Information Systems – Businesses should be’wired for innovation’.
Discuss. IntroductionInthis paper, I will attempt to depict whether businesses should be ‘wired forinnovation’ and in which manners they should achieve this. I will do so by exploringseveral different points of view on this topic.
The areas I will discuss willconcentrate on defining innovation, exploring the processes, which society and businesseshave utilised to achieve innovation whilst exploring the potential negatives ofinnovation. 1.1Human instinct and DefinitionWestrive to better our lives by whatever means available. In history, we can seethat we, as humans, have never reached a standard of life satisfactory enoughand thus, since the start of humanity, we have not stopped innovating. (Rowley, Baregheh and Sambrook (2011) havedisputed that a key concept in the literature of innovation is the “type ofinnovation” in question. These different types of innovation come about as aresult of the high volume of models, classifications and frameworks produced bydifferent researchers that have distinct relationships with each other andwhich aim to define what innovation really is. To allow for a structured andinformed framework around the concept of innovation, it is imperative to have aclear outline of the distinct types of innovation and the relationships betweenthem. Damanpour (1987) strongly argued for a differentiation between types ofinnovations and stages of adoption, and stressed the importance it held indeveloping realistic theories in organizational innovation.
More recently,Kelley and Littman (2006) suggested that organizations must value all types ofinnovation, implicitly supporting the need for a framework to support all differentof types of innovation. If businesses aim to succeed in today’s competitiveenvironment, ‘they need innovation at every point of the compass, in allaspects of the business and among every team member. Building an environmentfully engaged in positive change, and a culture rich in creativity and renewal,means creating a company with 360 degrees of innovation’. This, further ties inwith the idea that frameworks for innovation must take a similar approach. 1.2RevolutionsWhen considering the past, it can beargued that there have been four major industrial revolutions, which all intheir specific way, changed the status quo and contributed to the world wecurrently live in, precisely through acts and instances of radical innovation.
The first major leap forward cameabout by mechanization, followed by the introduction of various sources ofenergy and the transportation by plane and automobile. What followed has beenthe source of many arguments, and was the invention of nuclear power. Theultimate and last revolution to this day, has been the one which saw thephenomenal rise of the Internet of Things (IoT). These major advances have comeas a by-product of innovation by individuals and major businesses and arestrongly emphasize why business and economies should in fact be ‘wired toinnovate’.The Austrian economist, Joseph Schumpeter, made many contributions to economic scientificand political theory which helpus understand why and how the industrial revolutions have taken place and whywe can expect several other instances of major technical progress to takeplace. His work; “The Process of CreativeDestruction” (1947) perfectly describes how innovation has driven majorchanges in history. He states that industrial mutations, rooted through innovation, “incessantlyrevolutionizes the economic structure from within, incessantly destroying theold one, incessantly creating a new one”.
2.1- Short v Long term strategyFora business it is vital to establish a strategy in order to achieve a goal.Because of this, an organisation needs to decide whether it is aiming torealise profits over the long term or the short term. This is of crucialimportance, not only for the business strategy but also in order to dictate thecompany’s view on investment on innovation. To be able to make such a decision,analysis of competing businesses is to be complete.
Market analysis todetermine product viability is also a very helpful tool as it will bringinsight of the place for innovating specific products and services within aspecific market.B.Tregoe and J. Zimmerman (1983) have reasoned that strategy is sometimes called”strategic planning” and then is used indiscriminately with”long-range planning”. Executives talk frequently about “marketstrategy” or a “pricing strategy”.
These tools enable them to remaincompetitive and penetrate the market with new products, be they sourced fromradical or incremental innovation. Consequently, it is the aspect of marketcompetition, which sways a company’s’ strategy into specific directions. Theseauthors have argued in their work called ‘Strategic Thinking: The Key toCorporate Survival’, that ‘Failure to separate strategy formulation fromplanning and operations compromises corporate strategic thinking,’ which willthen impinge on a business’s ability to innovate in a substantial manner.Figure1.0 illustrates the rapport between strategy and operations.
Clear strategy andeffective operations combined are bound to succeed, and if strategy is clear,but operations are ineffective, the outcome is ambiguous. It is not a predefinedfailure, but winning hinges almost totally on the capacity to forecast and thenbe carried by the kindness of external forces such as the economy andcompetition. Correspondingly, if operations happen to be effective but thestrategy is unclear, a business may be propelled forward. Nevertheless, it doesnot find itself in a position of strength or control and is likely to suffer inthe long term.
Thisis key for a business to consider whilst putting efforts into innovation. Being’wired to innovate’ can seemingly greatly improve the performance of a company,yet if does not have a real strategy behind its R and operationsfunctions, this success can be very short lived. Businesses which come into amarket with a fresh idea will succeed, but if they are dealing with forinstance a trendy product or service, the ‘hype’ is not sustainable in the longterm, it may be advantageous to in fact not be ‘wired for innovation’. Thiswill happen because it would be sacrificing its profits and investing them intoR, which in return, will not be yielding any profits in the future.Similarly,being ‘wired for innovation’ can, in some instances, be a tragedy. “Innovationmay result in short-term disruption before any longer-term performance benefitsare accrued by the firm” (Roper et al. 2008).
Such strategy may cause asuccessful framework to decay because of pre-mature innovation for which thebusiness may not yet be ready for. Moreover, Sako (2012) supports this idea by saying that “appropriate business models are necessary to translate technical success into commercial success.” Which further underlines the importance ofmanagement and business strategy with regards to innovation.Allscenarios confirm that there is indeed, a flipside of the coin and being ‘wiredfor innovation’ may mean that these changes don’t go in hand with goals offirms or they simply won’t bring significant value.
Hence, it is important toconsider a business’s strategy and operations to determine, whether investmentinto R&D to innovate is good business planning. 3.1– The persisting challengeThe true challenge for businesses remains the same asit has been in the past. It is to innovate and keep yourself and yourcompetitors on their toes to persist in trying to discover new products and services.It has been previously mentioned that remaining competitive in an environment thatis not only drenched with large amounts entrepreneurial ventures and reputablecompanies but also by disturbing technologies that canmake industries become extraneous. Thisis also referred to as the ‘Innovator’sDilemma’ (Clay Christensen), which today’s businesses are havingto face. This dilemma consists of a cycle, which starts with acurrently innovative concept.
That concept then grows and reaches a large audienceand is often profitable. Shortly after, this concept becomes outdated and overtime, is replaced by a new, innovative idea. Inorder to steer clear of this, businesses must be ‘wired for innovation’ whilstbeing prepared to fully question the life of its current product or service andeventually replacing it. The notion of ‘Deliberate Disruption’ has been broughtforward by Sethi et al (2017) which consists of understanding the market andits competitors in depth to then be able to protect themselves and theiraudience. Agreat example of such disruption can be demonstrated by the story of how PayPalcame to be what it is today.
In ‘Founders at Work'(2007), Jessica Livingston interviews PayPal founder Max Levchin revealsthat “PayPal was really not founded to do payments at all. My focus was incollege security”. The company had several phases which finally ended up as aniche, web-based payment system which was in 2002, sold to eBayfor $1.5 billion even though year 2000 “was basically the year of fraud, wherewe were just losing more and more money every month. At one point we werelosing over $10 million per month in fraud. It was crazy.
” This goes to showthat adaptability and innovation can never hurt a business. Moreover, the key issue affecting businesses in the presentis technological innovation. It is changing every day and opening new doors forbusinesses.
Multinationals have slowly but surely managed to change theperception of having to adapt to technology and are now trying to lead suchadvances. Nonetheless, businesses must be ‘wired for innovation’ to achievethis and avoid having too many doors closing at once. ConclusionItmust be noted that most businesses should be aiming to be innovative: whetherthat is entering a market with a fresh idea or trying to remain competitive.These innovations, however, need to come at a time when the business is ripefor such a change and it goes in hand with a clear strategy and well-defined innovativeframework. If that is not the case, the consequences can cause severe damage toa business. Overall, being ‘wired for innovation’, in the broad sense, meansthat all people concentrate on improving the status quo and this betters thelives of all society. It is therefore, in my opinion, accurate to say that businessesshould be ‘wired for innovation’ as it is a condition for success.
Unless, atrendy product or service is involved, where it may be most beneficial tomaximise short term profits and look to terminate its lifespan at the right timeor when a business involved is situated in the public sector, where a business enjoysa monopoly such as in some parts of the world, providers of; water, electricity,telecommunications, gas etc and can afford to be somewhat slower in advancing forward. BibliographyLivingston, J. (2007).
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