B207A Big ideas in organizations Shaping Business Opportunities I

Block 1 Big ideas in organizations Session 3: Innovation and organizations

What is Innovation? ‘Innovation’ is defined as both a ‘new idea, device, or method’ and ‘the act or process of introducing new ideas, devices, or methods’. Innovation could be in a product, a new market or a new strategy. New uses for existing products. New markets for existing product, new markets and new product. Innovation is not confined to just businesses either; it can include a range of stakeholders including governments, unions, universities and non-governmental organisations (NGOs).

Why innovation is important? Severe competition. Short product lifecycle. Demanding customers dictates that all organizations – whether they are private, public or non-profit – must innovate to survive and thrive. This raises a number of questions that will be explored throughout this module, such as: How can organizations effectively foster innovation? Is there a ‘one size fits all’ solution to the problem of innovation? Do all parts of an organization innovate in the same way? Should every organization adopt an innovation strategy uniquely tailored to their particular history and environment?

Creating an innovative organization Innovation, is in fact very much a product of the organizational and social environment. It involves and is dependent on the work of a community of people. It must be fostered by strong institutional support systems, its success or failure depends on its wider internal and external culture. A key challenge then for any organization is how to create and nurture innovation. However, innovation can be risky and new ideas can lead to failures. For this reason, innovation should be encouraged as an organizational value: implementing systems that enhance efficiency and quality and while also promoting the need for new ‘big ideas’.

Business function and innovation Business organisations are made up of several departments or ‘functions’. A typical organization may consist of four main business functions: Every function has operations management marketing accounting and finance human resource management. a distinctive perspective on innovation. Organisations need to create an innovative strategy for successfully promoting and implementing new ideas, products and processes.

Adopting A Holistic Innovation Perspective Positives of adopting a holistic approach: Business functions can allow organisations to innovate in a number of ways. Each function can offer a distinctive solutions to organizational problems. Business functions can help to provide decision-makers with fresh insights for tackling issues and challenging assumptions. Business Functions can open up space for distinct processes and ideas to emerge, develop and contribute to the organisation’s overall success. Negatives of adopting a holistic approach: There is the danger that one functional perspective will dominate and therefore marginalize the others. For example, if a company is market-driven then it may view all potential issues as marketing problems that require marketing-based solutions.

Innovation Tasks There are four major innovation tasks which correspond roughly (but nowhere near exactly) to the logic of the innovation process. These tasks are: idea generation and activation of the drivers of the innovation (the ‘entrepreneurs’ or ‘innovators’); coalition building and acquisition of the power necessary to move the idea into reality; idea realization and innovation production, turning the idea into a model, a product or plan or prototype that can be used; transfer or diffusion. the spreading of the model-the commercialization of the product, the adoption of the idea.

Opportunities and challenges for fostering twenty-first-century innovation Creating an organizational culture of innovation requires the investment of time and resources. Yet it also means being aware of the opportunities and challenges found within the contemporary business environment. Innovation does not occur within an organizational vacuum, Different external economic, political and social pressures can aid or hinder the emergence of new ideas and practices.

Globalization Globalization is one of the factors having the greatest impact on contemporary innovation is globalization. Positively, globalization has served to ‘shrink the world’ by making communications quicker and travelling easier through technological advances, alongside prevailing values of international ‘free trade’. Consequently, organizations have greater access to innovation happening around the world. They also can take advantage of a fast-paced global business environment to seek and push through their own cutting-edge solutions.