the concept of innovation would be discussed based on the selected company Walmart. The source of innovations and the barriers faced by the management of the organization in implementing innovation in the business would be analyzed (Brown & Osborne, 2012). Finally, the suggestion for improving the situation would also be provided in this assignment.
Walmart is a multinational retail corporation having a root in America. The organization operates a chain of hypermarkets, grocery stores and discount department stores. The organization has it’s headquarter in Bentonville, Arkansas. Walmart was established in 1962 by Sam Walton and incorporates in 1969 (Mayer & Noiseux, 2015). In current days, the organization has 11,527 stores and clubs throughout 28 countries under 63 banners in total. Walmart is the largest company by revenue throughout the world, according to the Fortune Global 500 list in 2014. It has been seen that it is the largest private employer with 2.2 million employees in the world (Venugopal, 2015). In U.S. it was the identified as the largest grocery retailer. The organization employs 2.3 million associates around the world. About 75% of the organizational store management teams started their job as the hourly associates and got $50,000 and $170,000/ year (Keupp, Palmie & Gassmann, 2012). However, the company is investing $2.7 billion within past two years in education, training and higher wages.
The total revenue of the company was $482.1 billion estimated at the end of the year 2016. The return by the company to their shareholders was $10.4 billion (Thomas & Wilkinson, 2015). The current CEO of the organization is Doug McMillion who has successfully implemented innovation for improving the organizational practices. The organization is having a well established position in the market. However, there are a number of issues identified and reported by the organizational reviews as well as from different reports which are affecting the brand image of the organization. Both internal and external issues are affecting the organizational success and sustainability (Bucherer, Eisert & Gassmann, 2012). Thus, for combating these issues, the CEO and the management team of the organization has undertaken appropriate techniques for the innovation in their operations which would assist to improve the situation.
The organizational operations are not supportive to the employees which is making the employees dissatisfied and inferring with the highest productivity provided by the employees. There are a number of employee related issues identified. It has been reported that the two store openings reduce three local jobs or retail employments of an average 2.7 % in every country the company enters (Hamel, 2012). Thus, the company is said to be the job killer. It has been claimed that Walmart jobs are poverty jobs. The payment of the employees is only $8.81/hour which is $15576 based on the full-time designation that is less than 2/3rd or the poverty line (Hill et al., 2014). The company pays less than any other retail company in America. It has been reported by Kirchhoff, Linton and Walsh (2013) that Walmart discriminates the disabled and elderly employees, thereby working against the disability discrimination law.
It has also been estimated that the internal environment in the organization is not safe for the employees. The company has been notorious for endangering its employees both at organization and home. From the publicized instances of the company, the night ‘lock-ins’ is one practice, where it has been reported that, the employees were literally locked in several Walmart outlets for ensuring that they are staying back at their job roles (Marcus, 2015). Employees filed a class action suit against the company claiming that the company is forcing them to work 70 hours per week while paying only $1500 per month. In spite of mistreating the employees, the organization forced employees to purchase new uniforms from the company and stealing their money in this way. In Pemmsylvania, the company has been reported to force the employees for working in unpaid breaks and meal times for which employees sued the company.
The company undertaken several steps for providing cheaper insurance and less care to their employees resulted in sicker employees. Walmart used taxpayer subsidies for providing health care benefits, in spite of paying the employees enough to afford the health care facilities. They also cut the insurance benefits from the part-time employees. The organization also failed to meet the shareholder’s expectation; however, the organization gave $1.5 million bonus to the CEO (Varadarajan, 2015). Thus, clear economic class discrimination has been seen in the company. The organizational underpays women and neglects pregnant workers. In U.S. workforce more 57% are women who were paid $1.16 less/hour. A number of lawsuits have been filed for women working in Walmart (Weber & Rohracher, 2012). The company used foreign labor as well as child labor which are against the legal rights. The company has also been reported to hurt the local communities.
The organization has undertaken a number of innovation strategies for dealing with Updated the safety policies in 2013. The organization has arranged training processes for enhancing the efficiency of the employees. The low productivities of the employees were affecting the organizational entire productivity and success negatively. For combating with this situation, the organizational management implemented specific training sessions for improving employee’s skills and knowledge about their job roles (Nonis & Relyea, 2012).
The employees are widely dissatisfied for the company’s services. Thus, the management decided to implement reward system for the employees. The reward system helped to motivate the employees in the context of organizational notorious environment. The reward system helped the employees to identify their strength and weaknesses upon which they could work on and they could be motivated after getting rewards for their hard work (Caraway, 2016). The recruitment system of the company was not suitable for the organization and the management decided to improve the recruitment process. The internal recruitment was less which was one of the most important reason for employee’s dissatisfaction. Company used to higher employees for low wages in spite of promoting an internal employee (Collins, 2015). Improvement of promotion and recognition system improved the organizational culture and improved the employee satisfaction.
The primary source of innovation of Wal-Mart is their supply chain management. According to Schaltegger, Ludeke-Freund and Hansen (2012). Wal-Mart products are manufactured in more than 70 countries and operate more than 11,000 stores in 27 countries. Their innovation in the supply chain management began when the authority of the organization started to remove a few of the chain’s links. Since 1980, Wal-Mart started working directly with the manufacturers in order to minimize costs. They understood that this step could help them to manage their supply chain management more efficiently (Arora, 2016). As a result of their innovative supply chain management the organization was named as Retailer of the Decade.
There is another innovative decision was to implement strategic vendor partnership. The authority of Wal-Mart used strategic sourcing in order to figure out products at the best price from suppliers. They selected only those suppliers who could supply products according to the demand of the organization. After that, the company developed partnership with most of its vendors and offered them long-term and high-volume purchases while ensuring the lowest possible price (Lui et al., 2016). The whole supply chain management of the organization acted like a collaboration.
Wal-Mart authority is also using cross docking as inventory tactic. It was known as a logistic practice that was the centerpiece of Wal-Mart’s strategy to refill inventory efficiently. Suppliers were told to deliver products to Wal-Mart’s distribution center where those products were cross-docked. Right after the cross, docking is completed; those products are delivered to Wal-Mart (Berlau, 2015). This process of cross docking helped the organization to keep the inventory and transportation cost as low as possible. It also helped them to reduce the transportation time by eliminating inefficient.
The major resistance would come from the customers all over the world. Wal-Mart is famous for offering goods as a lowest possible price (Caraway, 2016). If the organization implement changes in its workplace, then it obvious that, they will have to increase the prices of the products in order to meet the new expenses. In this case, the organization will face huge challenges from its existing customer base. Customer will not like the process as they will find out that the prices of the products are rising at an alarming state. Most of the customers will begin to complain to the authorities of the organization and will ask to keep the prices same. On the other hand, some customers will instantly change the organization and will star to buy from other retail organizations such as Tesco, K-mart and Asda (Lui et al., 2016). In this way, the chances are high that Wal-Mart will lose a huge customer base that not a single organization would want to see. Therefore, it would be a dilemma for the organization whether to bring changes or not.
In the end, last but not the least, resistance will come from the market rivals such as Tesco, Asda and K-Mart (Bucherer, Eisert & Gassmann, 2012). The only drawback that Wal-Mart has is their organization structure. Other market rivals can easily use that image of Wal-Mart to strengthen theirs, If Wal-Mart tries to improve their image, and it is imminent that that organization will prevent them to do so as they will lose their competitive edge over Wal-Mart (Arora, 2016). Therefore, those organizations can lower their prices to a level that the customers will overlook the changes of Wal-Mart and will fall for the offered low prices of other retail organizations.
There are a number of barriers for implementing innovation in the organizational context. Creating innovative environment in the organization means changing the existing framework of the company. The organizational members do not always accept change. Thus, the management of the company faced a number of barriers while implementing these innovative changes in the organization (Davila, Epstein & Shelton, 2012).
Resistance from internal stakeholders
The resistance of innovation from the internal stakeholders can arise from employees, HRM facilities and higher authorities. Some employees who are working from several years raise objection for the innovation (Thomas & Wilkinson, 2015). It is because innovation would change the traditional operational processes which might be difficult to cope with. Thus, mostly the older employees give objection during change implementation.
In the case of HRM services, the HRM facilities who might neglect the employee’s welfare and satisfaction would become barrier for innovation. It is because; the new system would not provide them the facility to work with the power which they had previously (Jeston & Nelis, 2014).
In the future, the chances are low that any logical change will take place in the organization. The primary problem that the organization will face while changing its business model is its existing policy of everyday low prices. This strategy of everyday low price includes several limits that will not allow Wal-Mart to make any changes in the organization as it can increase the cost of the organization that will force the authority of Wal-Mart to increase the prices of the products (Bucherer, Eisert & Gassmann, 2012). If it happens, the chances are high that their competitors will take the market away from the organization. On the other hand, it is also true that the organization must generate comparable return on equity to satisfy Wall Street and other inventors.
That is why the organization has implemented sweatshops and hazardous working condition. It helps them to reduce their cost of the company. This cost reduction helps them to minimize the prices of the products they offer to the customers (Becker, Kugeler & Rosemann, 2013). If the organization implements anything to improve the working condition they will have invest a huge amount of money. Besides, the bigger the upgrade, the larger the money will be needed to maintain it continuously (Giacalone & Rosenfeld, 2013). Therefore, the organization would not be able to offer products at the lowest possible rate.
Resistance of external employees
The resistance against the innovation implementation can also be raised from the external employees including suppliers, customers and shareholders. One of the major reasons behind the objection for innovation is the enhanced cost of innovative operations in new organizational environment (Wright, Sturdy & Wylie, 2012). Suppliers would not gain benefits if the price of the product were enhanced. On the other hand, in the case of shareholders, due to customer’s dissatisfaction, there would be a chance of not getting their shares in further business with the company, as they have not received their expected share from Wal-Mart in previous projects (Hamel, 2012). Thus, they might resist the innovation in the organization. Another barrier of innovation that the organization is facing from its external stakeholders is number of lawsuits that are placed against them. A huge number of employees have charged Wal-Mart for harassment and some organizations has accused it for violating rules and regulations related to protection of environment (Rosemann & vom Brocke, 2015).
In order to bring change in the organization, Wal-Mart will have to follow some strategies and methods so that both the internal and external stakeholders can respond positively. Those strategies are mentioned below,
When change is announced, it is expected that all the employees and other stakeholders will not get ample information about it. It is not expected that leaders would come forward and will explain the reasons of change. Employees and other stakeholders do not want to be told that whether the change is good or bad. They only want to understand it. Therefore, it is recommended that Wal-Mart must share ample information with its stakeholders as plainly and as completely as possible.
Employees and other stakeholders would think about how the change is going to create an impact on them. They will think that whether they have the skills and abilities to go on with the change. These personal concerns of the stakeholders should be surfaced and addressed.
After implementing the first two recommended strategies employees will be ready to hear information on the details involved in implementing the change. In this stage, the stakeholders would like to know how the thinking behind the change is tested before the implementation. It is also expected that some employees will also want to know where they will go to find some assistance, as they will be affected by the change. At this stage, the authority of Wal-Mart will have to be ready to answer these questions with proper justifications. They will have to implement proper training and guidance systems that would help the employees who will be affected by the change.
Most importantly, Wal-Mart will have come out from their “lowest price” strategy, as after implementing the change they will not able to offer products as a lowest price. The chances are high that when the prices will rise, the customers will ask questions. At that time the organization will have to implement proper advertisement strategies to communicate with the customers in order to tell them that the changes are made for the betterment of the organization and for the customers.
Conclusion
In conclusion, it can be said that innovation is the key to success for a competitive organization. To sustain the business growth, the company would have to implement innovative practices. In this assignment, Walmart has been selected for investigating innovation implementation in the company. It has been revealed that the organization needs innovation as it has a number of issues and an innovative change implementation can help the organization to improve the current situation based on which the organization might be able to sustain their business and can achieve more success in the industry. In this assignment, a brief description of the organization has been provided along with the issues faced by the organization from which the need for innovation has been identified. Then the source of innovation obtained by the organization has been discussed along with the barriers faced by the organizational management while attempted to implement the innovation in the organization.
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