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Innovation is defined as exploiting new ideas leading to the creation of new products or services. Change is the response to the different variations in the external environment of the organization. The purpose of the essay is to define how innovation can help companies to increase their profits and stay ahead of the competition. Moreover it outlines how companies encounter difficulties in accepting innovation strategies and methods for using it within the organization. It also describes how a change in a company is not readily accepted and methods to solve the problem and the difference between innovation strategies and changes that companies make to compete in the market.
Innovation is the formation of new creative ideas. Some companies see innovation as art of taking risks. Successful growth of a company can be achieved through dedication to breakthrough innovation and adoption of an innovation mindset. Innovation of products and services results in larger profits, higher earnings and increased stock prices. Introduction of iPod by Apple created a huge profit for the company, the innovation of using hard drive technology and user friendly designs allowed them gain an advantage over the competition. Innovation has to be one of the most important strategies in an organization and should permeate every aspect of its business. For an innovative idea to be successful the CEO has to develop the right strategies, allocate the right mix of resources and ensure a steady growth in earnings.
Innovation of products enhances company revenue. Products have to be completely renewed or updated for keeping a strong market presence. Change and improvement of products are regarded important for long term business growth. General Mills Incââ‚¬â„¢s Go-Gurt, the first ever portable yogurt in a tube is a good example of a product that made innovative ideas to establish in the market. Moreover companies should have commitment to innovation in processing of the products. A supplier who worked on a product for a long time builds up an expertise on the production and can create innovative strategies to develop same products at lower cost hence increasing efficiency. Market Innovation is concerned with identifying new potential markets and better ways to serve existing as well as the new markets. Due to high competition in markets an opportunity unseen or overlooked can be lost forever.
Companies are fighting to stay cost-competitive which is sound and safe business but breakthrough in innovation is the best way to leapfrog in the competition. Innovation helps companies to gain real competitive advantage, but technological innovation helps the rival companies to duplicate the benefits obtained by the company but also can turn its competitive advantage to its disadvantage. For example Kodak was the dominant producer of photographic films worldwide but with the invention of the digital cameras, the films became obsolete for the majority of the camera users. Kodakââ‚¬â„¢s competitive advantage became into a competitive disadvantage. For successful innovative strategies as wells as applying them a company should have an optimistic and positive CEO, an innovation officer who is committed in leading an innovation effort, several dedicated teams and reward structure for the participants in creating new creative ideas.
Even though organizational innovations bring profits to the company a level of uncertainty accompanies innovation. The companies are not giving enough importance to innovation because of the shaky economic conditions which are permeating every industry and swallowing up profits. But prompting reconstructive initiatives which results due to innovative ideas is the only best way to stay ahead of the competition. While many companies have spoken about the importance of innovation, but few have gone far to maintain innovation as top strategic priority. Most managers misinterpret innovation when it is happening right in front of them. When organizations have cultures that take risks and think creatively the rewards are tremendous. But CEOs are reluctant to innovation because it involves high risk, high cost and that promises uncertain returns.
Innovation results change in companies strategies. Change is the phase in which companies innovate by lowering cost and improving the functioning and performance. This change is required to adapt to the continuous alteration of internal and external business environment. When companies fail to change they run a risk of organizational decline. To prevent organizational decline managers have to recognize internal and external changes and understand their consequences.
Often when a company is ready to change its strategies, resistance forces of employees is one the setbacks for the company. Resistance to change is caused due to intolerance to change, misunderstanding and employees own interest. To overcome this problem managers have to communicate, share reasons and show the benefits of the new strategy. The CEO of P&G usually discusses with the mid level managers before a change and listens to their ideas hence the employees are less likely to be resistant if they are allowed to discuss and agree who will do what after the change. Even if the changes have been made the managers have to constantly support and reinforce the strategy so that the employees stick with the change.
The difference between innovation and change is that innovation is taking a creative idea to a point where it has produced something of value for the organization, whereas change involves taking an organization through various stages. Innovation is creative process where there are no boundaries to its limit but change is a planned systematic intervention designed to improve or enhance the performance of the organization. Innovation is the experimentation of ideas but change has to have a definite goal and it ensured that it is orderly and consistent.
In this fast changing market and technology world if the companies want to uphold their business they have to innovate. If they want to develop further they must not only frequently innovate but have a continuous change. To attain and maintain companyââ‚¬â„¢s success in the present market the high level manager have to spend some time to understand the customer needs and how they can be achieved innovatively using their own resources. But to attain future success the organization has to think beyond the market it is dealing now and refer to other possible markets through market innovation. So to remain at the top of the business world, companies have to continuously innovate and change.