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There has been increasing research on understanding processes and systems that make organisations innovative and successful (Medina et al. 2002, p.272). This report analyzes the characteristics of innovative organisations and examines if Nintendo shares these characteristics. It also studies other factors of innovation and their existence in Nintendo. Next, it analyzes Nintendo's most innovative product, Wii, using related innovation management theory. Furthermore, it provides an example of strategic alliance between organisations that lead to innovation. Finally, it explores technology transfer in Nintendo.
Characteristics of innovative organisations
The epistemological meaning of 'innovation' is clear: making something new (Tidd, Bessant & Pavitt 1999 cited in Medina et al. 2002, p.273). Innovation is broadly understood as connected with the implementation of new ideas or original solutions (Bergfeld 2009, p.10; Björk & Magnusson 2009, p.663). It refers to the introduction of important technical or technological changes (product or process) or changes in other areas such as commercial, marketing, financial, social (e.g. human resources), and organisational structures or management (Medina et al. 2002, p.273). This section analyzes the characteristics of innovative organisations. The characteristics of innovative organisations are the following:
Strategic flexibility factors
Innovative organisations have strategic flexibility factors, such as subcontracting, use of contingent/temporary workers and customisation, so that they can maximise access to limited resources (Medina et al. 2002, p.274). Hitt et al. (1998) believe that outsourcing, the employment of contingent workers, and the use of special production systems enable the customisation among actions that produce greater strategic flexibility (Medina et al. 2002, p.275). Through outsourcing and contingent workers, companies have a nimble permanent workforce, which allows them to conduct strategic moves more speedily, thus facilitating greater commitment to strategic organisational goals (Medina et al. 2002, p.275).
Customization is the degree to which a product is produced according to the customer specifications (Medina et al. 2002, p.275). When a company changes the manufacturing process to meet the particular needs of a given client, an increase in investment is needed, so that the company can cover the cost of redesigning procedures and numerous production changes (Birkinshaw et al. 2007, p.69). Sanchez and McKinley (1998) declare that companies that customise have adequate capabilities and resources to make the modifications indispensable for the development of such ideas into tangible products, and that those modifications in the production process also enhances the chances of thinking about new products (Medina et al. 2002, p.275).
Effective communication is indispensable in getting managers to be constructively disposed towards any particular innovation (Johnson, 1990). The management is critical in ensuring that there are sufficient interpersonal channels that can build up confidence in pursuing innovation (Pullen et al. 2009, p. 213). As one article noted: "The greater the risk, the uncertainty, the technological novelty and the complexity associated with innovation, the more effective the informal channels of internal communication are" (Johnson, 1990; Medina et al. 2002, p.276). Communication is obviously a feature that is also related to flexibility because flexibility, by definition, means that many organisational processes should be freely formalised and thus incessantly fine-tuned for the tasks needed through open and constant communication (Medina et al. 2002, p.276). Too much formality in the communication system can encumber the development of solutions for problems and ideas for innovations that necessitate cooperation among different functional areas (Von Hippel, 1998) or innovative approaches that go beyond the task definitions of the individuals. Hence, innovative companies tend to permit procedures and routines to widen beyond the boundaries provided by the organisational structure (Johnson, 1990).
There has been recent interest on how the blurring of company boundaries and the formation of inter-organizational value networks and strategic alliances contribute to innovation (Birkinshaw et al. 2007). The literature provides conceptual and empirical arguments of the significance of networks for learning and innovation, because these strategic alliances provide the benefits of better access to information, knowledge, skills and experience, new harmonizing capabilities and technology and the opportunity of sharing resources and lessening costs, among others (Birkinshaw et al. 2007; Björk & Magnusson 2009).
Innovative organisations develop and exploit innovation networks within itself and with other organisations (Birkinshaw et al. 2007; Björk & Magnusson 2009). Social networks have been recognised as critical to continuous learning (Liebeskind et al., 1996) and the formation of new knowledge. Communities of practices are spontaneously established groups of people that swap knowledge and promote learning and innovation (Björk & Magnusson 2009, p.664). These unofficial networks of people ''share expertise and knowledge in free-flowing, creative ways that foster new approaches to problems'' and have been recognized as important for innovation and learning in organizations (Wenger & Snyder 2000, p. 147).
Organisational culture and climate
To boost innovation performance, climate is an "enabler of creative processes that lead to new ideas in organisations" (Pullen et al. 2009, p. 214). It is an intervening variable which can improve the operations of the organization (Pullen et al. 2009, p. 214). Organizational climate links with organizational context to influence innovation performance (Pullen et al. 2009, p. 214). Innovative companies have an entrepreneurial climate, which facilitates ideation and free time use for innovative ideas testing and implementation (Pullen et al. 2009, p. 214). In new product development, the existence of 'entrepreneurial climate' is needed reach high innovation performance (Pullen et al. 2009, p. 214).
Organizational culture refers to the shared beliefs and values held by an organization's members (Pullen et al. 2009, p. 214). Innovative companies have a culture that shares the same meaning and understanding of how innovation is made, shared, and reinforced in the organisation's values and processes (Pullen et al. 2009, p. 214).
Is Nintendo innovative?
Given these characteristics, it is argued that Nintendo is innovative. Nintendo has strategic flexibility factors, communication processes, strategic alliances, organisational culture/climate, and innovation networks. Nintendo applies subcontracting, use of contingent/temporary workers and customisation, so that it can capitalize access to limited resources (Medina et al. 2002, p.274). Before Wii, Nintendo is far behind Sony's PlayStation and Microsoft's Xbox, but through the right use of flexible work operations, the former is able to hire designers and workers that led to the phenomenal innovation of Wii (Shannon 2008, p.21). Nintendo also enhanced communication across its departments, by creating teams that use information technology (IT) for product development needs (Shannon 2008, p.21). The company focused on changing how gaming should be done and who the gamers should be (Shannon 2008, p.21). Nintendo has also entered strategic alliances with game developers, so that it can produce an increasing library for its games. Nintendo also has an innovative climate and culture, especially as it focuses on changing how gaming is seen and practiced. Finally, Nintendo also uses and develops innovation networks, which are based on multidisciplinary teams that develop new products and enhance the maximisation of the product life cycle of existing products.
Other elements of an innovative organisation and their existence in Nintendo
Other elements of an innovative organisation that are not usually include in the literature of innovation management models are risk management and customer relationship management. Many companies think that innovation is something insular inside the organisation. In reality, innovative companies also look outside their boxes and peers into the boxes of customers, in order to understand emerging needs and aspirations. Nintendo has conducted research and development R&D in the gaming experience of gamers. It observed that most gamers belong to a certain age, wherein the youngest and oldest members of the household cannot participate. Wii revolutionises the gaming experience by including these "excluded" niche markets. As a result, Wii turned into the gaming console for all ages. Furthermore, Wii taps into the psychological needs of the market for greater interactivity. The intuitive nature of Wii's wand enables people to develop a psychological bond with the Wii console, which is akin the bonding between humans and machines.
In addition, Nintendo goes beyond the traditional gaming pattern and uses risk management to take bolder risks. Innovation is not entirely risk-free. Instead, innovative companies also assess the risks of their innovation and understand how they can lessen the risks to increase the benefits from new products and other forms of innovation. Nintendo also analysed the risks involved in changing the gaming experience entirely, but found the market for this product quite legitimate and profitable. Most innovative product: Wii
Innovation management theory
The most innovative product of Nintendo is Wii. Its innovation will be analysed using the product life cycle model. The product life cycle refers to the phases of product performance in the market- introduction, growth, maturity, and decline (Giudice, La Rosa, & Risitano 2006, p. 41). The changes in the marketing environment (i.e. demand for the product) influence the marketing mix of the product (Giudice et al. 2006, p. 41). The product revenue and profits can be shown as the utility of the stages of product lifecycle (Giudice et al. 2006, p. 41). See figure 1 for the product life cycle.
Figure 1: Product Lifecycle
During the introduction stage of the Wii, there was marketing strategy in promoting the product, although word-of-mouth spread like fire about the unique gaming experience that Wii offers. Wii has grown profitably, where it adds new features and titles to its library. It expanded offerings and increased supply to protect from the product from the competitive responses of Microsoft and Sony. The main problems of Wii are lack of supply of Wii and intellectual property rights in countries where such rights are hazy to none. Wii is still in the growth stage, as it maintains market share and thinks of further innovation.
Strategic alliance using innovation
An example of a strategic alliance that uses innovation is that between Air Canada and other carriers. For instance, Air Canada has made a distinctive strategic alliance with four carriers for its LAN, LAN Chile, LAN Peru, LAN Ecuador, and LAN Argentina. The benefits of this alliance are reduction of marketing costs and complementary marketing efforts. Through this alliance, these companies can innovate on new systems and processes that can customise their services and other offerings. This example shows the significance of strategic alliances to generating operations innovations and streamlined organisational processes. When the product life cycle management is applied, this means that Air Canada is in the maturity stage, which many airliners are, but instead of declining in innovation, it uses process and technology innovations to offer new and cost-efficient services. The results are innovations that intersect management, culture, and IT systems.
Two-way flow of knowledge: Technology transfer in Nintendo
In the growth stage, Nintendo enjoys continuous profits and revenues. However, sales have still declined compared to the first stages of innovation. In order to sustain innovation, Nintendo has improved technology transfer by accessing organisations that can design more titles and products that fit Wii (Shannon 2008, p.21). Nevertheless, the company has yet to truly engage in technology transfers that can greatly enhance the competitiveness of Wii. Technology transfers with schools, governments, and private organisations can enhance the offerings of Wii. For instance, the medical community is increasingly interested in using Wii. Wii can be used as a take home or in-school apparatus for developing medical skills, such as surgical skills (Bokhari et al. 2010). A study chose the Nintendo Wii® device (copyright Nintendo of America, Inc.) as a surgical simulator because the WiiMote®® (Nintendo Wii®® remote) employs natural hand movements for game control and does not entail translation of hand movements through buttons like customary game controllers (Bokhari et al. 2010, p.584). The researchers developed a scientific methodology that tested this device along with the game Marble Mania® to have high correlation with surgical hand movement (Bokhari et al. 2010, p.584). They believed that the Nintento Wii device can be modified into a take-home simulator and lead to enhancement of surgical skills.
The remote was modified to replicate a laparoscopic instrument and was placed through a trocar-like attachment to curtail gross movement similar to laparoscopic procedures, in which instruments can only be in motion within the confines of a port (Bokhari et al. 2010, p.584). A potential, controlled trial was made to examine the validity of the training capability of Nintendo Wii® with Marble Mania® through the interface developed for the experiment (Bokhari et al. 2010, p.584). The sampling consisted of 21 right-handed general surgery residents (Bokhari et al. 2010, p.584). Fourteen residents were assigned to the experimental group and seven were placed in the control group. The experimental group practiced with the Wii game, Marble Mania®. Each level of the game was done four times in random order, twice with the dominant and twice with the nondominant hand (Bokhari et al. 2010, p.584). The residents finished 50 levels of the game with growing difficulty of fine motor control (Bokhari et al. 2010, p.584). Findings showed that Nintendo Wiii® gaming system, along with the Marble Mania video game, can be used as an effective laparoscopic simulation device (Bokhari et al. 2010, p.586). The study concluded that Wii's affordability, availability, and the intrinsic attraction of video games will make the "Nintendo Wii as an effective take-home surgical simulator" (Bokhari et al. 2010, p.586).
This example shows how Wii in the growth stage can enhance its revenues by going beyond traditional markets and finding other applications in numerous fields and professions. It is possible to expand Wii's uses to industrial applications as well, as long as Wii is willing to use technology transfer that can help it work with diverse industries and fields and understand how Wii can also contribute to the latter.
Wii can benefit from technology transfers to expand its offering and improve its revenue maximisation during the growth stage. It can develop alliances with other industrial firms and academe, so that it can expand its uses across diverse industries and sectors. Nintendo should be willing to open its sights to unlimited opportunities that come with producing and nurturing strategic alliances among different organisations and sectors. Wii are the champions should not end so soon- the tune of success can be extended for a long time through maximising innovation networks through strategic alliances.