According to one source, the process of innovation involves generating new ideas and putting them into successful application (cited in Aaker, 2004). According to another source, innovation is the process of lowering costs in relation to benefits (cited in Dess, 2007). According to a third source, innovation is the process by which different organizational components such as engineering, technology, employee morale, etc. are improved (cited in Armstrong, 2005). All three definitions share one element: change. That is not surprising considering the fact that innovation is considered to be essential for survival in today’s intensely competitive business environment.
As a result of globalization and liberalization of the international financial system, the competition that a business organization faces is no longer limited to the domestic market. As a result business organizations must compete internationally. Because of this internationally intense competitive business environment, organizations have to constantly innovate in three areas: differentiation, cost minimization and quick response. Differentiation has to do with the product life cycle where businesses constantly introduce new features into their products and services to generate new demand. Cost minimization is the process of developing new processes and improving upon the existing processes so that cost of operation is minimized. Quick response is minimizing the time to market.
The first definition of innovation given above, that of generating ideas and putting them into application, has more to do with differentiation. Differentiating product lines with a view to developing a competitive edge is a constant exercise in creativity. According to the first definition, a business organization can be considered to have innovated successfully if it has managed to attain a unique positioning in the market. The second definition of innovation given above has to do with lowering the cost benefit ratio. This is an issue of cost minimization. The management of a business organization can fund research and development to innovate into existence new production processes which will make the same goods and services cheaper to produce. When production becomes cheaper, prices come down and the company’s market share expands. According to the third definition of innovation, companies must reengineer different work processes in order to bring products faster to the market. Thus innovation in this case is associated with minimizing time to market.
I think innovation has to do with implementing information technology in order to enhance the efficiency and effectiveness of different organizational processes. In effect, the idea of implementing information technology borrows elements from all three definitions given earlier. As mentioned before, all three definitions share change management as the core concept. However when it comes to automating business processes, innovation becomes particularly challenging because the management gets carried away with the idea of implementing start-of-the-art technology and loses sight of strategic focus. When that happens, the whole point of innovation is lost because business process reengineering through implementation of information technology is capital intensive and the management will have spent all the resource for nothing.
Role of innovation
The importance of the role of innovation in the organizational context cannot be overemphasized. The importance is widely recognized. That is why most business organizations in the current business environment are constantly looking into different areas of operations for inefficiencies and applying innovative fixes. Patching up the already existing state of affairs is one kind of innovation. This is limited in its scope because employees are not required to adopt new learning.
However when it comes to business process reengineering, then the challenges involved in managing change are very demanding indeed. One example of business process reengineering is automating the human resource functions. Developing human resource software is a rapidly expanding industry. The reason that this is happening is that most of the tasks in human resource management are structured and repetitive. Processing payroll, for example, does not vary from one time period to another in terms of the nature of its requirements. In fact tasks such as processing payroll, because of the monotony of their repetitiveness, are particularly vulnerable to human error and therefore best left to automation. When automating payroll processing, the business organization adopting innovation such as this is doing so though business process reengineering. Innovation such as this reduces paperwork and enhances efficiency and effectiveness.
As mentioned before, businesses have to constantly change because the industry itself is constantly changing. In order for the change to carry meaning in terms of profit maximization, which is the ultimate goal in every business organization, change must be aligned with the strategic focus of the organization. This is a process that is best supported by an innovative culture. The organizational culture must motivate employees to think in innovative terms so that they can develop practical theory on their own regarding their work processes. When employees are motivated throughout the organization to change their work processes for the better in terms of minimizing benefits to cost ratio, then the combined effort contributes to furthering strategic focus of the company. In this respect, innovation is in strategic alignment with organizational goals and objectives and the result is synergy.
Examples in actual organizations
Galaxy International is a prime example of how innovation involves the implementation of an information system. This is the name of a family-run hotel business, located in London, which provides accommodation to airline crews. The company has formed a strategic alliance with Mega Airlines which ensures a certain occupancy rate every year. Now Galaxy International is considering expansion by means of forming strategic alliances with other airlines. The expansion plans focused on making more information about the company available. The management at Galaxy International decided to do so by upgrading the existing website. Thus this is an example of innovation where the company was implementing information technology in order to enhance its marketability.
The model of innovation followed in this example was the strategic alignment process. According to this model, innovation starts with developing an IT strategy. In this example, the IT strategy was upgrading the existing website. Once the IT strategy has been developed, the process of innovation moves on to business strategies and evaluates how the IT strategy helps the business strategies. Once alignment between the two is assured, the next step is checking into organizational issues of strengths and weaknesses to see whether that alignment is achievable. If not, the process of innovation moves back and forth between the three domains in iterations until alignment between all three domains is achieved. Then the next domain is information system strategies which checks to see whether the organizational context is robust enough to support the implementation of the information system. This is the strategic alignment process (SAP) which Galaxy International followed in its technological innovation.
Innovation is critical in strategic human resource management and the example of this is the adoption of the strengths based approach at BAE Air Support. As mentioned before, innovation is the process of improving upon existing procedures and methodologies. This is a worthwhile cause in that it seeks to optimize resource allocation in such a way as to maximize its efficiency and effectiveness. However innovation of this kind also picks on employees’ weaknesses and in the process it reduces employee morale. The strengths based approach is based on the positive psychology model and therefore the methodology differs from the traditional methodologies in that it seeks to allocate manpower in places it is best suited to. In adopting the strengths based approach, the organization where it is being implemented seeks to discover the inner drives and interests that motivate the employees and assigns them to work processes where they have a natural interest. The implementation of the strengths based approach boosted morale at BEA so that the level of performance went up.
Solution focused learning
External benchmarking and internal benchmarking are both practiced in business organizations to fuel innovation. External innovation is practiced by comparing a particular organization’s operations and procedures with those of its competitors. This can help eliminate inefficient and ineffective resource allocation. However the problem with external benchmarking is that different business organizations even in the same industry have different values, norms and attitudes leading to wide cultural differences. Therefore the best practices at one organization cannot be copied in their entirety to another. This problem disappears when the practice is one of internal benchmarking. It is in internal benchmarking that solution focused learning becomes particularly relevant (cited in Kline and Saunders, 2007).
Conceptualizing and implementing innovation is an issue of project management. At its very core, the project of conceptualizing and implementing innovation is a project of managing change. Managing change is a thorny issue because the end result has to be in strict conformity with the long term goals and objectives of the organization in which the change is taking place. As a result organizations frequently hire change management consultants to manage change. However the inputs based on which the structural transformation will take place in the organization have to come from internal stakeholders, employees and the management, and that is why solution focused learning is essential for innovation.
In order for the process of innovation to start, employees and the management must diagnose the problem. This is the stage where strategies are formulated and the project is defined. According to the strategic alignment process for example, a business organization changing to a web-based marketing approach has formulated the development and hosting of the website as strategies and the project is defined as such. Thus strategy formulation and project definition are concerned with diagnosis. However this is only the preliminary stage in the learning process. The strategies that have been formulated in the diagnosis stage have to be in keeping with the strategic focus of the company. If a company is moving to web-based marketing for example, then the management has to make sure that the web-based approach will reach out to the right target market.
Extensive research is conducted at this stage to assess feasibility of the project. Feasibility is based upon the cost-benefit ratio. If the costs of innovation outweigh the benefits, then the diagnosis stage is revisited and the project is redefined along with strategies. Research is followed by solution which is concerned with allocating resources for executing the project. If the project is found to be feasible in terms of its ability to further the strategic focus of the company, then the project is executed. The solution arrived at in this stage is selecting the personnel who will work on the project. Innovation affects several departments all at the same time because all the departments are networked so that if the processes of one department change, then the processes in other departments have to adapt. That is why innovation has to be a coordinated effort. When the solution is in place, the project is implemented and its performance evaluated. Evaluation is concerned with adjusting the new system from time to time to keep it in alignment with the strategic focus of the organization.
Senge’s and Wheatley’s system models and theories
Margaret Wheatley advocates the use of human creativity as the engine for innovation (cited in Armstrong, 2005). This is in contrast with the use of mechanistic models for initiating innovation. Employees are the greatest assets of an organization. Wheatley’s system model promotes the involvement of employees in innovation. What Wheatley is promoting is the bottom up approach in innovation where the ideas are coming from the grass roots rather than the top management. This has the merit of reducing employee resistance. Employee resistance is always a huge challenge when change management comes in the form of a mandate from the top management. Frequently change management consultants are hired to smooth the process. This resistance stems from the employees’ unwillingness to abandon practices in which they have been developing aptitude for some time.
The problem with not involving the employees is that a lot of tacit knowledge that the employees have developed in connection with the work processes they are responsible for is thrown out the door. This tacit knowledge is valuable intellectual capital which does not register in the formal knowledge management system of the organization and therefore nobody misses it when it disappears. However it is the cumulative experience and expertise of the employees that have been developed spontaneously as a result of the learning curve that is not connected with any form of training and development. This is free capital that is taken advantage of in Wheatley’s theory. That is why employees should be involved in innovation. Another advantage of this approach is the element of diversity. Human beings have diverse needs and this is reflected in the organizational context. The diverse needs provide energy for innovation. That energy is not tapped into unless the employees are encouraged to innovate on their own.
Peter Senge’s theory advocates viewing the organization as a whole system so that solution focused learning can happen within a broader context. Solution focused learning confined to specific departments runs the risk of developing disparate goals and objectives so that organizational strategic focus becomes diluted. This cannot happen in systems thinking because the innovation that is taking place in different departments has the same scope in terms of the analytical framework.
In addition to systems thinking, Peter Senge formulates four other principles (cited in Armstrong, 2007). The first of these principles is related to personal discipline. According to this principle, each employee has to develop an objective approach to innovation and temper the objectivity with vision. The second principle has to do with the development of mental models. This is related to the strength based approach where strategic human resource management motivates employees to discover their own strengths and weaknesses and focus their energies accordingly. The third principle promoted by Senge is the issue of leadership. Leadership guidance is indispensable when it comes to developing a shared vision because without shared vision, organizational output cannot be targeted towards maximizing strategic focus. The fifth principle is concerned with team based learning. Organizational activities have to be necessarily team-based efforts and therefore the solution focus learning implemented in innovating organizational processes has to be a team approach. These five disciplines in Senge’s system model combine to create a collective framework for initiating and maintaining innovation.
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Armstrong, Michael. (2005). Strategic Human Resource Management. Prentice Hall.
Dess, Gregory G., et al. (2007). Strategic Management: Creating Competitive Advantage.
Kline, Peter., and Bernard Saunders. (2007). Ten Steps to a Learning Organization. South
western college pub.