Innovation is doing things in new ways in order to achieve significant results and make a huge difference in performance compared to others. Innovation’s goal is to have a positive change, to make someone or something better. Innovation is also defined as new ideas that work and a successful innovation can be achieved through the creation and implementation of new processes, products, services and methods of delivery which will result in significant improvements in the profitability and enhance the growth of an enterprise.
Innovation is a special case of planned change and learning that either transforms current products, services, and markets, or creates an entirely new market by introducing a radically new product or service. An organization is considered innovative if it stirs up the marketplace, by creating competitive pressures and new opportunities. It has been recognized that innovation success in an established organization requires balancing the stabilized efficiency of the current market offerings and building new capabilities to create and develop offerings for unknown markets.
The changes used to adapt the environment can be evaluated according to the scope and to the extent to which changes are incremental or radical for the organization. Incremental changes maintain the general equilibrium of the organization through a series of continual progressions and affect only one part in organization. On the contrast, radical changes, transform the entire organization. Incremental changes include technology improvements, such as the introduction of computer-integrated manufacturing or product improvements in the established structure and management processes. In radical changes, the technology is likely to be breakthrough, and new products created will establish new markets.
Importance of innovation seems to be the most talked management issue these days. Knowledge plays a crucial role in the economic processes because within the knowledge-based economy, innovation plays a central role and stands at the heart of economic change. Firms innovate to defend their competitive position as well as to achieve competitive advantage. Organizations possessing more knowledge outperform those with less. It was believed that an enterprise can maintain competitive advantage through quality and price. While innovation is one of the most valuable differentiator for sustainable competitive advantage.
Barriers to Innovation and How to Overcome Them
The brutal fact is that about 70 per cent of all change initiatives fail. There are two primary reasons why organizations undergo change: one is based on ‘hard’ economic value (e.g. financial return to shareholders); the other is based ‘soft’ organizational capabilities. The organizational approach develops corporate culture, human capabilities, feedback, measurements and reflections on evolutionary progress. Both people and organizations frequently resist change, even if it is in their best interests, especially in large and established organizations. Below are the five main reasons why individuals resist change:
- Selective perception. People sometimes perceive the same thing differently. When changes are initiated, individuals tend to focus on how they will be personally affected rather than seeing the big picture for the entire organization.
- Lack of information. People will resist change if they are not informed about what is expected from them or what benefits change will bring. If the reasons for change are not clearly presented, people tend to fill in the missing pieces with speculation, which often assumes the worst in terms of initiator intentions and personal impact. In addition, if people do not have enough information about how to change, they may fear making mistakes, so they will not try.
- Fear of the unknown. Individuals resist change when they are uncertain about how it will affect their well-being. They fear downsizing, uncertainties about not knowing how to change, not being able to perform as well as before the change, losing position, income, and status or power.
- Habit. Many people prefer familiar actions and events, even if they are not optimal. Breaking a habit is difficult because it takes hard work and involves giving up perceived benefits from the habit, even if the new behavior has more desirable consequences.
- Resentment toward the initiator. If a change seems arbitrary or unreasonable, resentment and anger are directed towards those initiating the change. People resent being controlled and losing autonomy over their works and lives, when their thoughts and feelings are not considered by change initiators. Finally, without trust in the initiator’s inventions, people may resist the change out of resentment or fear of possible unknown consequences.
Organizations resist change for many of the same reasons individuals do. There are also many forces inside an organization that create resistance to changes initiated by environmental conditions. Some of the main ones are summarized below:
- Power Maintenance. Changes in decision-making authority and control of resource allocations threaten the balance of power in organizations. Units benefiting from the change will welcome it, but those losing power will resist it.
- Structural stability. Organizations create hierarchies, subgroups, rules and procedures to promote order, consistent and predicable behaviors. People who ‘fit’ these desired behavioral criteria are hired and shaped to confirm further through the socialization process and organizational conditioning.
- Functional sub-optimization. Differences in functional orientation, goals and resource dependencies can cause changes that are seen as beneficial to one functional unit and as threatening to another. Functional units usually think of themselves first when evaluating potential changes and support those that enhance their own welfare, but resist the one that reduce it.
- Organizational culture. Organizational culture promotes predicable ways of thinking and behaving. Organizational members will resist changes that force them to abandon established assumptions and approved ways of doing things.
- Group norms. Groups develop their own norms to promote desirable behaviors. Many members conform these norms. Consequently, any change that disrupts group norms, tasks or role relationships will probably be resisted.
The top six obstacles to innovation are:
- Short-term focus.
- Lack of time, resources or staff.
- Leadership expects payoff sooner than is realistic.
- Management incentives do not reward innovation.
- Lack of a systematic innovation process.
- Belief that innovation is inherently risky.
Below is a list of suggestions how to become successful innovators about overcoming the barriers to innovation:
- Have a vision for change. Innovation has to have a purpose, a statement which defines the direction for the business and which people will readily understand and remember. Your team needs to know the direction they are headed in order to be innovative. Illustrate the goals and explain to people how their role is decisive in meeting the goals to fulfill the organizational vision.
- Fight the fear of change. Innovative leaders constantly explain the need for change. They must paint a picture that shows an attractive future that is worth taking risks to achieve.
- Have a dynamic suggestions scheme. Great suggestion schemes are focused and open to all. Leaders do not need to offer huge rewards. Sometimes, recognition and response are generally more important.
- Break the rules. To achieve radical innovation leaders need to challenge all the assumptions related to how things should look in your environment. Business is like Art, with no well-defined rules and referees. Innovation is filled with opportunities for people who can take advantage in creating new ways to provide the goods and services that customers want.
- Give everyone two jobs. Ask your people to run their current jobs in the most effective way possible and at the same time to find completely new ways to do the job. Encourage them to identify the purpose of their role, the outcomes delivered through this role and if there is a better way to deliver that purpose.
- Collaborate. CEOs must see collaboration as key to their success during innovation. Success can not only be achieved by using internal resources, but also by looking outside of the organization for people to partner with.
- Welcome failure. The innovative leader encourages a culture where people feel free to innovate and experiment. Innovative leaders tell people that each unsuccessful attempt is a step along the road to success. When innovative leaders welcome innovation and create a culture of experimentation, means that they except failure and welcome it.
- Build prototypes. Innovative leaders are suggested to try the new ideas at low cost by building prototypes and see what the customer reaction is. You will learn more in the real world than you will in the test laboratories.
- Be passionate. Leaders must concentrate on the things they want to change, on the challenges they want to face and be passionate about overcoming them. Organizations need passionate supporters, who are inspired to innovate and change the way they do things to come up with extraordinary results. Be passionate about what you believe, communicate that passion every time you speak and explain why reaching the destination is really worthwhile.