Innovation

Innovation

Innovation is an important concept to understand as a manager and for an organisation as a whole. Used in the correct manner, innovation can give an organisation the competitive advantage they need to be a success in their market. Firstly, it is useful to look at innovation in general. Naylor (1999) says �innovations are ideas that are developed into new products or processes. They result in changes that customers recognise as new.’ Dess et al (2007) describes innovation as �using new knowledge to transform organisational processes or create commercially viable products and services.’ Put in even simpler terms, innovation is �the process of making improvements by introducing something new’ (http://en.wikipedia.org/wiki/Innovation). Therefore I believe the two words that sum innovation up are �process’ and �new’. Innovation is a process and there theories and models that I will evaluate in this essay. Innovation also has to be something new that an organisation can use as an advantage.

In general terms there are two types of innovation. Radical innovation evokes major departures from existing practices. They can give a firm a strong competitive advantage and have the ability to revolutionise a whole industry. Radical innovation often has the ability to change the way we live and make other products obsolete. For example, the telephone and fibre optics improved communications. Businesses no longer had to use letters as often and the speed of communication changed rapidly. If an organisation discovered how to use this technology, or were the first to invent this technology, then it would give them an advantage in terms of communication with suppliers, customers and internally. Incremental innovations enhance existing practices or make small improvements in products and processes. They act as a smaller source of competitive advantage as they can extend/ expand a product line. An example of this type of innovation could be sports drinks, shatterproof glass or electronic bookkeeping. The diagram below shows a few more examples of innovation on a scale ranging from radical to incremental.

Radical and incremental are both examples of innovation, the main difference being the time spent to develop them and the impact they will have on their respective markets. If an organisation had the choice they would rather have radical innovation. As already mentioned, radical innovations give a massive competitive advantage. Yet a radical innovation typically takes 10 years or more to develop and put into place. An incremental innovation takes on average 6 months to 2 years. Radical innovation also involves open-ended experimentation and time-consuming mistakes. I believe that the organisation’s market position has to be taken into account when choosing radical or incremental innovation. If a company has just been formed and has few resources then they could not maintain a radical innovation for 10 years. Radical innovation should only be attempted by a large organisation that has the finances, raw materials and staff at their disposal. Otherwise, for a company whose future is not secure, it is a great risk to use most of their resources on something that will only show rewards in 10 years time.

Deutschman (2004) looked at Gore’s six points for a manager to create a climate of inventiveness. First he said use small teams. If people work in small teams then they will become familiar with one another. This, added with the use of minimal rules, will hopefully allow freedom of speech and room for creativity. Another point is that small teams allow a person who is more introvert to express their ideas. In this climate, everyone has their opinion and is encouraged to express them. There should also be no ranks, titles or bosses. Gore believes that employees should be allowed to maximise their potential without managers and directors having a stifling effect. Gore also said that companies should take the long view. This ties in with radical innovation and Gore agrees that this type of innovation does take a long time to achieve. Employees should have a mentality that the overall goal will take a number of years to achieve, hence they should take time to formulate their ideas and not rush. Gore believes in only one type of communication which is face-to-face. He discourages memos and e mails and this is another example of Gore breaking down the hierarchy with everyone working together on the same level. Anyone in the company can talk to anyone else and this means a wide range of ideas can be shared. Gore’s fifth point is lead by leading. He believes that workers should spend 10% of their time pursuing speculative ideas. His theory is that most innovations are created by people thinking on their own and it is only when the idea has