Importance of Innovative Strategies in Organizations
Innovation is significant in terms of bringing new ideas within the operational procedures that are effective for increasing the company performance and overall company productivity. Companies develop innovation strategy in order to implement appropriate innovation tactics, which prevents the company from facing any financial or situational crisis (Afuah 2020). Appropriate innovation are also beneficial for mapping the unique value proposition of the company for the target customer market. It is important to conduct appropriate innovation planning, in order to organise the innovation initiatives in the organisation, in order to create a positive impact on the organisation. According to the experts, the impact of the innovation depends on the strategic choices made by the organisation. One of the most common method bringing innovation in the organisation is to incorporate technological benefits in the company operations. According to the reports of OECD, it has been found out that within Italy the R&D investments has increased up to 305.2 per capita (Ec.europa.eu. 2022). It indicates that the market trend of investments in technology and innovation has increased. However, in order to ensure the success of innovative ideas in the organisation, the management has to take responsibilities for determining the key objectives for innovation. It is also important to identify the customers and competitors, which is also beneficial in terms of predicting the impact of the innovation on the external factors of the business. In this assignment, the importance of management strategies in terms of enhancing innovation procedures of the company will be evaluated. Appropriate theories, concepts along with relevant evidences of the company will be incorporated in the study, for better comprehension of the subject. Analytical approach, detailed methodology as well as a set of recommendations will be provided, that are beneficial for improving he innovation management of the organisation.
Determining a specific methodology or analytical approach is important in terms of maintaining the overall reliability of the study. The study design, approach and sample, data collection and analysis procedures determine the outcome of the study.
In terms of study design, a descriptive design approach has been selected in the study. This approach helps in describing the various characteristics of the data that has been gathered for the study. It also helps in providing a detailed analysis, which also prevents the chances of missing out any beneficial data from the gathered data. In order to evaluate the importance of the management strategies in terms of managing the innovation control, the descriptive approach is considered suitable (Diener, Luettgens and Piller 2020). The particular reason behind this circumstance is that every aspect related to the subject, could be analysed in an in-depth way with the help of the descriptive design.
In terms of data collection, the secondary data has been gathered from the authentic sources, such as company websites, scholar journals, online articles, books, and many more. The qualitative approach has been selected in the study, because the critical analysis section of this study depends on the secondary data collected from the secondary sources (Putra et al. 2020). The data analysis will also be proceeded in a qualitative method, as the analysis of the data will be carried out in a descriptive manner. One of the major limitations of the study is that it lacks primary data, which would have been beneficial for comparing the current market data with the previous data.
Analytical Approach to the Study
In addition, in terms of sample, the inclusive and exclusive criteria have been utilised in terms of collecting samples. The articles and journals consisting important information regarding the importance of management strategies for innovation has been included in the study, and the rest of the articles has been excluded from the collected data. In terms of understanding the subject of developing strategies to manage the innovation in the company, the business model innovation can be applied. This theory states that in accordance with the financial viability of the company, developing innovative measures within the company operations are beneficial in terms of improving the chances of company growth. This model helps in managing the implications of the innovative procedures, with the help of appropriate strategies (Khosravi, Newton and Rezvani 2019). According to the management experts, innovation is also considered as a crucial tool in terms of providing the organisation a competitive advantage, by enhancing the company’s value propositions in the market. Innovative initiatives also improve the quality of the performance, which also helps in attracting the attention of the customers. Therefore, it also increases the customer count of the organisation as well as the brand value in the market. On the other hand, the management strategies ensure the organised implementation of the innovation procedure within the company. Effective planning and strategies ensure that the implemented innovation in the company, are increasing the productivity level and higher launch success rates.
In terms of capturing ideas from the employees of different designations, developing a collaborative workplace, increasing communication, and most importantly preventing any resource wastes are some of the benefits of innovation and management strategy within the organisation (Arundel, Bloch and Ferguson 2019). With the help of the qualitative analysis and some of the real organisation’s evidences will be used in the next section for the critical analysis. The importance of the management strategy as well as its impact on the overall company performance will be analysed. The risk regarding implementation of management strategies for innovation will also be identified, for which beneficial recommendations will be provided, that are useful for mitigating any innovation related risks.
As per the ongoing trend in the business world, innovation is considered the main point of concentration for every large scale to small-scale businesses in the market. The basic elements of the management strategies regarding the innovation are generating new and creative ideas, and capturing the best possible idea that can provide growth to the company. The company then evaluate the ideas and identifies the competitivity of the idea with the desired objectives for the company (Petelski, Milesi and Verre 2020). Lastly, the most suitable innovative idea is generally prioritised and executed in the company. The management strategies are effective in terms of guiding the company to implement the innovative initiatives in the appropriate operational procedures. Ineffective innovative measurements can be a waste of economic investment, or company resources.
Innovation helps the companies to cope up with the continuous changes and the external influences such as the changing customer demands. There are some examples of the companies that did not innovate the strategies, and their overall revenue visibly declined in the market. For example, Blockbuster was a video streaming platform, which was bought by Viacom at 1994, for 8.4 billion dollars. However, in 2000, due to poor strategic moves and wrong decisions, the company was caught under a debt of $900 million (Sloan 2020). Due to the increase of internet and technological benefits, customer demands also started to change. The customers demanded more technology induced high quality videos, which the company failed to offer, because of the lack of innovation in the company. Therefore, the company, which once had a brand value of $3 billion, was charged with heavy debts, and failed to sustain in the market for a long run (Sloan 2020).
Management Strategy for Innovation in Organizations
There are generally different types of innovation, such as open innovation, disruptive innovation, incremental innovation and many more. Appropriate management strategies and internal research helps in identifying the basic needs of the company, and then the suitable innovative approach is selected (Brown, Bocken and Balkenende 2020). Effective innovation management means determining the plans, schedules, requirements, activities and the execution of the innovation initiative within the company gradually. Therefore, it reduces the chances of resource wastage, and prevents and financial crisis from occurring in the future.
For example, Apple is one such company that has used innovation appropriately without wasting any expenditures and in return, innovation increased the overall revenue of the company. The company have sold 1.5 billion iPhones, consisting of innovative features, which also helped the company to construct an overall new market for the application developers (Podolny and Hansen 2020). Innovation strategy of apple was extremely successful from the start, as the company managed to increase its share price by $12 in 2000, which further increased by $200 in few years (Podolny and Hansen 2020). The market share price of the company is anticipated to grow gradually, as the company is heavily dependent on the innovation and effective management strategies (Lam et al. 2021). Therefore, it can be said that appropriate innovation management within the organisation has the capacity to increase the revenue generation and overall profitability of the company. It has been observed that, suitable strategic innovation option depends on the company’s desired objectives, internal resources, cultural values as well as the core competencies (Grimsdottir and Edvardsson 2018). Therefore, it is important for the company to understand the internal condition, and then induce innovation in the management strategies for acquiring the desired target objectives.
The main purpose behind implementing innovative measures in the organisation is to increase the productivity rate, and improve the overall performance quality. Several companies implement technological innovations in the operational aspects of the company, in order to reduce the manual efforts of the employees (Ngoc Thang and Anh Tuan 2020). The innovation management develops an opportunity for the organisations to grab a long-lasting advantage. However, it has been observed that the management strategies have a specific responsibility in terms of making the innovative measures successful. It is important to meet three specific criteria with the help of appropriate strategies. The first criteria is to create innovative measures in accordance with the desired objectives of the company (Khosravi, Newton and Rezvani 2019). The innovation needs to be a part of the ongoing program, and lastly, the innovation process should be systemic.
For example, Tesla follows a systemic approach in terms of implementing innovation in their production procedure. Tesla has reinforced their business model and brings innovation into the car models one at a time. In 2013, the company witnessed a hike of 300% in the stock pricing of the company due to their modern tech innovations (Wang and Peng 2020). In 2021, TSLA the stock pricing of the company was reported to trade at 847.95 US dollars, which indicates the overall value growth of the company (Wang and Peng 2020). Therefore, it can be considered that the systematic approach of innovation has helped the company to increase its market value as well as the entire bottom line.
Benefits of Innovative Ideas in Organizations
There are mainly four different types of aspects, in which the company can bring innovation. The aspects are, products, process, marketing and organisational innovation. Therefore, it is also important to identify the internal gaps and the areas of the company, which needs innovative measures to improve (Abdi et al. 2018). All the mentioned business aspects have a direct influence on the firm performance. Some of the companies utilises innovation in every field to enhance the overall performance quality and achieve a higher market share from the market. Amazon is one of the largest global e-retailing business, which has used several management strategies terms of reaching up to the top position. One of the important factors that they have considered for increasing innovation flow in the company is to use appropriate tools as techniques for increasing innovation ((Demir 2018). The company also focused on promotional and sustainable management strategies, which has helped the company to achieve a 40% market share in the e-commerce industry in US and 30% market share in Europe (Onyusheva and Seenalasataporn 2018). The company mainly used innovation through social networking and project management as the main management tools for innovation, which has also helped the company become the most popular online retail destination in the world.
Cultivating innovation in the organisation is a complicated process, which can hinder the implementation of innovation strategies. There are several internal challenges that the company has to deal with before implementing strategies for innovation, such as employees, limited resources, financial problems and many more (Bulturbayevich 2021). In several companies, the employees lack creativity or knowledge regarding advance technologies, which prevent them from producing innovative ideas that are beneficial for company growth. In often cases the employees remains reluctant to the new innovative policies, due to the lack of motivation (Khosravi, Newton and Rezvani 2019). Employees play a crucial role in terms of generating innovative ideas, or willingly participating in innovative programs conducted by the company.
One of the biggest example of innovation failure, due to lack of appropriate management strategies is Kodak company. Kodak was the first company to launch digital camera, with preview film technology and spent over 500 million dollars at that time. The company also bought Sterling Drug for $5.1 billion, in order to produce chemically treated photo, and named the camera Advantix (Mui 2022). However, later the company realised that the technology is not worth the value that they had invested in order to bring it to the company. It resulted in the failure of the innovative product Advantix, which also caused the company to get into a verge of bankruptcy. In 2007, the market value of the company declined to 140 million US dollars (Mui 2022). Therefore, it can be said that the management of the company failed to understand the effectiveness of the innovative ideas, before including them in the business operations. As a result, the company faced financial problems, and ultimately failed to revamp the company’s previous position in the market. It has been observed that a thorough research is required before implementing the innovative programs in the company, or else it might negatively affect the entire bottom line of the company.
Impact of Management Strategies on Organizational Performance
In addition, lack of collaborations and limited commitment of the employees in the organisation also affects the innovation growth in the company. Collaborations can be considered as key driver for enhancing the innovation progress within the organisation. It helps the company to achieve appropriate finances, resources, labours and multiple other benefits (Van der Voet 2019). In often instance s, it can be observed that the customers are unable to acknowledge the changes within the products developed by the company, after including technological advancement. As a result, the customers become reluctant in terms of utilising the innovative services of the company. In addition, the customer demands are continuously changing in the market. Several companies fails to adapt to the ongoing changes in the market. As a result, the companies cannot increase the customer satisfaction through the innovative programs. It can also be observed that the companies face difficulties in terms of identifying the business aspects, which mainly requires innovation (Demir 2018). It can lead to the wastages of financial investments or the additional resources that the company acquired in terms of implementing innovation in the company. In order to mitigate such challenges, a set of beneficial strategies are provided below that the company can apply.
Developing employee-centric strategies: The individual performances of the employees mainly determines the overall organisational performance in the market. Therefore, it is one of the main responsibility of the organisations to maintain employee satisfaction, in terms of increasing their performance (Nedelko and Jevšenak 2019). The organisations can develop the employee-centric innovative strategies, which will benefit the employees as well as the overall company outcome. The employees will willingly try to engage with the innovative programs developed by the company, if it benefits them at the end (Khosravi, Newton and Rezvani 2019). The company also have to assure that the employees are getting proper training regarding the technological functions and benefits, which also has the capacity to increase the individual performances.
Open innovation: The employees should be given opportunities to share their opinions, perspectives, and ideas without any restrictions. The company can encourage employees to participate in the decision-making procedures, as well as remove any barriers that restricts the employees to share their innovative ideas (Oliveira et al. 2021). Open innovation also encourages the employees to enhance their creative thinking, and commitment towards the company operations. Therefore, it can be considered that open innovation is beneficial for both employee and overall company growth.
Encouraging the innovative habits: The organisations need to provide appropriate facilities to the employees, so that they can develop their innovative skills and knowledge. For example, Google has developed an 80/20 rule, which allows the employees to take free break during the working hours (Steinman et al. 2021). In this free time, the employees can develop innovative ideas, which are useful for improving the business operations.
Promoting innovative behaviours: It is important to promote the benefits of the innovation among the employees, in order to encourage the employees to make innovative decisions within the company (Peñalver et al. 2018). Creating a collaborative environment and increasing engagement with the employees is also beneficial. It helps the employees to get a safe place for brainstorming. The company has to ensure that the employees do not hesitate about sharing their innovative ideas in the company.
Identification of Risks in Implementation of Management Strategies
It can be concluded from the overall discussion that developing appropriate management strategies for implementing innovative solutions in the organisations are required, in terms of making the innovation successful in the company. It has been identified in the critical analysis that appropriate management strategies helps in planning the innovation procedures, as well as making the innovative measures successful. Open innovation is necessary in terms of increasing the innovation flow in the organisation. It has been observed that the company is responsible in terms of providing appropriate facilities to the employees, so that they can increase their innovative thinking skills. There are several companies that faced difficulties in terms of implementing the innovative solutions in the company functions, due to lack of appropriate management strategies. Failure to acknowledge the areas that requires innovation, also leads to financial or resource crisis problems. Therefore, it is recommended that the companies need to conduct internal capacity research, and develop innovation strategies based on the internal capacities, in order to prevent any future financial problems. The organisations can develop an employee-centric innovation strategy, which are beneficial for both the employees as well as the bottom line of the company. There are some barriers like limited knowledge of employees regarding technology, lack of appropriate resources, collaboration problems and multiple others. The organisations have to take initiatives in terms of mitigating these issues by developing appropriate innovation management.
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