Business Enterprises in the Modern Business Environment - Term Paper Example

Innovation for Managers Programme: Module Module Module Session: Month, Year Assignment Question Full ID Number: Assignment Word Count: Submission Date: Table of Contents 1.INTRODUCTION 3 2.INNOVATION 3 3.IMPORTANCE OF INNOVATION 4 4.PLANNING FOR INNOVATION 5 5.IMPORTANCE OF SERENDIPITY FOR PROVIDING IDEAS FOR INNOVATION 6 6.EXAMPLE IN THIS CONTEXT 7 7.CHAINED LINKED INNOVATION MODEL AND ITS IMPORTANCE IN PLANNING FOR INNOVATION 7 8.EXAMPLE OF INNOVATION PLANNING FROM THE RESEARCHER’S EXPERIENCE 10 9.CONCLUSION 10 Reference List 11 1. INTRODUCTION Business enterprises in the modern business environment perform under huge pressure created by other business organizations that offer similar services or products (Drucker, 2014, p. 23). Pressure is also exerted by customers whose expectations keep on reaching new levels as a result of their consumption of technologically advanced products with every passing day (Fahling, et al., 2012, pp. 97-100). In order to cope with new business conditions and circumstances, enterprises encourage their employees to incessantly keep looking for effective means of production in order to either provide new products to the customers or simply improve the quality of the existing ones (Kinnear and Ogden, 2014, p. 44). In simple worlds, they should consistently create innovation and incorporate the same in their products and services. It is with regards to this fact that the researcher will be attempting to evaluate existing theories and frameworks of innovation in order to comprehend the extent to which it is feasible to plan for innovation. The researcher will also be citing examples of few companies who have been epitomized as the symbol of innovation. This will help the researcher to identify the underlying principles and strategies adopted by companies in order to plan for innovation. 2. INNOVATION Innovation aids in transforming novel ideas and knowledge into products (Meesapawong, Rezgui and Li, 2014, pp. 247-250). According to Joseph Schumpeter, innovation is an activity leading towards optimal production functions and alternative methods of product development facilitating maximum utilization of resources. McDaniel (2002) categorized innovation into several activities that involves: a. Introduction of a new product that comes with one or multiple unique selling propositions. b. Introduction of an innovative method of production that accepts existing inputs and increases the amount of output thereby decreasing the cost per unit of production. c. Entrance into new and relatively unexplored markets thereby tapping a large base of customers. d. Seeking cheap and good quality sources of raw materials that not only decrease the cost of sales but also enhance the quality of finished products. e. Competitive positioning of products and services. According to McDaniel (2002), fulfillment of the aforementioned activities is extremely important as far as planning for innovation is concerned. Managers who execute these activities properly are able to induce innovation in their operations and the end products. Lionnet (2003) explains that innovation can be referred to as a process by means of which unique ideas and concepts are incorporated into products and services that allows organizations to create sustainable revenue stream. According to the author, innovation is technical, dynamic, social and economical progression processes that involves an interaction between people hailing from diverse horizons with dissimilar perspectives and are encouraged with different motivational factors. Innovation involves introduction of new processes that are aimed towards the creation of new services and products. It also involves bringing about enhancement in existing technologies and practices that may add to the efficiency of an organization (Ramadani and Gerguri, 2011, pp. 7-11). Innovation can also be described as an effective utilization of unique concepts, venture in ground-breaking research and development processes and development of technologically advanced manufacturing and development processes (UK Department of Trade and Industry, 2003, p. 10). Having understood all the definitions of innovation, one can easily distinguish the elements to form the major ingredients of innovation. Innovation can be classified as an integral part of production processes, development and improvement of existing products as well as services, development of new products and services (García-Morales, Jiménez-Barrionuevo and Gutiérrez-Gutiérrez, 2012, p. 1042). It can also be considered as a means to seek modern ways of organizing and amalgamating inputs in order to create innovative products and services. Innovation can also be found in management practices that involves effective allocation of resources (Feldman and Pentland, 2003, pp. 104-106). Innovation is regarded by many as one of the fundamental mantras behind attainment of competitive advantage. That is why organizational managers emphasize a lot on planning for innovation (Carter, et al., 2013, pp. 946-947). This helps them outline their strategies and execute them appropriately in order to achieve sustainable business growth and development which in turn contributes towards realization of greater profit (Burke, 2002, p. 76). 3. IMPORTANCE OF INNOVATION In the contemporary business environment, companies compete with each other on number of levels and aspects. It is this competition that allows them to excel in their own standards and outperform the benchmarks set by one another every single day. The underlying reason behind such an intense competition is the urge to satisfy needs and demands of the customer base (Berson and Avolio, 2004, pp. 634-636). Customer satisfaction index is one of the basic determinants of managerial success. That is why managers strive to find out unique means to influence the purchase behavior of customers. The modern world is characterized by a rapidly developing lifestyle of human being. As a result of this, rapidly changing lifestyle and globalization and the tastes and preferences of customers keeps on changing every single day (Battilana, et al., 2010, pp. 422-433). Hence, it is a challenging task for organiziatons to design their products according to the ceaselessly varying preferences and tastes of customers. It is innovation that allows companies to tweak certain attributes within their products that make it look unique by all means. This in turn influences the purchasing behavior of customers in favor of buying those uniquely manufactured products (Lionnet, 2003, p. 66). The importance of innovation is also evident in the ways in which managers enhance the efficiency of their operations. They invest a lot of time behind planning for innovations so that effective operational processes can be developed that ensures a positive outcome for all stakeholders of the company. Organizations have to prove their mettle in the market so as to survive the intense competition, and innovation is considered as one of the primary requirements of survival. It gives a new direction to the workflow process in an organization and in fact lays proper foundations for managers to execute their strategies (Leger and Swaminathan, 2007). 4. PLANNING FOR INNOVATION Academic scholars and organizational leaders all over the world have been seen debating on one particular aspect that is related to the extent to which planning for innovation is possible given the ongoing competition in the business environment (García-Morales, Jiménez-Barrionuevo and Gutiérrez-Gutiérrez, 2012, p. 1041). Nonetheless it can be said that with the proper application of theoretical frameworks and models as well as exhibition of an appropriate leadership style, planning for innovation is definitely possible. One of the fundamental requirements to plan for innovation is for the manager to convey his/her vision to the employees promptly. This allows the organizational members to have a better understanding of their responsibility. Managers need to establish a robust channel of communication in order to facilitate free flow of information (Meesapawong, Rezgui and Li, 2014, pp. 247-250). This is precisely because free flow of information is extremely important for inducing innovation in workflow. Application of theoretical frameworks and models proves to be instrumental when it comes to optimizing performance of workforce. Nevertheless, the lack of visionary leaders and the inability of the existing leaders to come up with original ideas have limited the scope of organizations to implement strategic plans that are aimed towards innovation (Ramadani and Gerguri, 2011, pp. 7-11). Furthermore, inadequate systems and processes that establish a strong connection between business development strategies to the organizational objectives have also resulted in the dismal record of applying innovative strategies. That is why it is said that strategic plans require original ideas, portfolio optimization and innovation planning in order to achieve the required output (Fahling, et al., 2012, pp. 97-100). Planning for innovation is extremely important as it maintains an alignment between organizational operations and innovation strategies. In order to plan for innovation, managers need to constantly encourage their employees to come up with original ideas. This can be achieved through brainstorming where employees working in a group are given stringent deadlines to introduce creative ideas (McDaniel, 2002, 12). Idea campaigns are launched by managers as they attempt to plan their next step towards innovation. Thereafter, various ideas are combined together and experimented under normal circumstances in order to adjudge their feasibility in the ongoing business environment. This is another segment of innovation planning which requires managers to forecast demand and requirements for the future and choose amongst the best innovation strategy available at disposal (Kinnear and Ogden, 2014, p. 43). One thing that needs to be kept in mind over here is that managers often tend to adopt the first idea that is proposed. However, sticking to that idea may often restrict the scope of innovation. That is why it is extremely important for managers to ensure that the idea that is selected is pushed further for inducing creativity (Drucker, 2014, p. 27). In order to ensure that ideas are being introduced effectively, managers need to establish a robust line of communication. Having a proper communication channel will not only allow the employees to suggest their innovative ideas to the superiors but will also allow them to share the ideas with their peers. Such a free flow of information will provide the employees with ample scope to learn and come up with even more innovative ideas (McDaniel, 2000, p. 14). Effective communications channels places managers in an advantageous position to formulate plans for innovation. They are able to decide from a pool of innovative ideas in order to select the one that has the maximum potential to boost business growth and development. It has been mentioned above that in order to plan for innovation it is extremely important for managers to make an accurate prediction of future demands, tastes and preferences (Drucker, 2014, p. 29). Having an accurate prediction of the future allows managers to plan for innovation accurately. However, making an accurate prediction of the future every time is a difficult job or rather impossible. This is precisely the reason why managers give a lot of importance on serendipity and accidental discoveries when it comes to planning for innovation. It enables them to be flexible in their plans and directions while pursuing their objectives (Feldman and Pentland, 2003, pp. 105-108). Being flexible and lucid while planning for innovation enables managers to adapt to any invariable business circumstances. This fact is certainly valid considering the incessantly shifting business dimensions in the contemporary business environment (Carter, et al., 2013, pp. 946-947). The importance of serendipity in planning for innovation will be discussed in more details in the following paragraph. 5. IMPORTANCE OF SERENDIPITY FOR PROVIDING IDEAS FOR INNOVATION Serendipity can be defined as an ability of people to make important discoveries however by accident. People who are skilled and have adequate knowledge often tend to come up with innovative ideas by accident (Burke, 2002, p. 88). They initiate their thought process by intending to provide a certain outcome but in the process make an accidental discovery that serves as the utmost need of the hour. If one can make an accurate prediction of the future then serendipity would never be required. In such cases, people can just follow the normal plan. However, given the unpredictability or uncertainty associated with events that might crop up in the future, encouraging serendipity should always be a part of the plan (Berson and Avolio, 2004, pp. 634-636). Encouraging and promoting serendipity is a very critical task especially in the present business environment where innovation is considered as one of the most reliable foundation for attaining competitive advantage. In order to promote and encourage serendipity, managers should constantly inspire their employees to introduce or work towards something new (Ramadani and Gerguri, 2011, pp. 7-11). Employees should be encouraged to talk to new people, form an extensive network with different people, learn new things and discuss their findings with their powers. The fundamental way of creating innovation effectively is to constantly seek knowledge and sharing the same with others (Battilana, et al., 2010, pp. 422-433). Not only does that broaden the knowledge base of a particular employee, but it also provides the individual to make accidental yet important discoveries. This serves as an innovative concept and takes the company one step close towards establishing a stable and sustainable business (Lionnet, 2003, p. 61). Chances have always preferred the most knowledgeable and prepared personalities. Therefore, people who constantly seek to learn something have greater chance as well as potential to come up with an innovative idea by accident that might just prove to be a career defining moment for the employee (Leger and Swaminathan, 2007). 6. EXAMPLE IN THIS CONTEXT Managers of multinational companies like Yahoo and Google strongly believe that groundbreaking innovation often happen on the basis of serendipity. That is why these companies emphasize a lot on teamwork, collaborative effort and coordination in workplace. According to the managers of Google, a worker acquires a major proportion of their overall knowledge while being engaged in their daily activities. It is at these moments that they have the tendency to make path breaking innovations (Carter, et al., 2013, pp. 946-947). That is why managers of these companies encourage their employees to work in groups such as knowledge acquired by a particular employee is propagated to another employee. Alongside serendipity, innovation can also happen through lucid transfer of knowledge. Therefore employees working in a group have greater chances of making innovative discoveries by accident as they often stumble upon ideas provided by another team member who still has not realized the innovation quotient of that particular idea (Fahling, et al., 2012, pp. 97-100). However, a creative mind will always capture innovative thoughts no matter how or from whom it is being propagated. Therefore, constant interaction between employees and incessant flow of information provides ample scope to employees for making accidental discoveries. Such accidental discoveries lay a robust foundation for managers to plan for innovation that has the potential to fetch the required outcome (Kinnear and Ogden, 2014, p. 43). The facts that have been mentioned in this section provide appropriate justification to the importance of serendipity in planning for innovation. 7. CHAINED LINKED INNOVATION MODEL AND ITS IMPORTANCE IN PLANNING FOR INNOVATION The chain linked innovation model depicts the activities that take place in a process of innovation. Alongside that, the model also represents the external forces in the market that fosters innovation within organization (García-Morales, Jiménez-Barrionuevo and Gutiérrez-Gutiérrez, 2012, p. 1042). The model also depicts the connection and interactions that happen between various stages of the process of innovation. Even though the model is extremely stylized, the several phases or layers of the process of innovation are not all that distinctive in the reality (Meesapawong, Rezgui and Li, 2014, pp. 247-250). Regardless of this fact that the factors that have been included in this model have a strong relevance to what happens out there in the modern business environment (Feldman and Pentland, 2003, pp. 98-101). Figure 1 given below shows that the chain linked innovation model happens to be one of the most sought after model of innovation as far as planning for innovation is concerned. Figure 1: Chain linked innovation model (Source: Leger and Swaminathan, 2007) The chain linked innovation model provides a strong depiction of the way in which planning for innovation is done and how is it executed. As is evident from figure 1 given above, in order to plan for innovation, it is extremely important for managers to assess the potential market that needs to be targeted with a particular idea (García-Morales, Jiménez-Barrionuevo and Gutiérrez-Gutiérrez, 2012, p. 1042). Assessment of the potential market allows managers to segment the customers that need to be targeted. It is imperative for the managers to make a precise assessment of the potential market as this evaluation forms the groundwork for the innovation planning and execution. Therefore once the potential market is assessed and adjudged, the next step is to produce an idea that is associated with invention of production of an analytic decision of a product or service (Feldman and Pentland, 2003, pp. 105-108). The designing of products or services should be done keeping the mind the needs, tastes and preferences of the target customers that have been assessed in the potential market. It is extremely important for the managers to ensure the fact that product design is suitable to the needs and requirements of the target market. It requires the manager to have broad knowledge and vision. As has been highlighted within the figure, the process of innovation is driven by knowledge and research. Without these two aspects, the overall process becomes invalid (Burke, 2002). After the design phase is over, it needs to be tested rigorously under normal as well as stressful circumstances. This is one of the critical phases in this process as this determines the fate of the innovation process. The success or failure of this phase will determine whether innovation can be planned appropriately or not (Meesapawong, Rezgui and Li, 2014, pp. 247-250). In order to test the design of the product, some of the samples need to be released in the market in order for the consumers to use them and give their reviews. It is extremely important for managers to follow up this phase with proper customer relationship management strategies by engaging in frequent communication with the consumers in order to collect their valuable feedback regarding the quality of the product or service (Berson and Avolio, 2004, pp. 634-636). The feedbacks obtained from the consumer will allow the manger to comprehend whether the product is likely to meet the needs, demands and preferences of the customer base. Managers need to encourage their employees to keep providing innovative ideas in order to improve the quality of the products continuously even if consumers provide favorable reviews about the products. This process also highlights the fact that managers need to pool up every source of knowledge in order to make sure planning for innovation can be done effectively and efficiently (Leger and Swaminathan, 2007). After the testing phase is over, managers need to have a close look at the review provided by the customers and incorporate the feedbacks into redesigning product with more innovative ideas. This is one of the fundamental aspects of planning for innovation (Battilana, et al., 2010, pp. 422-433). This is where the relevance of constantly encouraging managers to push for creativity and innovation lies. By redesigning the products or services, managers will be able to position them competitively in the market. This will allow them to place their respective companies in an advantageous position. It is extremely important for managers to consider the feedbacks and incorporate the same in the products and services. The underlying rationale behind this fact is to induce more innovation in the product and in turn attain sustainable competitive advantage (Kinnear and Ogden, 2014, p. 43). After the completion of the redesigning phase, the products and services need to be distributed through proper channels and networks and appropriately marketed. Marketing the product effectively and efficiently is extremely important considering the fact that customer responses towards the product depends the efficacy of the marketing strategies (Lionnet, 2003, p. 58). These responses will allow managers to plan further for innovation. The product needs to be distributed properly so that a large base of customers easily avail the product (McDaniel, 2002, p. 12). Their responses towards the end product will allow product mangers to learn about the strengths and weaknesses of the product on the basis of which further innovation can be planned. Nonetheless, a manager needs to be mindful of the fact that a chain linked model of innovation can only be implemented with appropriate knowledge and research (Ramadani and Gerguri, 2011, pp. 7-11). Failure to integrate any one of the aforementioned factor will restrict the scope of planning for innovation. The aspects that have been mentioned in this section justify the importance of chain linked innovation model when it comes to planning for innovation. 8. EXAMPLE OF INNOVATION PLANNING FROM THE RESEARCHER’S EXPERIENCE The researcher has prior working experience in the service sector. It is one of the most competitive sectors given the fact that companies of all size and types operate in this sector. This is precisely the reason why planning for innovation is considered as one of the vital sources of survival in this intensely competitive business environment. The researcher has enjoyed the leadership and company of innovative and visionary managers who constantly seek knowledge in order to induce innovation within the work processes. The managers in the researcher’s organization believe that inducing innovation within the work processes will enable them to imbibe the same innovation quotient in the products. The managers constantly urge the employees to work in groups and urge the group members to share their knowledge, ideas and concepts frequently with each other. The organizational members are asked to participate in business seminars and competitions held within the company itself where the participants are assigned with the job to present business strategies in front of a panel of judges. The group with the most innovative idea is rewarded as a symbol of encouragement for other participating groups. The ideas are shown in the organizational magazine that is published every year. 9. CONCLUSION To conclude, it can be seen that planning for innovation is possible in every way provided that leaders exhibit an effective leadership style thereby inspiring employees to work and plan for innovation. It is extremely important for leaders to be visionary by means of which they can assess the demands, tastes and preferences of public in general. On the basis of such assessments ideas have to be drawn out and pushed for creativity. It is imperative for managers to establish a robust communication whereby employees will not only be able to share their ideas with the superiors but also with their peers. This will pave way for a lucid transfer of knowledge and will facilitate in planning for further innovation. Managers should also encourage serendipity by constantly urging subordinate employees to talk to new people, acquire new information, form extensive networks, share their knowledge and ideas with others. This will increase their chances of stumbling upon an innovative idea by accident. Such ideas can be instrumental when accurate predictions regarding the future cannot be made. Moreover, innovation models such as the chain linked model of innovation can also be implemented by managers in order to plan for innovation. Reference List Battilana, J., Gilmartin, M., Sengul, M., Pache, A. C. and Alexander, J. A. (2010) ‘Leadership competencies for implementing planned organizational change’, The Leadership Quarterly, 21(3), pp. 422-438. Berson, Y. and Avolio, B. (2004) ‘Transformational leadership and the dissemination of organizational goals: A case study of a telecommunication firm’, Leadership Quarterly, 15, pp. 625−646. Burke, R. J. (2002) Organizational change: Theory and practice. California: Sage. Carter, M. Z., Armenakis, A. A., Feild, H. S. and Mossholder, K. W. (2013) ‘Transformational leadership, relationship quality, and employee performance during continuous incremental organizational change’, Journal of Organizational Behavior, 34(7), pp. 942-958. Drucker, P. (2014) Innovation and entrepreneurship. London: Routledge. Fahling, J., Huber, M. J., Böhm, F., Krcmar, H. and Leimeister, J. M. (2012) ‘Scenario planning for innovation development: an overview of different innovation domains’, International Journal of Technology Intelligence and Planning, 8(2), pp. 95-114. Feldman, M. S. and Pentland, B. T. (2003) ‘Reconceptualizing organizational routines as a source of flexibility and change’, Administrative Science Quarterly, 48, pp. 94–118. García-Morales, V. J., Jiménez-Barrionuevo, M. M. and Gutiérrez-Gutiérrez, L. (2012) ‘Transformational leadership influence on organizational performance through organizational learning and innovation’, Journal of Business Research, 65(7), pp. 1040-1050. Kinnear, S. and Ogden, I. (2014) Planning the innovation agenda for sustainable development in resource regions: A central Queensland case study’, Resources Policy, 39, pp. 42-53. Leger, A. and Swaminathan, S. 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