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Critical Indicator of Business Success: The Ability to Innovate
This report aims to investigate the ability to innovate is becoming a critical indicator of business success. With the globalization of the world today, business have become more competitive and succeeding in the business environment have become more challenging, requiring more drastic measures such as adaptability in changing environment and ability to innovate as compared to decades past. This investigation is conducted in order to identify the key factor that drives a business success with focus on the ability for the business to innovate as a critical indicator of business success. The investigation is carried out by reviewing current and past surveys conducted by various researchers in different business environment. Compares of business goal attainment is made between highly innovative business and less innovative business in different business environment.
Based on research, it was discovered that for companies to remain competitive they need to nimbly and respond quickly to the changing business environment without getting caught in knots. It is important for companies to posses the ability to respond to market movement by transforming information into insight as core to sustainability. The main constraints to improved business success mostly are conflicting departmental goals and priorities, slow decision-making, silo-based information and risk-averse cultures. Companies are at a competitive disadvantage if they are not agile enough to anticipate fundamental market place shift. These are theories made from past research and survey and here is where innovative activities come in. This report discusses the different highlights, review, debates and current discussions on the innovative effect of business system on the success outcome of the business (Andy & Jasper 1998).
INNOVATION AS A CRITICAL INDICATOR FOR SUCCESS
Many companies will treat innovation as black-box, the serendipitous achievement of a few gifted individuals. But this survey found that innovation leaders consistently outperformed laggards on five manageable capability areas. In the past, most successful companies were duopolies or mono polices as compared to recent times were free market trade, globalization and the ability to satisfy the customers expectation is the key to profitability. Innovation involves exploiting new ideas resulting in the creation of new services, product or process. It is not just the development of a new idea that is important, but bringing the idea into the market and putting it into practice by exploiting it in a way that leads to new services, systems or products that add value and improve quality. This is a critical indicator to most business success as customer satisfaction is fully derived from the product and services and not just for the selfless gain of the company (Eric Almqust 2013).
Apple is an example of innovative company as they are able to develop new versions of the iPhone which is similar in nature but still at the same time gain high profitability by the ability to make customers see the uniqueness and need for it. This involves a high level of creativity to succeed above others in the mobile industry. It possibly involves management restructuring and technological transformation. Business innovation involves exploiting new technology and employing out-of-the-box thinking ability to develop new value and to bring out noticeable changes in the economy leading to economic development and growth. Economic growth brings more profitability to the company, this is an after effect derived from innovative business activities and seen from companies that employ the use of appropriate innovation system in their business activities (Vadim Kotelinikov 2012). Research also shows that if a company is not agile, the rate of success is limited because customers are not static.
Current debates shows that planning for the unpredictable may appear to be an impossible irony, but many companies seem to recognize that in a period of economic instability, a company ability to be flexible and positively respond is critical for sustaining growth. Economist have also explored the business market to distinguish companies that employ innovative strategies in their business activities to company to use traditional systems to run their business, based on several market survey is was seen that most of the company still using traditional system to run their business were quick to stumble and fall in the fast growing economy and especially during economic instabilities due to their inability to respond to market changes and find a suitable way to meet the customer needs and keep the customer despites reducing purchasing power of the customers. To nurture an environment in which customer centricity and innovation can thrive, those polled during survey emphasized that importance of a high performance culture, accountability, and ability to access the right information at the right time as the key enablers to innovation and hence company profitability and sustainability (UIS 2009).
An economist by the name of Mr. Weil from MIT quoted that “productivity is important as it drives economic growth”. Managing in a time of impermanence is easy feat but to compete in the business environment, businesses need to refine organization processes and leverage outside and institutional knowledge more efficiently and effectively. In a nut shell, after the investigation it was found that companies with higher degree of technology and process standardization were more agile and agile companies places more focus on standardizing that process that will not change, thereby freeing up resources to develop value added features that do respond to changing customer needs (EMC 2009). Experts have identified various types of innovation such as service or product innovation that involves the introduction of a new service or product that is considerable improved or new, process innovation that entails the implementation of an enhanced production or delivery strategy, supply chain innovation comprising of innovation that transforms the sourcing of input products from the market and delivering of output to customers, and marketing innovation which results in the evolution of new methods of marketing with enhancement in packaging, product design, pricing and promotion among others. This is the sole to sustainable business development.
WHY INNOVATION IS IMPORTANT
One survey showed that almost 90% of businesses believe that innovation is a priority for them. Measured and planned combination of idea, people and objects results to innovation leading in new business ideas and hence technological revolutions. To achieve valuable innovation, new services and products need to be strong enough to progress through rigorous commercialization process and into the business marketplace. Management expert Peter Drucker stated that “if a company which in this age necessitating innovation, is not able to innovate, it faces decline and extinction”. Many organizations are employing measures to strengthen their ability to innovate in order to create a dependable operating system for innovation which is an important indicator of corporate sustainability (Amitabh Shuka 2009).
Innovation is a popular act in business but one of the hardest to pull off. Bain and Company recently surveyed about 450 executives from different companies around the world and it was discovered that two-thirds of these companies made innovation one of their top priorities. Less than one-quarter believed that their companies were effective innovators and even fewer said they strong at breakthrough innovations (Iraj & Nebojsa 2010). The survey found companies that are great in innovation and not just iconic innovators such as Amazon.com, Samsung or Apple. To wrap it up, virtually all the top quartile of investors in the survey agreed with the following statement:
- They have a winning, repeatable model for innovation that they apply consistently in different regions and categories.
- They currently have projects that will exceed or meet their financial targets for innovation.
- They are prepared for market disruptions through innovation.
- They have consistently met or exceeded their innovation goals.
The importance of innovation is increasing significantly. In today’s economic scenario, innovativeness is becoming a major factor in influencing strategic planning. It has been noted that innovation leads to wealth creation. Although efficiency is important for a business success, in the long term business activities, it cannot sustain the business growth. In the current day, we need innovators more than any time before. Every company and business is feeling the impact of migration, knowledge and technological revolutions, climate change issues, and globalization. Innovation will widen and add more value to the employment base. If the quality of life in these trying circumstances is to improve, innovation is imperative. Innovation will also make the world a better place for the younger generation. Research indicates that strong demand combined with competition is a major drive towards innovation. The intensity of competition is the determinant of productivity and innovation besides services and products also includes new business systems, new management methods and new processes which have a significant impact on productivity and growth.
Amitabh Shukla, 2009. What is Innovation? Why Innovation is Important.
Andy Necly and Jasper Hii, 1998. Innovation and Business Performance: A literature review.
EMC, 2009. Organizational Agility: How business can survive and thrive in turbulent times.
Eric Almquist, 2013. Taking the measure of your innovation performance.
Iraj Hashi, and Nebojsa Stojcic, 2010. The Impact of Innovation Activities on Firm Performance Using a Multi-Stage Model; Evidence from the community Innovation Survey 4.
UIS, 2009. Measuring Innovation: Training Workshop on Science, Technology, and Innovation Indicators.
Vadim Kotelinikov, 2012. Apple’s Systemic Approach to Innovation.