Management of Strategy Change and Innovation
Embracing technological innovation is a key driver for a firm towards the realisation of competitive advantage in the market. Firms must harness effective mechanisms to ensure they have the upper hand in market competition (Johnson et al., 2014). However, those mechanisms of technological change and innovation have been studied in isolation without proper accounting for their interactions. As an organisation, constant innovations help them to succeed faster than those that do not do it regularly giving them a competitive advantage (Baregheh, Rowley, & Sambrook, 2009). Innovation in business firms has to do with how better, cheaper and faster the firm makes products and services than their rival competitors (Urbancova, 2013). Organisations are mandated to establish a culture of innovation within the society. To accomplish this task, such organisations have to implement plans of action that target at encouraging innovative ideas. Key Terms
Innovation
Innovation adoption
Culture of Innovation
Competitive Advantage
Creating a Culture of Innovation
Organisations can play a major role in harnessing competitive advantage in the market if only they can create a culture of innovation (Urbancova, 2013). However, many companies have not realised or even invested in any innovation and more so, technological innovation. Many are the companies whose topmost leaders do not appreciate a single piece of innovative ideas from their subordinates. As a result, other companies that value the opinions and ideas of everyone in their organisations makes tremendous progress within their business environment with the help of having a competitive advantage over their competitors. Therefore, organisations need to embrace a culture of innovation seriously and take it as a key driver to change the face of a highly competitive economy (Ambec, Cohen, Elgie & Lanoie, 2013).
Moreover, organisations should strive to provide their staff members with specific incentives to engage in innovative ideas. As Johnston et al., (2014) argue, lack of these incentives does not encourage staff members to innovate, and as a result, they may not be willing to air out or try new ideas. If an organisation can include incentives in the employment contract manual, it may go miles away in creating an innovative organisation as everyone within the company will be engaged completely in the search for the most innovative ideas.
Organisations also need to have a follow-up plan for newly developed ideas. Besides, they need to be there to support ideas with material things such as capital, resources, and attention (Thompson, Scott, & Martin, 2014). This has been made easier with the emergence of information technology system whereby research can be done online and be able to identify new market opportunities and come up with new ideas on how to bridge the niche (Murray, Caulier-Grice, & Mulgan, 2010). While accomplishing this mandate, goals and objectives need to be specified to avoid wastage of time and resources. Besides, the effectiveness of the idea or innovation needs to be evaluated first to assess whether it will bring failure or success to the organisation (Cooper & Kleinschmidt, 2011). As such, innovative organisations must work to support new ideas, which call for material provision and training of staff as well as providing marketing support. Forbes et al. (2011) argue that, for businesses to produce the right innovation to strategize on their competitive advantage, they must at the level best be able to do something that has value. He outlines a five-stage process in the development of innovation including discovery, evaluation, execution, commercialization, and the diffusion of the idea.
The generation or the discovery stage is the cornerstone of an innovation development. Competitive organizations always have pressure to develop innovations to compete and to explore the market (Ambec et al., 2013). Palo Alto company in California is a nice example of an organization that encourages idea generation successfully through seeking an equilibrium between playfulness and need. Hence, once the idea is developed, it passes the next stage for further evaluation.
In the evaluation stage, ideas are weighed by pros and cons that may impact heavily on organizations. The stage involves looking at the advantages and disadvantages the innovation may pose to the business (Johnson et al., 2014). Thus, this stage marks a point where ideas that seem to lack potentiality to be discarded. In this view, most of the companies happen to be more successful when evaluation process is transparent and standardized (Christensen, 2013). The implication of this transparency is that the top management should welcome the views of their employees during the implementation of ideas to ascertain their effectiveness.
Experimentation is the third stage of innovation development, which determines the target customers of the innovation as well as the application of that innovation (Ambec et al., 2013). The important aspect about what organisations could do here is that, even if they find an idea as proposed by an individual as not matching with the expectations of the business, the innovation should not be discarded completely as it could lead to another innovation. Washington Mutual Inc. serves as a perfect example towards understanding experimentation process. The company carried out sampling method to some of its branches on banking strategy, and when the innovation was received well, it proceeded to the next level of developing it.
Commercialization of innovation involves looking at the target customers to ascertain that the innovation eliminates the previous problems and carry out an investigation of the cost-benefit analysis (Cooper & Kleinschmidt, 2011). Once the innovation successfully goes through this stage, it precedes the last stage. Diffusion and implementation represent the last stage of innovation development. International Business Machines Corp. and the IBM industry are two example of organizations that involves everyone in their implementation stage of innovations.
Companies need to accept that although a majority of the ideas fail, they still have to reward the volunteering team that comes up with the idea because, even on failing, there is still some experiences that are gained which may foster another base for another innovation. Additionally, it is also important to pay attention to the process of diffusion of an innovation adoption. There are five levels of innovation adoption: idea developers, early adopters, early majority, late majority, and laggards.
The innovators are the originators of the idea, and as such, they harbour a lot of crucial information about the innovation than anybody else within the community (Vargas-Hernandez, 2011). They mainly compose of high-income individuals and those who possess high confidence about themselves. The early adopters represent the second stage of innovation adoption. The most remarkable thing about this is that they are mostly reliant on groups. They first seek knowledge and information about the innovation before adopting it (Johnson et al., 2014). Besides, this is the first group of individuals to accept and adopt an innovation.
The early majority is the third category in the diffusion process of innovation adoption. The group comprises of individuals who are deliberately careful with the adoption of innovation. Johnson et al. (2014) note that this group represents the largest number of individuals who accept and adopt an innovation. Late majority represent a relatively high number of individuals to accept and adopt a given innovation. Individuals in this group are usually sceptical in nature and are relatively old. Moreover, individuals in this group comprise those who earn low incomes and have lower levels of education. The last group involves the laggards. Laggards are mainly individuals, who are the custodians of their traditions. Besides, individuals in this group are those who have low economic status and with very little or no education at all (Johnson et al., 2014).
Exploring Strategy Model
While exploring innovation strategy model, it is critical to consider three major factors including the strategic position of the company, strategic choices, and how strategy in action. These are the three main factors influencing change and innovation in any given organisation (Johnson et al., 2014). While choosing the strategic position, it requires the innovator or innovators to viably assess the culture of the people around and investigate on their does and don’ts. Above all, strategic position calls for a splendid assessment of the environment and assessing whether it is suitable for the intended change (Johnson et al., 2014). Looking at the strategic capability of an organisation necessitates the need to look for its weaknesses and strengths. The purpose of strategising organisation’s strategic position is usually enlisted in vision statement, missions and values of that organisation before commencing its operations. Innovation and Choice
On the other hand, the making of strategic choices reflects on the corporate governance, business, international influence, innovation, and acquisitions and alliances. Outstandingly, the main concern for corporate governance is the structure and mechanisms of control through which accountability of managers is valued. Besides, many of the organisations established mainly benefits the stakeholders and shareholders (Johnson et al., 2014). However, strategic choices mean going an extra mile to include the international levels in the picture. To conclude the strategic model, putting the strategy into action is the hardest thing. As such, organisations have to look at the various processes of change, evaluate them and make changes where necessary.
Fig 2 Strategy Model
The key factors involved in management change and innovation are the pull and push factors. On the one hand, the pull factors are influenced by several other factors such as the desire for independence, greater personal control, financial, rewards, higher social status, spotting an opportunity, better use of skills and expertise, and experience from the previous business (Thompson et al., 2014). Conversely, the push factors are influenced by marginalisation levels, family commitments, job insecurity, discrimination in the labour market, lack of development opportunities, underpaid salaried work, and unemployment (Cooper & Kleinschmidt, 2011). The pull factors arise as a result of a change in technology leading to increased demand while push factors are those factors that make organisations to incur higher costs of production making them strategize their costs. Any competitive industry possesses various characteristics that aid in innovation (Cooper & Kleinschmidt, 2011). As such, organisations need to be growth-oriented in the sense that it does not give up even in the face of hardships and competition from its competitors. Besides, companies should learn to search for opportunities on where they can acquire a competitive advantage (Urbancova, 2013). Furthermore, they should also commit all the necessary resources to the innovation.
Framework
To have a clear understanding of the competitive advantage that a company may derive from the business environment, Porter offers a Five-Forces Model clearly analysing each of the facets composing it to the deepest level. According to him, industry’s structure and intensity are greatly influenced by five forces including threats of substitutes, the haggling power of suppliers and buyers, threat of entry into the market, and the competitive rivalry (Porter, 2008). As such, every organisation must strategize on their competitive advantage by looking for the best innovative idea in which to invest.
Fig 3: Porter’s Five Forces
Moreover, Vargas-Hernandez (2011) note that organisations operate on either two of the organisational structures, organic or mechanistic. Organisations operating on organic structures were more dynamic and had open communication channels (Vargas-Hernandez, 2011). Besides, such organisations tended to be consensual and loosely controlled. In mechanistic structures, organisations are more traditional, have hierarchical structures, and are tightly controlled. Additionally, there is a form of relationship that existed between entrepreneurial behaviour and organic structure.
Ansoff’s Directional Policy Matrix
Fig 1. Ansoff’s Matrix
The directional policy is a framework developed by Ansoff to analyse the current and new market structure as well as current products and new products, which in turn helps in determining the best innovative strategy to develop to have a competitive advantage (Urbancova, 2013). It is, therefore, critical for organisations to analyse markets well and look for opportunities that are available. Thus, Ansoff argues that to develop the right market penetration and product development strategies, innovators must look at the current and new products as well as the current markets and identify a business gap (Trott, 2012). Furthermore, he advises that market development and diversification relies on new markets new and current markets.
Innovative technology enables organisations to compete at the international level. The introduction of internet has allowed proprietors to offer products and services to prospects around the world via the website (Christensen, 2013). As such, organisations can be able to give out structured descriptions about the products they offer to their customers using the internet. Above all, Facebook and Twitter are also playing a part in networking, and business people can interact with each other and make transactions online without necessarily getting into touch. Vargas-Hernandez (2011) argues that when connections are lost due to lack of network transmitters or the system is hacked, it becomes a very risky process especially for innovative organisations, which relies on the internet for communications and other transactions. As a result, this may lead to the suffering of the company (Rosenbusch, Brinckmann & Bausch, 2011).
Furthermore, innovation has also enabled organisations to cut down costs to a substantial level. For example, with the development of computers, organisations can eliminate a good number of people from the company since their production is replaced by the computers (Christensen, 2013). Consequently, the company saves on costs on salary, benefits and turnover accruals to such employees. Additionally, innovative organisations do not display any concerns to their employees to some extent (Rosenbusch et al., 2011). As such, though they can lay off workers due to a particular innovation, the bad side of the story is that these employees lose their jobs in the process leading to some problems to the individual such as adaptability mechanism. Conversely, the company has to make a critical decision between letting go the employee or to maximise profits.
Conclusion
Bridging the knowledge-to-practice gap in organisations is something that has raised alarms in the modern era where competition within industries is imminent. However, the implementation of new ideas, guidelines or tools into product and service delivery within organisations is slow and unpredictable. It is of eminent interest to understand the factors that result in delays in the process of adopting a particular innovation. Consequently, the rate of diffusion of an innovation and the adopter characteristics are important factors in technology transfer process. The theory-based models of innovation and change should be implemented to strategize its rate of adoption. Besides, having looked at the various attributes of innovation and change to an organisation, it is evident that, innovative organisations may lack competitive advantage especially when unanticipated innovation fails to meet the expected goals and standards.
References
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