Developing Innovation Capabilities - Coursework Example

Developing innovation capabilities University Student Id Course Date Introduction Innovation capability entails the ability to come up with the best strategies that can help organizations achieve competitive advantages. Organizations are looking for the innovative strategies that they can employ in the process of achieving competitive advantages in the market. It is through the innovation capability that organizations can deliver products that can compete well in the market. Innovativeness in designing products helped in developing unique products that can meet the needs of the customers in the market (Lin, 2007). Large organizations are making use of the innovation to redesign their products in the process of keeping pace with the market changes. Innovation provides the significant opportunity to make organizations able to take advantage of the market gaps existing through providing the necessary products and services that can help in meeting the unmet needs. The increasing competition in the industry is making organization develop their innovation capabilities with the aim of making sure they are competitive. For instance, some multinational companies like Walmart are using their innovative capabilities to differentiate their products in the market. The adoption of differentiation strategy helps in eliminating the possibility of substitution in the market as there are many firms that offer similar products (Çakar and Ertürk, 2010). Besides, organizations are making use of innovation capabilities in the process of responding to the changes in the business environment. This essay evaluates how the innovation capabilities are developed within the large corporations while making use of the appropriate examples. Innovation capabilities Innovation capabilities are important in any organization in the process of integrating the organizational resources, skills, and competencies to ensure they match the environmental changes. The organizations can renew the competencies through being innovative in their operations hence can make the necessary adjustments to fit in the changing business environment (Kennard, 2014). The change management process has been improved through making sure that the company is innovative to accommodate the possible changes in the needs and taste of the customers. Innovation improves the operational concepts that enhance the productivity of the organizations hence innovation capabilities are vital in improving the competitiveness of an organization (Kumar and Che, 2010). The management of a company plays a major role in the process of implementing strategic innovations and managing change. Large corporations like Toyota Company has realized the need of developing innovative products that can help in achieving competitive advantages. Innovation management in the large companies entails change management and integration of the innovation processes with operations of an organization. Organizations make use of their innovation capabilities to develop the necessary products that can best meet the needs of the customers. The innovation management entails the necessary tools that help organizations in achieving their set goals. Through innovation capabilities, organizations can be in a position to respond to the opportunities that are available both internally and externally. This is because through innovations organizations become more creative in introducing new ideas and processes that can help in meeting the market demands (Sok and O'Cass, 2011). Research and development in large firms like Coca-Cola Company been improved because of the innovation capability that helps in aligning the product development process with the market needs. The innovation capabilities of an organization are crucial in enhancing the product lifecycle management and product line planning. The innovation process can be a pushed process through the use of new or existing technology that has been invented. Also, it can be pulled process through considering the customer areas that need to be addressed and solutions realized. The understanding of the technical and market problems can also be important in the process of ensuring successful innovation in the company. The increased competition has led to a shorter product lifecycle where the organization is making use of the innovation capabilities in the process of shortening the lifecycle of the products. The innovation managers reduce the development time without necessarily sacrificing the quality aspects of the products to ensure the market needs are met. As a result, the large firms operating in competitive markets are looking for ways of introducing new products in the market at a higher rate than the competitors (Ngo and O'Cass, 2012). For example, the Apple Company has managed to achieve competitive advantages in the market through launching new products at a faster rate than the rivals. This helps in achieving a larger market share before the competitors can realize the opportunity. Besides, the majority of the companies usually define the strategy of their business regularly and also specify the ways in which some functions which include marketing, finance and also operations that will provide support to the strategy. However, in accordance to the study which was conducted by the companies in the industrial sector, has shown that it is only in rare cases when the companies articulate to the strategies to align innovation with their strategies (Hu, 2008). Consequently, lack of the innovation strategy can result into conflicting priorities between various parts of a given organization, even if the organization has a business strategy which is clear. Also, diverse perspectives usually play a significant role in making an innovation to be successful. However, without having an appropriate strategy of integrating and also aligning those diverse perspectives, the power of diversity tends to be self-defeating. How to develop innovation capabilities within the large corporations Various ways and strategies can be used to develop innovation capabilities in the large organizations aimed at improving the performance of organizations. The development of the innovation capabilities are largely determined by the business environment in which the organization operates. The following are some of the strategies that can be used by the large organizations in the process of developing innovation capabilities. 1. Establishing sense of direction that is clear A clear sense of direction is usually aimed at enhancing creativity to develop the products that can help the company to achieve the set future objectives. An organization can then make use of the new sense of direction in the process of developing a better and new dimension for improving performance. Changes involve organizational culture shifts and changing the way of thinking which can take time. However, by taking an initiative of a clear sense, the primary target of the organization can, therefore, accelerate changing the culture (Wang, Lu and Chen, 2008). Moreover, the mission of the organization also assists in organizing as well as directing the creativity its individuals. In addition, by having an articulated message, every member of the organization is provided with an opportunity to focus on how innovation results into greater value. Therefore, the innovation capabilities can be developed through ensuring that the direction of performance is determined and new ideas to be focused on established. 2. Open communication Organizations can ensure open communications through organizing division meetings that can involve general manager and employees. This can involve coming up with intranet forums that involve feedback and idea sharing to help leaders in communicating openness necessary to encourage hearing innovative ideas. Through establishing an open communication between the employees and the management of the organization usually creates an atmosphere for the aspect of trust. However, if an organization wants to create a new and also a more trusting culture, then employees are not expected to take the first step in innovation (Slater, Mohr and Sengupta, 2014). The company leadership usually facilitates open communication by sharing its information such as the good news with the employees. In addition, for the leaders of various organizations to be able to maintain the aspect of innovation, they are required to provide a multiple chances for the communication. For instance, Southwest Airlines communication policy helped in improving the sharing of information that created the necessary awareness concerning the sudden changes in the costs of fuel during the Gulf war. The CEO sent memo to the pilots communicating the soaring of the fuel prices asking them to help in addressing the situation. Inventive thinking helped the pilots in getting new ways of reducing fuel consumption without any compromise on service quality and safety. As a result, the company managed to sustain innovation through offering multiple opportunities using open communication. 3. Reducing bureaucracy Organizations that want to experience improvement in the speed of implementing strategies, they have to make sure that they reduce the bureaucracies that might be existing. The faster implementation of company strategies is important in encouraging further inventive thinking. The large organizations are in most cases considered to be less entrepreneurial and also inventive as compared to the smaller organizations since the size of a company does not actually inhibit innovation (Lin, Chen and Kuan-Shun, 2010). The bureaucracy usually slows down the action of innovation in an organization. The smaller organizations usually implement their innovative ideas faster as compared to the larger ones since they usually have less bureaucracy. Therefore, organizations can be in a better position to develop innovation capabilities through reducing bureaucracy as it slows the innovation process. 4. Instilling the sense of ownership The sense of ownership is critical in making sure that the necessary innovations in organizations can be developed. The mentality of ownership usually creates a powerful incentive for thinking positively. For instance, when the employees become aware about how their interests are aligned with those of organization, the workers always get motivated to further the mission of the organization. Moreover, the stock ownership is also an important incentive to the workers. Employees in any organization are usually eager to see how their efforts can be in a position to affect the level of profitability of the organizations they work. In case the employees are not in a position to see their individual efforts affecting the company profitability are likely to be reactive and passive (Li, 2011). Therefore, it is important to make sure that there is improved involvement to ensure that employees are in a position have an impact on the performance of an organization. For example, the Southwest management gave the pilots freedom of designing and implementing the plans necessary to minimize fuel consumption as they were in a good position to ensure efficiency. The pilots were committed to delivering the necessary solution as they were aware of the effects of their response on the airline and their future. 5. Making sure that rewards and recognition are consistent Organizations that manage to adopt the team based compensation are considered counterproductive at the situations when competing for rewards. The incentives in managing human resources discourage collaboration at the cross-functional level necessary to maximize performance in organizations. The organizations that foster innovation culture are likely to offer rewards that can ensure reinforcement of the culture that they want to establish. If organizations do value integrated solutions compensating the team leaders based on the unit performance cannot be employed (Leskovar and Bastic, 2007). Besides, the companies that value development of the new leaders cannot use rewards that are based on short-term performance. The moment the financial rewards are usually tied to the innovation, the rewarding of a person or even a team who are responsible for a big idea creates a competitive atmosphere which discourages smaller improvements. Therefore, using rewards and recognition that are consistent can be important in developing innovation capabilities in large organizations. 6. Tolerance for failure and risk Innovation can be considered as a risk as success cannot be guaranteed as it can result in a failure as well. The tolerance of some of the failures is usually a significant part of the growth of a business, and therefore it greatly encourages the aspect of innovation in an organization. However, since innovation can result in a failure as well, workers would not take risks unless they clearly understand about them. It is through the understanding of the risk aspects associated with innovation that the necessary innovation capabilities can be developed. This can entail coming up with a flexible framework that can help in accommodating the necessary adjustments that can help in mitigating the risks facing innovation (Figueiredo, 2010). For example, the production system of Toyota transfers innovation authority and quality management to the front line workers in the plant. As a result, the workers are in a position to make the necessary adjustments for improving the system whenever they see the opportunity for improvement. The moment the innovations can work can then be incorporated into the organizational operations to achieve the desired improvements. The primary psychological benefit associated with the method used by Toyota Company is developing the necessary employee trust. The employees who have the appropriate trust with their bosses are likely to be willing to take the most intelligent risks that can benefit the company. 7. Eliminating the processes and projects that can’t work The organizations that seek for ways of developing innovation capabilities need to abandon the processes and projects that cannot work. The processes and projects that cannot improve the performance of an organization can be eliminated with the aim of creating the necessary room for new activities that are progressive. Organizations are looking for ways that can ensure financial resources are not misused to improve the profitability of the company. The employee energy and time can be wasted in continuing with processes and projects that are not able to improve performance (Bower and Christensen, 1995). However, innovation requires the necessary optimism that can help in improving the level of performance through developing a positive attitude. Therefore, large corporations can be in a better position to come up with the necessary innovation capabilities through eliminating the processes and projects that cannot work to replace them with innovative ones. Benefits of developing innovative capabilities Organizations that develop innovative capabilities are likely to enjoy an improvement in performance in the market through being competitive. Considering the changing needs of the customers in the market, innovative capabilities are important in the process of developing the necessary strategies that can meet the diverse needs of the customers. For instance, organizations can be able to develop innovative product features that are aligned with the taste of the targeted customers (Birkinshaw, Bouquet, and Barsoux, 2011). The marketing manager can deliver innovative products in the market that can compete better than the rivals. Also, it is through the innovative capabilities that organizations can be in a position to achieve efficiency in operations. Efficiency can be achieved through developing ways of achieving the set objectives while making use of limited resources (Anderson and Tushman, 1990). For instance, Walmart has managed to employ competitive pricing strategy because of its low costs of production that have been achieved through the innovative capabilities. Conclusion Despite the fact that there are many investments done on the management of the time and also money, the aspect of innovation has remained to be a frustrating pursuit in the majority of the companies. For instance, the initiatives for the innovation in most cases usually fail hence making the successful innovators have difficult times in their process of maintaining performance. Moreover, the problem which is experienced by innovators in their process of improving innovation is that they do not have a strategy for their innovation. However, a strategy is usually the commitment in setting a coherent, mutual and reinforcing policies or even behavior which aim at achieving a particular competitive goal. Also, good strategies in most cases promote alignment among different groups in a given organization and also clarify the objectives and the priorities around them. References Anderson, P. and Tushman, M. 1990. Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change, Administrative Science Quarterly, 35(4), pp.604-633. Birkinshaw, J., Bouquet, C. and Barsoux, J. L. 2011. The 5 Myths of Innovation, MIT Sloan Management Review, 52(2), pp.42-50. Bower, J. and Christensen, C. M. 1995. Disruptive Technologies: Catching the Wave, Harvard Business Review, 73(1), pp.43-53. Çakar, N. D., & Ertürk, A. 2010. Comparing innovation capability of small and medium‐sized enterprises: examining the effects of organizational culture and empowerment. Journal of Small Business Management, 48(3), 325-359. Figueiredo, P.N., 2010. Discontinuous innovation capability accumulation in latecomer natural resource-processing firms. Technological Forecasting and Social Change, 77(7), pp.1090-1108. Hu, M.C., 2008. Knowledge flows and innovation capability: The patenting trajectory of Taiwan's thin film transistor-liquid crystal display industry. Technological Forecasting and Social Change, 75(9), pp.1423-1438. Leskovar-Spacapan, G. and Bastic, M., 2007. Differences in organizations’ innovation capability in transition economy: Internal aspect of the organizations’ strategic orientation. Technovation, 27(9), pp.533-546. Li, X., 2011. Sources of external technology, absorptive capacity, and innovation capability in Chinese state-owned high-tech enterprises. World Development, 39(7), pp.1240-1248. Lin, R.J., Chen, R.H. and Kuan-Shun Chiu, K., 2010. Customer relationship management and innovation capability: an empirical study. Industrial Management & Data Systems, 110(1), pp.111-133. Lin, H.F., 2007. Knowledge sharing and firm innovation capability: an empirical study. International Journal of manpower, 28(3/4), pp.315-332. Kennard, M. J. 2014. The A to Z of Innovation Management, Birmingham: University of Birmingham. Kumar, N. and Che Rose, R., 2010. Examining the link between Islamic work ethic and innovation capability. Journal of Management Development, 29(1), pp.79-93. Ngo, L.V. and O'Cass, A., 2012. In search of innovation and customer‐related performance superiority: The role of market orientation, marketing capability, and innovation capability interactions. Journal of Product Innovation Management, 29(5), pp.861-877. Slater, S.F., Mohr, J.J. and Sengupta, S., 2014. Radical product innovation capability: Literature review, synthesis, and illustrative research propositions. Journal of Product Innovation Management, 31(3), pp.552-566. Sok, P. and O'Cass, A., 2011. Achieving superior innovation-based performance outcomes in SMEs through innovation resource–capability complementarity. Industrial Marketing Management, 40(8), pp.1285-1293. Wang, C.H., Lu, I.Y. and Chen, C.B., 2008. Evaluating firm technological innovation capability under uncertainty. Technovation, 28(6), pp.349-363. Read More