Term Paper on "Innovation the World in Which We Live"

Term Paper 5 pages (2347 words) Sources: 1+

[EXCERPT] . . . .

Innovation

The world in which we live is changing very rapidly with every day and the classic goals of the companies to maximize profits and gain market share which ensures development of market economies through competitions becomes harder and harder task for the managers not only of big corporations, but a daily concern for business of all scope.

Due to globalization process, the competition between local firms in almost every country was tightened by incoming foreign firms, and competitors are introducing new products and new technologies, unstable economic perspectives for some old capital countries is cause currency shifts which also makes firm operation less predictable and more risky, needs and tastes of customers are changing over time also, technological pressure on firms has become harder as product life cycles has shortened compared with those several decades before coupled with the drawback that adopting a technology is a very time-consuming process. Because of these factors need for innovation was realized and very big concern has been given to developing innovation management methodology, creativity motivation, strategic innovation methods and sustainable growth as only way of effective business performance.

A survey of 700 U.S. corporations revealed that their CEO expect future growth of their firms mainly due to introduction of new products with the growth of profits attributable to these goods at the rate of 40%. Another research was done from 1992 until 2002 devoted to determining management practices that yield the most corporate success.

The results of the study by D. Mitchell, C. Coles, 2004, p. 39 proved that the most high-growing companies were different from the others in the manner that "they continually replaced their business models with better ones, as often as every two to four years." The business model is defined in this very case as the combination of "what," "who," "when," "why," "where," "how" and "how much" to capture the needs of the firm clients using available resources of the firm, and changing the business model is not simply meeting the present client requirements, but changing at least four of the mentioned above business concept components. In the study of Canadian small firms, innovative capability was noted to be the more important factor influencing firm growth, profitability and productivity than company access to markets, technology ability, government assistance, marketing strategy, access to capital, cost of capital, management or labor skills. Furthermore, the firms with the highest estimated competitive advantages turned out to be the ones with highest R&D spending, implementing 'New Product New Market" strategy and developing New Technology. Among other small firm performance drivers, positive correlation was traced by G. Donald between "innovation and specialization, functional differentiation, professionalism, managerial attitude toward change, technical knowledge resources, administrative intensity, slack resources and external and internal communication."

Empirical investigations prove that the majority of innovations come from small businesses (Kuratko and Hodgetts, 2001) and innovation initiation is different within companies of different cultural background and ownership structure. The sources for the ideas within the company came mainly from customers, less from company management, suppliers, marketing team, competitors, production, government, R&D, parents, local patent, foreign patent. Support of innovation process on implementation stage was evidenced to be more necessary than on idea initiation stage. Study of Donald Hispold discovered that typical innovation idea came from internal and external knowledge integration with the help of representatives of several business units within the firm which further stresses the necessity of locating a firm in nurturing knowledge intense environment.

Non-only idea stimulating environment, but strong corporate culture yields higher company performance and effectiveness with market and adhocracy corporate cultures being the most efficient, while clan and hierarchical corporate culture lead to not efficient use of company performance. The most important traits of corporate culture for company success are involvement of as many employees as possible in working process and collective estimation of behavior, company system and so on, consistency of corporate culture only if it does not prevent innovative initiatives, adaptability, sense of mission and long-term vision.

The Senior Vice-President of the biggest innovative company, 3M, doctor William Coyne, reveals the success of the company as the creating internal tradition of innovation. In short, the summary of his ideas can be looked upon as Perpetuating organizational innovation and development.

Picture 1. Perpetuating Organizational Innovation and Development.

The first necessary step to create the corporate innovation stimulating environment is to set clear corporate vision for within which innovation takes one of the key places and all the corporate employees must be clearly familiar with it. Collective feeling and making each employee feeling important within the company can create a family atmosphere with positive approach to work and thus much profitable outcomes. In this case, workers are more likely to associate personal well-being as being an integral part of corporate performance which will ensure maximizing utility and thus finding the optimal present company operation and ways to improve it within each cell of the company.

Corporate goals, department goals and personal goals must be set precisely in order for people to visualize the collective and personal goals which can motivate them for further perfection. Research has broken the stereotype of a typical creative flexible and relaxed worker and has proved such people to be very self-confident, concentrated, achievement-oriented and organized and setting specific objective goals for them will be beneficial for their personal and corporate growth. On the other hand, directing the process can prove more beneficial then setting one desired work outcome and can initiate more ideas for employees. Thus, the best strategy would be to allow people to choose several ways to reach a broadly stated aim rather than limiting possibilities of solving the problem.

The second step in creating tradition of innovation, suggested by doctor Coyne, is ensuring that the company strategy is not contradictory to the overall external environment trends and that it will definitely meet the future requirements. In order to make customers loyal to the company products, all the members within the company team must know not only current customer needs as the products are aimed at satisfying them, but having foresight as to future necessities that the customer himself does not know yet but the company is already now taking measures to be able to meet these requirements in the future. Simplistic economic theory suggests that the highest profits are within market segments with low competition, where there are few companies to satisfy newly occurred client needs.

Stretching goals is another advice which comes from adoptability quality of strong corporate environment and implies that aims must be very ambitious and initially very hard to achieve to derive the most from employees and resources. This can be done only if corporate strategy is very adoptable, with some of the products or lines possible of slightly being changed with no time. Also, all the employees must feel very secure and should not be afraid to take on the risk of a high-promising innovating project as people are tempted to risk more in stressful situation which is often a road to success. One of the biggest obstacles for innovation development is fear of risk which is natural for the majority of people as innovation means new and not experienced which gives people uncertainty and thus they will be reluctant to take on such a responsibility. Creating an atmosphere of supporting workers for their ideas no matter how wild they may seem, and encouraging them to bring innovation from idea stage to structural, feasibility estimation and action stage is vital in order to make innovation a habit for workers.

This brings us to the next step where action of workers must be reasonably supported by management of the company in terms of resources and moral motivation. This is referred to as empowerment and feeding enthusiasm is the next goal for company management as killing it with destructive criticism can cost the company in the long run much more in terms of apathy and risk-aversion than short-term mistakes that can be done by workers. Trust must be developed within all the levels in the corporation which will make all the workers feel responsible for each bit of production process, make them feel as an integral part of one big machine which will in turn stimulate them to find ways to improve it.

Workers must be encouraged to criticize management also which is still more effective than any hidden conflicts while such criticism must be accepted by the management.

Personal creativity of each employee must be developed as creativity of innovators coupled with creative atmosphere in the company shall lead to successful new product development.

A good example of necessity to manage talents and innovation incentives comes from biography of two world known composers, Mozart and Schubert. Mozart father started managing his talent and marketing his works very early and traveled with him all around Europe while there was no one to manage Schubert creativity and he died very poor. His works became popular many years after his death while Mozart became a rich star.… READ MORE

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