The Process of Innovation - Report Example

Management Innovation Paper Name Student’s Name: Date: Word count: 4145 Table of content Table of content 2 Introduction 3 Source of innovation 4 Companies’ source of innovation 5 LG 5 Sony Corporation 8 Lessons to be learnt 10 Reduced cost 10 Technology Storage 11 Research and Development 11 Recommendation 12 References 20 Introduction Innovation management is the discipline involved in how companies and other entities manage their process of innovation. Innovation management is used to ensure the companies moves towards product development and towards organisational innovation. Innovation management provide the stakeholders with the necessary tools that will help them develop goals and processes that can be achieved by use of innovation. This allows managers and other stakeholders to react to external and internal challenges and opportunities that may arise in their industry of operation. This will enable the mangers to come with creative ways of fight any pressure either from internal or external so as to maintain their current customers or even increase their customers’ base by introducing new products and new ideas so as to gain competitive advantage. Innovation management involves all the stakeholders including employees at every level so as to allow them to come up with creative ways to develop their company brand in manufacturing and marketing. This will ensure continuous development of the company products. Therefore, innovation involves more than research and development but a close working relationship of all the workers in a company. Innovation management is a continuous process that involves evolution association of all the company department and use of technology to coordinate the production activities of the company. Innovation management involves invention of new ideas and technology so as to direct the technology towards profitability of the company. These processes also works towards solving customer problems by ensuring all their needs are met by developing ideas to solve the identified customer problems. Innovation management calls for improved quality with the highest level of efficiency. This report involves two companies in the same industry part have their headquarters in different. The companies I am going write about in the report are Sony and LG which operate in the electronics industry and operate in different countries. In the report I will compare and contrast how the two companies manage their innovation. This will be through the use of recommended models to measure the innovation aspects. There will also be a part in the report discussing the lessons these companies can learn from each other. The recommendations to these companies on how to properly manage innovation would be explained in the report. LG Electronics is a multinational company that deals with production and marketing of electronics with its headquarters in Yeouido-dong, Seoul, South Korea. The company has its operations in different parts of the world and produces a range of electronics ranging from Television sets, phones, radios. These products range from telecommunication tools, home appliances, entertainment products, office products and provide energy solutions products. Sony Corporations is a Japanese multinational company and has its headquarters in Minato, Tokyo, Japan. The company produces a range of products which include electronics, entertainment products such as video games and deals with financial services. These two companies undertake a lot of innovation in order to keep on improving their products so as to maintain their customers. This innovation involve introduction of new ideas which will lead to introduction of new products in the market. Source of innovation Innovation is highly associated with invention of technology which will lead to invention of new products. There are different models that can be used to describe innovation processes. The Tidd and Bessant four step processes is one of the models used in innovation management. The model divides sources of innovation in four broad parts. The word innovation is often associated with technological inventions and most often product development. According to this model there are numerous sources of innovation. The model deals with two categories of innovation process which include technology push and technology pull. Inn technology push the company source of innovation is through investing in research and development so as to come up with new ideas. The company manufactures the new products from the invented or the improved ideas and the products are placed in the market. Through marketing the product reaches the end user of such a product. The process is recurring and the company has to keep on investing in research and development. The process therefore, can be summarised as research and development then it moves to manufacturing then goes to marketing which takes the product to the user of such a commodity. The second category is that market pull this is a user based approach to innovation. It starts with marketing of the current company products to their customers. The company then invests in research and development and improves the same products. This leads to manufacturing of high quality products which would allow such a company to enjoy a competitive advantage among its competitors in the industry. Therefore, the source of innovation of the two companies is very important. The two companies have different approaches towards innovation and this will be further explained below. Companies’ source of innovation LG The company uses open innovation where it engages with small companies that have innovative ideas. The small companies sell or even partner with LG so as to produce products from the innovative ideas owned by the small companies. The reason behind this is that small companies do not have financial resources to allow them grow internally or even pursue their innovative ideas into developing products. Therefore, the small companies’ partner with big companies that will provide the funds required in developing such products. This creates a win-win situation for these companies because the small companies get paid for their innovative ideas and the LG benefit from producing the products and placing them in the market. This allows the company to maintain their customers and even widen its market base. This approach helps LG not to invest so much in research and development and therefore, directs the funds which would have been used to partner with small companies. This safes time in production of a product because innovation should be aimed at shortening the value chain so as to maximise the company gains. Therefore, LG uses the market model because it observes the current situation in the market and decides which small company to engage with so as to continue producing for the market. The company ensures that the marketing department is well financed so as to partner with small companies for innovative ideas. This means that the marketing department identifies the gaps that exist in the market and works towards breaching those gaps. The company then finds the most suitable small company with the most innovative idea that will help the LG breach the gap in the market. This model allows the LG company to invest in quality assurance so as to ensure that every product that results from the innovation meets the required market standard and will enable the company to enjoy competitive advantage in the industry. This would mean that the company will increase its sales which increase the company profits. This process shortens the value chain for a product to reach the customer. The best value chain strategy to achieve competitive advantage in the industry the company requires undertaking cost leadership where it will cut down the operating cost and production costs this will enable the company out compete other companies in the industry. This refers to the process under which the product or service is delivered to a consumer. The company should ensure the channels used to offer the product are helpful to the customer. The process involves how long a customer takes to be served, and the time he or she takes to get the commodity. The company should, therefore, ensure products are provided in time. The company should, therefore, ensure their channels and processes favor the customer by giving the best services in the industry. The company will be able to penetrate the market if it treats the customers the right way. This model ensures that the company does not invest a lot of time in finding new ideas but rather utilizes the time in partnering with small companies that have great ideas. This model enables a company to enjoy a large market share. LG Company has the largest market share in most, and it has different branches in various parts of the country, and globally. This gives the customers an advantage of accessing the products and services from any branch which is nearest to them. This also means that it has a range of products that customers can select from. The large market share makes it more favourable to customers of the company as compared to those of other competitors. The reason behind this is that the company is able to react very fast to changes in the market because it only needs to identify a small company with a great idea. This saves the company’s money in research and development. The saved cash is directed towards quality assurance and improvement of the small companies’ ideas so as to come up with a high quality product. Companies that can meet all the customers’ preferences and demands as they arise, and urgently, tend to attract customers the more, and make them loyal, unlike the ones which cannot. This means that LG will always attracts customers because it keeps on improving their products to cater for the customer needs. Sony Corporation The company uses technology push where it highly invests in research and developed and entrust this department to come up with extra ordinary ideas that will enable the company to compete with the other competitors in the industry. The company has a research and development department that comes with new and great ideas. These ideas are as a result of high quality research. The department takes the ideas to the experiment level so as to ensure that this product will have a positive impact in the market while introduced. The reason behind this approach is that the company aims at producing in large scale and wants to come with its own ideas so as to ensure it eliminates the threat of a competitor pirating the innovative idea. Sony innovation management is conservative because they believe in their own ideas to come up with new products through scientific research. The model that the company takes requires a lot of investment and requires a department that is only charged with the role of coming up with new ideas. The company should take a strategy that will ensure that they take a technology that will stay in the market for a long time because this will help the company reduce its operating cost and this will help increase the company profits. Technology is very expensive and, therefore, it takes a large share of company profits which can be taken to improve the services of the company. The company strategy will ensure that the company invests in research and development to ensure that they keep on improving the technology that is necessary in the industry. This will ensure the company expands into the industry as well as maintaining the current customers. The model is conservative because the company should have a strategy that will help the company reduce its operating costs so as to increase the company revenue both domestically and internationally. This will help the company maintain its dominance in the local market and open other ventures internationally. Reduced costs will increase company investment through reinvesting back profit into the international market. This means that after the research and development team is sure they have a new idea they give the manufacturing department the go ahead and the new products. The company aims at producing at large scale for the market. The reason behind this is that the company produces for all its branches around the world. The manufacturing department will ensure that the new products meet all the customer requirements so as to ensure they maintain their customers as well as increase the customer base. The manufacturing department ensures the required standard in the market is met so as to allow the marketing the department to market the product. This will ensure that the product reach the customers at the right time. Sony Corporation People The company aims at having a group of specific people to come up with innovation ideas. They are only designated to coming up with such ideas. This means that after the research and development team is sure they have a new idea they give the manufacturing department the go ahead and the new products. The company aims at producing at large scale for the market. The reason behind this is that the company produces for all its branches around the world. The manufacturing department will ensure that the new products meet all the customer requirements so as to ensure they maintain their customers as well as increase the customer base. The manufacturing department ensures the required standard in the market is met so as to allow the marketing the department to market the product. This will ensure that the product reach the customers at the right time. LG People The company offers training to their employees so as to ensure that they are up to date with the growing technology. This training helps the employees to come up with new innovative ideas that help the company introduce new products in the company and increase its market share. The company does not have a designated group of people to come up with innovative ideas but rather encourages each and every employee to be innovative in their own because it will improve the company’s image and competitiveness in the market. Lessons to be learnt Reduced cost LG innovation management is cost reducing and this ensures that the company can keep on improving their products and providing new products for their customers. The company’s innovation management strategy ensures the company reduces its operating costs so as to increase the company revenue both domestically and internationally. This will help the company maintain its dominance in the local market and open other ventures internationally. Reduced costs will increase company investment through reinvesting back profit into the international market. This is a lesson Sony Corporation should learn from LG because cost reduction is very beneficial to a company that wants to maintain high rate of innovation. The reduced cost means that a company can invest in other ventures. The Sony Corporation can take this model to ensure that they reduce their corporation costs. The Sony Corporation can take this model to ensure that they reduce their corporation costs. Therefore, this is a lesson learnt by Sony from LG. Technology Storage The companies will also require to ensure that their information storage system is perfect so as to ensure there is no information loss. This means that the company would require servers which will enable them communicate with their customers. The customers require constant feedback from the company. The company also require a clear marketing strategy that will make the company know online. This means that the service or the product being offered for marketing is appealing to the customers. The company also require having an IP address that will enable them to connect with other users. The company should also have routers. This infrastructure will enable the company to set up an online business through communication because the customers will be able to search their website and view the service they are offering to the market. This is a lesson to be learnt by both companies because they need to take their marketing to the modern levels. The companies need better ways of storing their information and that of their customers. This will call for a high advanced technology. Research and Development This is a lesson LG can learn from Sony because Sony has a well stipulated research and development team that is charged with coming up with new ideas that would lead to development of new products. This will mean at times the company will not have to partner with small companies in introducing a product. Research and development is the source f most innovation and therefore, it should be highly invested in by all companies. This is a lesson to be learnt by both companies. Recommendation The companies should highly invest in research and development so as to ensure that there is continuity in the companies’ product in the market. The companies should ensure that their employees are well trained and are motivated to come up with innovative ideas that will lead to production of new products. The companies can even setup an R & D department that will come up with new ideas and experiment if they can work in the current structure of the company. This would require the companies to set aside a research fee which would be directed to development of new products and ideas. This would mean that this department is only dedicated to innovation that would ensure the company gain a competitive advantage in the market. This will let the other employees from other department to concentrate on production for the market. The department should be very flexible and should encourage even employees from other departments to come up with innovative ideas. This would ensure that all ideas are incorporated towards innovation of the company’s products. The companies should take their marketing to online services such Facebook and Twitter. Social networks are extremely vital in any process that requires dissemination of information to a lot of people living at different places. Social networks can be defined as a mode of communication through building cycles in the community using the internet. This mode of communication allows people to share their thoughts, and their views with other people, who are, in the social network. These people come together as a family and they share their opinions. This will ensure that the companies will reach out to a lot of customers. This will help the companies get feedback on how to improve their products and services. This will take the companies to another source of information which is the user. The reason behind this is that the customers come up with very useful ideas which help the companies to come up with new products that will cater for customer needs. The companies should also take business online marketing where products and services are sold, and marketed by use of the internet. Through this method, people pay for the services and products using their credit cards from wherever they are. This function of E-Business enables to separate business to communicate and do business through online services such as internet, extranet or even private networks. Through this method a company is able to procure and deliver the order goods without physical movement. The companies should ensure that planning process is taken care in the best way possible to ensure that all the required resources are available before any product is introduced in the market. The managers should also ensure that they lead from the front so as to motivate their employees to perform their duties in the best way possible. The managers should also plan for human resource to be deployed in the company. There should be emphasis on dedication to organization goals so as to hire and plan for the resources that will enable the company move in the right direction. In this aspect, techniques of career development and reward play a significant role where human resource planning is important. Success of a business or an event is linked directly to the performance of the workers or employee. The critical path will be followed to the letter to ensure that there are no deviations from the company objectives. The management should introduce methods such as workshops, seminars and trainings. This will ensure that the employees keep on refreshing their knowledge in the tasks they as supposed to perform. The management can send a few employees to have a refresher course so that they will have a chance to train their fellow employees. This will help keep up with the growing technology that requires employees to be up to date with the current one. The employees will also learn new ideas that could increase their job satisfaction. Mixing with employees from other companies will help share new ideas and experiences that will help appreciate their jobs. This will allow the companies employees to be exposed to new ideas to so as to come up with innovative ideas. The company can also use the social media as a way of promoting their services. There has been evidence that due to increased use of internet social media has gained prominence as one of the most important tools of communication in the business world. The research talks about the ways one can use the social media to reach most of the people and to make them spread the news to other people. The research explains three ways in which one can make people to remember their brands in social media. The research also talks about businesses doing online marketing, to always do something worth remembering by people because it helps create a relationship between the brand and the customers. The research also talks about the social media method the companies can use to engage their customers and to make them part of the company. These methods include Facebook where the companies have a fan page where they communicate with their customers. This creates awareness even to the friends of the customers who end up becoming the customers of the company due to influence from their friends (Bradley 2004). Another method is Tweeter accounts where the companies get feedback from the customers on how to improve their services. There are companies which are going to an extent of offering free products and services to their Facebook and Tweeter fan; for example, Bow Wow offers free meals to Facebook fan on every Wednesday so as to maintain a close relationship with the customers. Therefore, these methods if used hand in hand will help the company to increase its popularity among the target group which will lead to an increase in its sales. The companies should invest in business models such as online direct marketing where products and services are sold, and marketed by use of the internet. Through this model, people pay for the services and products using their credit cards from wherever they are. This means that people can order for products without being physically present and the products are delivered to their address. This is an effective way of doing business online for products, which can be delivered online. Another business model is viral marketing where organizations aim at increasing their brand awareness and company’s reputation by asking people to join certain programs in the internet. The companies should ensure that every finding of the study is followed so as to give the best results. Every company manager should ensure that the planning process is taken care in the best way possible to ensure that all the required resources are available before any product is introduced in the market. The managers should also ensure that they lead from the front so as to motivate their employees to perform their duties in the best way possible. The managers should also plan for human resource to be deployed in the company. There should be emphasis on dedication to organization goals so as to hire and plan for the resources that will enable the company move in the right direction. In this aspect, techniques of career development and reward play a significant role where human resource planning is important. Success of a business or an event is linked directly to the performance of the workers or employee. The critical path will be followed to the letter to ensure that there are no deviations from the company objectives. The companies should have a strategy that will help the company reduce its operating costs so as to increase the company revenue both domestically and internationally. This will help the company maintain its dominance in the local market and open other ventures internationally. Reduced costs will increase company investment through reinvesting back profit into the international market. The company strategy will ensure that the company invests in research and development to ensure that they keep on improving the technology that is necessary in the airlines industry. This will ensure the company expands into the international market especially the international business class. The company should take a strategy that will ensure that they take a technology that will stay in the market for a long time because this will help the company reduce its operating cost and this will help increase the company profits. Technology is very expensive and, therefore, it takes a large share of company profits which can be taken to improve the services of the company. The company should ensure that its service program is highly merged with the growing technology so as to ensure that the customer needs are served in the best ways possible as they would like to have them. This will help increase their number of customers through convenience. The company should works towards making their prices similar to other companies in the industry because this will attract increased customers and sales. This will help the company market itself through its online business model which is its competitive advantage (Bradley 2004). This will be through increased distribution through opening of other branches and selling outlets (Blithe 2009). The company should also invest in the social media and paper advertisements. The company will work towards eliminating its threats and weaknesses to help in realizing its full potential in the international business market. I would also recommend that the company uses of different methods at the same time so as to have the most effective way of reaching out to so many people. This will ensure the whole of its target market is catered for. The company should also consider and research about the social factors such as the composition of the population so as to decide the target population. The company should also consider the cultural trends in a region because they help in creation of the market. The social factor may appear as not important to a business but they highly influence a company’s investments. Conclusion In conclusion, management innovation is becoming an important investment in most industries. The reason behind this is that it provides companies with a competitive advantage as compared to their competitors. Therefore, companies should continue investing in innovation management so as to introduce new products in the market. This gives the customers an advantage of accessing the products and services from any branch which is nearest to them. This also means that it has a range of products that customers can select from. The large market share makes it more favourable to customers of the company as compared to those of other competitors. There are recommendations that can be put in place so as to allow better performance in innovation management. Innovation goes beyond introducing new products in the market. Innovation management is a continuous process and the companies should keep on investing in new technology and training their employees so as to ensure they keep up with the pace of the high demanding technological world. Innovation management is used to ensure the companies moves towards product development and towards organisational innovation. Innovation management provide the stakeholders with the necessary tools that will help them develop goals and processes that can be achieved by use of innovation. This allows managers and other stakeholders to react to external and internal challenges and opportunities that may arise in their industry of operation. The word innovation is often associated with technological inventions and most often product development. According to this model there are numerous sources of innovation. The company uses open innovation where it engages with small companies that have innovative ideas. The small companies sell or even partner with LG so as to produce products from the innovative ideas owned by the small companies. References Baldwin, J. and Gellatly, G. (2003) Innovation Strategies and Performance in Small Firms. Cheltenham, UK:Edward Elgar Publishing Limited. Bilton, C. (2007) Management and Creativity: From Creative Industries to Creative Management. London: WileyBlackwell. 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