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Innovation and New Product Development process in the form of restructuring the business.
This study focuses on the internal innovation process of the company. Now a day's companies are considering innovation practices critically to achieve the success of the company however some companies do not go through this process. The purpose of this study is to develop the practical understanding of innovation process. This report will reveal the encompassing of innovation for business and will provide some recommendations when a business will implement the innovation process. This report will produce vast idea about how the innovation process helps to restructure the business.
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TABLE OF CONTENTS
CHAPTER 1 1
Problem statement 1
Research question 1
Research Aim and Objectives 2
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CHAPTER 2 3
LITERATURE REVIEW 3
2.1 Types of innovation 4
2.2 The expedition of innovation 4
2.3 Innovation and organisation 5
2.4 New Product Development 5
2.5 'Innovation Decision Process' by Rogers 5
2.5.1 Knowledge 6
2.5.2 Persuasion 6
2.5.3 Decision 6
2.5.4 Implementation 6
2.5.5 Confirmation 7
2.6 Innovation process management 7
2.7 Potential stages for innovation to effect expedition 7
2.8 Barriers and Support for innovation expedition 8
2.9 Overview 9
CHAPTER 3 10
3.1 Source of data 10 3.1.1 Primary data 10
3.1.2 Secondary data 10
3.2 Understanding qualitative approach 10
3.3 Data collection procedures 11
3.4 Theoretical framework 11
3.5 Data gathering 12
3.6 Overview 12
Limitations of research 12
CHAPTER 4 13
RESULTS AND DISCUSSIONS 13
4.1 Strategy and policy 13
4.2 External and internal environment scanning 13
4.3. Organisation culture for innovation 14
4.4 Organisational design for innovation 15
4.4.1 Organisational structure 15
4.4.2. Diversity in teams 18
4.4.3. Responsibilities and Goal Clarity 18
4.5 Customer feedback 18
4.6 Obstacles and Barriers to overcome 19
4.6.1. Resistance to change 19
4.6.2. Why people resist change 19
4.6.3. How to deal with resistance 19
4.7. Stress level 20
4.8. Overview 21
CHAPTER 5 22
CONCLUSIONS AND RECOMMENDATIONS 22
5.1 Conclusions 22
5.2 Recommendations 22
LIST OF FIGURES
Roger's five steps 6
Potential stages for innovation expedition 8
Cultural Web 15
Functional Designs 16
Cross-Functional Teams 16
Unsupported Teams 16
Ambidextrous organisation 17
The curve of stress and productivity 20
The global market and the technology are expanding day by day, therefore the business world getting more and more competitive. The companies are now seeking for new ways to invent more competitive advantages. Innovation is vitally significant for any business. The creative idea for business and for new product development is to enhance the existing system and business model.
Significance of research:
Innovation is the introduction of new things or methods. Radical innovation takes business further from its core markets and technology. It is very important to delineate the significance of innovation to business. According to Joseph Schumpeter, an Austrian economist, established firms play a big role in innovation. Most product innovations are made by companies, which have a dominant share of the market. (The Economist, 2004)
This report will investigate the effect of innovation process to restructure the business. The focus of this research is to find out the gap in experiential verification on the process of implementing the innovation strategies into a best result.
The research questions are:
What is the innovation process?
Why innovation is important for business?
How to overcome the obstacles and barriers when this implements in a business?
Research Aims and Objectives:
Aim of this research project is to review the impact of innovation strategy on an innovative business. Following are the research objectives:
To find out if innovation strategy illustrates the management to restructure the business.
To analyse how innovation process can bring best results for organisations.
To identify the factors obstructing the process of innovation.
Rapid change in all elements over last few years.
Technology facilitated more innovation.
Market more open to innovation.
To link in between the innovation strategy and the new product development into the business process.
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Marked to Standard
Innovation process emphasise the success of the business.
To find out the obstacles and barriers when implementing this in business.
To recommend how innovation process can be achieved in business.
This chapter has discussed about the overall circumstances observing the innovation in organisation and the significance of understanding the concepts of innovation strategy. In the following chapter will discuss about the literature review of this topic and explore the existing framework and opinion for this study. Chapter three represents the chosen method of this research. Chapter four describe the results of this report and then chapter five shows the conclusion and the recommendations.
All organizations today are chasing for forceful environmental factors, categorized by rapid change. They are trying to change the product life cycles and globalization. It is perceptible that the organisations, those are technology based (cameras, mobile phones, laptops etc) are in the market environment need to be more innovative, more creative to endure in the high competition market. Today success is based on innovation through creativity. In return it will give the advantages to the organisation and the same way to the 21 century's economies. Hence, the creativity and innovation are increasing significantly in today's world (Mumford and Gustafson, 1988).
Innovation is defined as the successful execution of inventive ideas within an organisation (Amabile, 1998). Product innovation based on idea which ultimately focuses on a product innovation increases consumer utility. In authenticity, on the other hand, it seems unlikely that consumer utility actually increases if a product innovation is introduces to the market. Customer may not notice the growth of the new product unless the new product is not marketed at all.
Today innovation does not only stand for new products or services, but also focus on new business plan. The model of business innovation is all about how the product or services is formed or how they are paid for. Such as Google, all the advertisement finances the service as a result the users or the customers do not have to pay them. The fashion chain ZARA, they have different business innovation by having the clothing lines in the shop for some weeks, afterword they modify their clothing line for the following some weeks. This company is able to improvise with the new ideas to attract the customers.
It has been argued by Granstrand et al., (1997) that innovation does not necessarily decrease the focus on the core competencies of the organization, rather, the management of the company should not confuse technological innovation with product innovation as a rule of thumb to avoid such a possibility. This is highly relevant to the mobile phone company, which should take care to deal with the technological innovation and the product innovation separately.
For any kind of process where creativity is involved, it is imperative to follow a procedure otherwise success will depend on luck or chance. If some kind of system is used, an organisation can harness can creative or problem solving abilities and make a profit or obtain market share. However, for a small niche company it may not be very important although it is vital for some company who are aiming for a share market in a very competitive market, such as a telecommunication company. For this reason, the innovation process will be used. The process consists of the following stages according to marketing concept-
Development of idea
Launch and post launch review.
The set of recommendation that will be presented will address the needs of each of these stages. It is not enough to simply tell a company to follow this procedure since there is much variety on the methods of execution.
2.1. Types of innovation:
Innovation can be two types. It can be tangible such as new product development or intangible as new services and new work exercises. According to Ben and Radford (2002), innovation focuses on whether new or improved products, management, processes and organisational development. Hamel and Getz (2004) referred another two forms of innovation such as services and business model innovations. In addition, Hesselbein et al., (2002), proposed another two: technology and organisational innovation.
2.2. The expedition of innovation:
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An innovation process passes through an organisation to achieve a goal. It is important to realise the value of innovation it passes through the business. Innovation is important to business and it has support from several sources. According to Bean and Radford (2002), it is a fact that innovation holds the life force of a living adaption for an organisation.
Develop a new business were inspected as perhaps sharing similarities in process. Though, the distinctions of an industrialist establishing a new project and the innovation expedition were apparently fundamental and restricting importance. Sharma (1999), distinguished that, there is absence of bureaucratic and risk adverse nature of an existing business in a new business. In the same way, large companies may not have flexibility whether this present in small enterprising business. On the contrary, Sharma (1999) argued that, they have very limited access to the resource accessible in larger and more established firms.
2.3. Innovation and organisations:
Over the last few years, innovation and accomplishing an innovative organisation have been increased widely. Innovation in a business may be restrained. Willams (1999), have demonstrated that, continuous innovation practices are often cause one dimensional innovations. Although, McAdam et al. (2000) argued that by exercising continuous improvement help to develop innovative organisations.
2.4. New Product Development:
Annacchino (2003), indicated that, a product plan consist with time periods, probability and resource requirements through the New Product Development (NPD). Creativity brings the success of a new product and it is only achievable by the best practice of an innovation. However, Annacchino (2003), also argued that organisation's recent NPD movement is more effective by assisting the organisation. Intangible innovation can be ignored at this stage. It is assuming that, the active frame of R&D and product process requires purifying. On the other hand, these are absence in the internal innovation of the common organisation who desires to understand innovation.
2.5. 'Innovation Decision Process' by Rogers:
Rogers (2003) clarified a suitable model which helps to identify the process of innovation. There are five steps in this theoretical model. During an innovation this five steps outline the individual's progress. The five steps are followed by the next page:
Figure 1: Roger's five steps Source: Rogers (2003)
2.5.1. Knowledge: This is the first step of this model. Rogers (2003) explained that knowledge is introduction of an innovation and it is important to realise it. This only happen when an organisation or an individual conscious of disappointment or frustration. Zaltman et al. (1973) added that an organisation who wants to implement innovation process need to aware of its allegations and benefits.
2.5.2. Persuasion: This step focus on the positive and negative forms of innovation. It indicates the attitude of the innovation rather than just to have knowledge about this. Persuasion involves with implication of the innovation and wishes for more information to evaluate.
2.5.3. Decision: The third step is decision, which is engage to foresee the future of an innovation. Rogers (2003) in his model indicated two clear choices- adopt the innovation or reject the innovation. If the organisation decides to reject it then this process terminate here. Other than, if it is adopted by the company then move to the next level. Decision level can be more difficult for the organisation rather than an individual. As in organisation, the problem may arise due to unwillingness to change and unsupportive framework.
2.5.4. Implementation: The change or modifications, adjustment, re invention of the innovation are engage in this step. These types of changes are essential to implement the innovation process. This will give the company some great benefits to overcome the conflict.
2.5.5. Confirmation: This fifth step may be needed if any decision requires revising or emphasizing the innovation's value and validity. If there is any dissatisfaction with the result or if there is any conflict of information then the innovation process can be terminated. Rogers (2003) suggested that, an innovation can be abandoned at any time when an organisation passes though these five steps.
This innovation decision process model helps the organisation to seek the proper way to implement the innovation process within the company rather than going through the unplanned innovation. These five steps are ideal to restructure the organisation's innovation process. Although not contesting the significance of this point, it may hamper the original business when operating the innovation process.
Even though, Rogers (2003) innovation decision process model gives very significant structure for the purpose of this study. This model lends the elasticity to implement the process all the way through. Woodside and Biemans (2005), they used this innovation decision process model in an organisational perspective.
2.6. Innovation process management:
Innovation process will only be succeeding when this process will work out with the organisation's culture, environment and structure. Therefore, Senge (1992) evaluated that, organisational learning concept helps to put together the organisational ad individual skills so that enormous change can flourish the competitive business environment. Kotter (1996) recommend that, adaptability, flexibility, accessibility combination will appear in 21st century's company to do the team development. According to Williams (1999) spotted that, the demand of innovation generation and rewarding enterprises e.g. admire, chance to work out further innovation or financial benefit.
2.7. Potential stages for innovation to effect expedition:
There are some steps which potentially helps to outcome the excellent result throughout the innovation expedition. Hamel (2000) suggested that, exchanging the concept to the line managers, building a business concept, looking for a guarantor and structure support to functional occurrences in the structured process. Pinchot and Pellman (1999) distinguished that, to find out the best mix of innovation and to achieve the long term objective it is very important to make sure all the resources are distributed for structural process. Potential steps for innovation expedition are also recommended by Pinchot and Pellman (1999) in the model as below:
Distributing idea to the managers.
Set up a Business plan.
Find out a sponsor
Figure 2: Potential stages for innovation expedition Source: Pinchot and Pellman (1999)
2.8. Barriers and Support for innovation expedition:
The total success of innovation depends on the practices during the innovation expedition. Lack of directions and testing the literature on developing innovative organisations lend a hand to diagnose the barriers that may be lead to the innovation expedition. In the same way supports to the innovative organisation might be performed as facility. Christensen and Raynor (2003) proposed the influences on the innovation expedition can be summarised as:
Tangible resources to succeed such as assets, people, things.
Processes that assist interaction, coordination, communication,
Values that understand the difference between the new and old requirements such as the culture and criteria for decision making.
Resistance to change, challenges to existing procedures are the main barriers to innovation process. Christensen and Raynor (2003) stated that, if the innovation process does not succeed, the main reason is managers and the organisations are incompetent or they do not understand the value of innovation. It is not possible without being compromised the efficiency to fit innovative activities into daily routines.
The purpose of the literature review validates that if a business wants to survive and growth then the innovation is principal to them. However the internal innovation outcome process results the unlocking of innovation value. Existing literature focuses on the innovative organisation or offers theoretical concepts rather than pursue the realistic points to process the innovation within the company. Essentially innovation transforms the business and this crucial process need to manage in proper way. When this change comes to the organisation then the resistance began. Only by studying the proper innovation strategy could sustain the business and can overcome all the limitations. This is how innovation can be more effective into the business. The prospect of innovation strategy will provide the great effectiveness of understanding the innovation value.
The earlier chapter discussed about how the innovation process works within the company in extend of the literature review. In this chapter, it focus on research questions and objectives as well as research framework, hypothesis.
Source of data:
To conduct the research there are two types of data will be considered
Primary data &
According to Ajzen (1991), primary data is the type of data that is collected for the research purpose at hand. The primary data for this type of research collect through,
Survey and questionnaire.
Interview and discussion.
Information that has already been assembled, having been collected for some other purpose source include census reports, trade publications and subscription services are known as a secondary date (Community Futures, Glossary of Business Terms).
Discussion with the business people via phone or email.
This research is a qualitative research.
Understanding qualitative approach:
The collection of qualitative data was pointed towards the gap of the research to realize the fact of innovation strategy in business outcome. Sometimes current information cannot provide adequate valid results in that case this type of research helps us to understand what is likely to be found. The statistical and numerical data collection will not provide the significant descriptive result of this study therefore the quantitative method was rejected. This qualitative research will conduct by secondary data such as previous analysis, discussions, internet search.
Data collection procedures:
This report prepare based on secondary data. All the information and resources are used here collected from the previous researchers those were published in several journals, books and websites.
According to Marshall and Rossman (1999), by conducting qualitative research which build an established model that provides dependability and consistency. Theory helps to describe the objectives and show the schemes form the subjective meanings. Rogers (2003) distinguished that the analytical issues can be supported when the innovation decision process grounds the data in a theoretical framework.
For any kind of process where creativity is involved, it is imperative to follow a procedure otherwise success will depend on chance and luck. If some kind of system is used, an organisation can harness its creative or problem solving abilities and make a profit or obtain market share. Hence the framework of the innovation process will be used. This process consist the following stages:
There are lots of varied approaches for this but creativity and diversity is most important here. Can be looked at as 'organised chaos'.
Ideas filter which is affected by the company mindset and research. Only those are promising will be taken and rest are killed.
Development of ideas:
Everybody gets involved at this stage, from supplier to consumer. Project teams and leaders established. Prototype developed and public trials carefully planned.
Final stage: Launch and post launch review:
Closely analyse product performance, test assumptions, and use tangibles to measure against value chain.
This research is based on qualitative research which would also have endowed with rich data. According to Miles and Huberman (1994) collecting the secondary information of data for research report, it helps to understand the various system and also enrich the research report. In this report, it is hypothesized that to find specific application it is important to utilize a structured model that may have deformed. Roger's (2003) Innovation- Decision Process model which has some significant steps and it is competent to take a broad view. This model therefore focuses on the actual and practical steps occurring in the innovation journey.
This report tries to explain the innovation situation towards an organisation. This methodology of the task can be a number of procedures have followed to prepare a meaningful report.
Limitations of Research
The scope of this research was limited to the secondary data only, which has narrowed the innovation to outcome systems. Therefore like any other study the limitations of this study are not out of questions. But the following factors seems to be the main points of weakness of this study-
The main limitation is the time constraint
Lack of secondary data.
Lack of pursue any primary data investigation.
Results and discussions
This chapter represents the results of this study. Results are prepared to focus on the study's objectives. The objectives are to identify the process of the innovation into the companies and the successful innovation effects.
4.1. Strategy and policy:
To be seen as an innovative company by the consumers, the company must be market driven. This means producing goods that the consumers want or need instead of producing goods that the company is best at producing cost effectively (manufacture driven). Pursuing a market driven strategy will mean that the company has to be responsive to changes in the market and the best way to achieve this is by following the innovation process with each stage working effectively towards a goal of satisfying the customer.
4.2. External and internal environment scanning:
In order to ensure effective implementation of change towards an innovative culture, it is essential to undertake an in depth analysis of the company's operations and strategic positioning as a starting point. An exhaustive test of the macro and micro aspects of the business need to be carried out to identify the issues that could potentially impact on the business and understand the many different influences encapsulated in the environment. This can be carried out using the analytic tools.
This framework categorises environment influences into four types, political, environmental, social and technological (Johnson and Scholes, 2002). The pest analysis will be used to look at the future impact of all these factors which may be different from past impact.
Johnson and Scholes (2002) described that the swot analysis summarises the key issues from the business environment and the strategic capability of an organisation that is most likely to impact on strategy development. This will help the company to identify the extent to which the current organisational strengths and weaknesses capable of tracking the threats or capitalising on the opportunities in the business environment.
PORTERS FIVE FORCES:
This will help to understand the competitive forces between and around the industry focusing on barriers to entry, the power of the buyers and the suppliers, the threat posed by substitutes and other likely reasons for the competitive intensity.
VALUE CHAIN ANALYSIS:
The value chain will also be used to describe all value adding activities within and around the business, which all together create the company's products and services.
4.3. Organisation culture for innovation:
McCosh et al. (1998) distinguished that having an innovation supportive culture is seen as one of the most important drivers of successful product development. Thus, the company culture must be positive towards innovation. The dominant senior management must be supportive of the concept of novelty. It must be willing to encourage innovative and risk taking behaviour. Culture of the organisation refers to the three elements, i.e. implicit or explicit values, assumptions, belief systems and behaviour norms. According to Jassawalta and Sashittal (2003), the symbol in the physical environment that signify the priorities and underlying values of the company as well as shape up how people think and act. However they argued that innovation supportive cultures emerge when social interactions generate an environment in which employees share high level of trust to the extent that it becomes embedded in the collectively held beliefs, assumptions, values and norms.
Figure 3: Cultural Web
Source: Lynch, R., (2003), Corporate Strategy (3rd Edition), Harlow: Financial Times/ Prentice Hall.
4.4. Organisational design for innovation:
4.4.1. Organisational structure:
Those business which stand out at breakthrough innovation, mostly apply the organisational design of ambidextrous structure. However, when businesses decide to pursue innovation, they usually apply one of the four organisational designs to develop and deliver their innovations. These types of organisational design are shown below:
Figure 4: Functional Designs
(Integration of project teams into the existing organisational and management and management structure.)
Figure 5: Cross-Functional Teams
(Operation within the established organisation but outside the existing management hierarchy)
Figure 6: Unsupported Teams
(Are set up outside the established organisation and management and management hierarchy)
Figure 7: Ambidextrous organisation
(Establishing project teams that are structurally independent units, each having its own processes, structures and cultures, but are integrated in to the existing management hierarchy)
It is being argued that organisational design i.e. the structure together with the management exercises employed have a direct and important contact on the performance of breakthrough innovation. However, the ambidextrous organisations are argued to be considerably more flourishing than the other three structures illustrated above. O'Reilly and Tushman (2004) identified that, 90% of the ambidextrous organisation are more likely to achieve the goal, while no cross functional or unsupported teams and only a quarter of the functional designs formed real innovations. Therefore, ambidextrous organisation design is the optimum one to achieve the best innovation results.
According to O'Reilly and Tushman (2004), the reasons why the ambidextrous organisation achieving overall greater innovation than other organisational types are as follows:
The structure of ambidextrous organisation allows "cross-fertilization" among units while cross defect.
The tight coordination at the managerial level enables the fledging units to share significant recourses from the traditional units such as money, talent, expertise, consumers etc.
Organisation division ensures that the new unit's characteristic methods, structures, and cultures are not being plagued by the forces of business as common.
Already established units of the business are secured from the distractions of launching new businesses and innovations i.e. they can continue to focus all their attention on improving their products, referring the operations and ultimately serving customers more efficiently.
4.4.2. Diversity in teams:
Diversity is of crucial importance to fostering greater levels of innovation and creativity, since it provides different perspectives and creates greater encouragement of idea generation on the existing capabilities. Furthermore, when organisations are trying to facilitate continuous innovation, diversity in team membership promotes more challenging and unusual views, which in turn results in increased innovation.
4.4.3. Responsibilities and Goal Clarity:
It is recommended that the company ensure that the employees really understand the NPD process and their roles in it; to do so a clear delegation of tasks should be facilitated, where the responsibilities are being allocated according to skills and talents of the employees, which also encourages motivation. As Cooper, et al (2004) suggested that to provide extensive training and leadership for increased goal clarity.
4.5. Customer feedback:
The customer feedback focuses on the end to end processes, which offer solutions that allow companies to improve their ability to listen to their customers with the objective of delivering value and increasing customer satisfaction.
The 'Voice' of the customer identified that, analyzes, prioritizes and assesses the tangible and intangible benefits of the customer perceive which they obtain from the usage of the product or service. Understanding the usage pattern, value proposition and adoption of the customer is a critical metric of planning future improvements and opportunities within the company and to gain competitive advantage.
4.6. Obstacles and Barriers to overcome:
In the light of discontinuous, large-scale changes facing the world, organisations will be required to undergo major, strategic, reorientations. These will involve innovations, creativity and changes in products, services, markets, organisational structure and human resources.
4.6.1. Resistance to change:
Resistance to change is any manner or performance that reflects a person's refusal to make or support a desired change or innovation. Any such resistance is often viewed by managers as something that must be overcome in order for change or for innovation to be successful.
4.6.2. Why people resist change:
People may resist change for many reasons, which includes:
Fear of the unknown,
Lack of good information,
Fear of loss of security,
No reason to change,
Fear of loss of power,
Lack or resources,
4.6.3. How to deal with resistance:
There are ways a manager can deal with resistance to change, in any of its form; resistance is often managed effectively if it is recognised early in the change and innovation process. Kotter and Schlesinger (1979) distinguished that among the possible ways for dealing with resistance to change; the following approaches are common-
Understand the resister,
Education and communication,
Speaking the right language,
Participation and involvement,
Remaining open ideas,
Facilitation and support.
4.7. Stress level:
Stress is the result of any emotional, physical, social, economic, or other factors that require a response or change. In the early 1900s, doctors Robert M. Yerkes and John D. Dodson, two researchers from Harvard described that how performance and efficiency are directly related to stress. They created Yerkes-Dodson law, the classic bell shape curve, which shows how performance increases up to a certain point with increasing stress; beyond that maximum point, more stress only harms the body.
Figure 8: The curve of stress and productivity
Source: Tager, M. and Willard, S. How People and Organisations can Transform stress and Manage Change. Available at: http://changewell.com/pschapter1con.pdf page 20
It would be prudent of the project team to take into account how costs for this innovation process must be managed and that the transformation is planned thoroughly and well in advance of any implementation, so as to take into consideration any potential obstacles and be able to deal with them when encountered.
Conclusions and Recommendations
The purpose of this study was to ascertain the internal innovation journey from beginning to outcome. At the same time to expand the detection of practices that supports the realisation of innovation value. The overall objective is to develop a map to action and realizing the activities that lead to best practice. This final chapter represents the conclusions of this report and as well recommendations for further research.
The principle finding of this research is, the innovation processes are straightforward with risk preference. However there are supplementary steps are necessary to mitigate risk and maximise the effectiveness in realising innovation process. Moreover, the quicker result of innovation process can be identified depends on how simple the innovation processes are.
It has been seen that the process of innovation for a business is all encompassing: it is holistic transformation, incorporating the change in organisational culture, processes, business strategy and policy, but also is not without instances of hindrance or obstruction to this process of change. Finally, the intension of this study is to endow with vast idea of innovation process and new product development to outcome journey that may lead to further research.
It is been recommended that there are some additional areas where requires further studies. Such as:
Conduct a research on companies which has already transformed successfully through innovation process.
Use the information of this study to new companies and analyse the result of those companies after being transformed and compare with this study's result.
Research can be done through the addressed barriers to innovation. This will simultaneously help to provide better result.
The further study is suggested as it can improvise better understanding of this area and it will help the company to realise the innovation process.