Innovation is significant in terms of bringing new ideas within the operational procedures that are effective for increasing the company performance and overall company productivity. Companies develop innovation strategy in order to implement appropriate innovation tactics, which prevents the company from facing any financial or situational crisis. Appropriate innovation are also beneficial for mapping the unique value proposition of the company for the target customer market. It is important to conduct appropriate innovation planning, in order to organize the innovation initiatives in the organization, in order to create a positive impact on the organization. According to the experts, the impact of the innovation depends on the strategic choices made by the organization. One of the most common method bringing innovation in the organization is to incorporate technological benefits in the company operations. However, in order to ensure the success of innovative ideas in the organization, the management has to take responsibilities for determining the key objectives for innovation. It is also important to identify the customers and competitors, which is also beneficial in terms of predicting the impact of the innovation on the external factors of the business. In this article, the importance of management strategies in terms of enhancing innovation procedures of the company will be evaluated.
Management Strategy for Innovation in Organizations
As per the ongoing trend in the business world, innovation is considered the main point of concentration for every large scale to small-scale businesses in the market. The basic elements of the management strategies regarding the innovation are generating new and creative ideas, and capturing the best possible idea that can provide growth to the company. The company then evaluate the ideas and identifies the competitivity of the idea with the desired objectives for the company. Lastly, the most suitable innovative idea is generally prioritized and executed in the company. The management strategies are effective in terms of guiding the company to implement the innovative initiatives in the appropriate operational procedures. Ineffective innovative measurements can be a waste of economic investment, or company resources.
Innovation is also considered as a crucial tool in terms of providing the organization a competitive advantage, by enhancing the company’s value propositions in the market. Innovative initiatives also improve the quality of the performance, which also helps in attracting the attention of the customers. Therefore, it also increases the customer count of the organization as well as the brand value in the market. On the other hand, the management strategies ensure the organized implementation of the innovation procedure within the company. Effective planning and strategies ensure that the implemented innovation in the company, are increasing the productivity level and higher launch success rates.
Innovation helps the companies to cope up with the continuous changes and the external influences such as the changing customer demands. There are some examples of the companies that did not innovate the strategies, and their overall revenue visibly declined in the market. For example, Blockbuster was a video streaming platform, which was bought by Viacom at 1994, for 8.4 billion dollars. However, in 2000, due to poor strategic moves and wrong decisions, the company was caught under a debt of $900 million. Due to the increase of internet and technological benefits, customer demands also started to change. The customers demanded more technology induced high quality videos, which the company failed to offer, because of the lack of innovation in the company. Therefore, the company, which once had a brand value of $3 billion, was charged with heavy debts, and failed to sustain in the market for a long run.
Benefits of Innovative Ideas in Organizations
There are generally different types of innovation, such as open innovation, disruptive innovation, incremental innovation and many more. Appropriate management strategies and internal research helps in identifying the basic needs of the company, and then the suitable innovative approach is selected. Effective innovation management means determining the plans, schedules, requirements, activities and the execution of the innovation initiative within the company gradually. Therefore, it reduces the chances of resource wastage, and prevents and financial crisis from occurring in the future.
For example, Apple is one such company that has used innovation appropriately without wasting any expenditures and in return, innovation increased the overall revenue of the company. The company have sold 1.5 billion iPhones, consisting of innovative features, which also helped the company to construct an overall new market for the application developers. Innovation strategy of apple was extremely successful from the start, as the company managed to increase its share price by $12 in 2000, which further increased by $200 in few years. The market share price of the company is anticipated to grow gradually, as the company is heavily dependent on the innovation and effective management strategies. Therefore, it can be said that appropriate innovation management within the organization has the capacity to increase the revenue generation and overall profitability of the company. It has been observed that, suitable strategic innovation option depends on the company’s desired objectives, internal resources, cultural values as well as the core competencies. Therefore, it is important for the company to understand the internal condition, and then induce innovation in the management strategies for acquiring the desired target objectives.
The main purpose behind implementing innovative measures in the organization is to increase the productivity rate, and improve the overall performance quality. Several companies implement technological innovations in the operational aspects of the company, in order to reduce the manual efforts of the employees. The innovation management develops an opportunity for the organizations to grab a long-lasting advantage. However, it has been observed that the management strategies have a specific responsibility in terms of making the innovative measures successful. It is important to meet three specific criteria with the help of appropriate strategies. The first criteria is to create innovative measures in accordance with the desired objectives of the company. The innovation needs to be a part of the ongoing program, and lastly, the innovation process should be systemic.
For example, Tesla follows a systemic approach in terms of implementing innovation in their production procedure. Tesla has reinforced their business model and brings innovation into the car models one at a time. In 2013, the company witnessed a hike of 300% in the stock pricing of the company due to their modern tech innovations. In 2021, TSLA the stock pricing of the company was reported to trade at 847.95 US dollars, which indicates the overall value growth of the company. Therefore, it can be considered that the systematic approach of innovation has helped the company to increase its market value as well as the entire bottom line.
Impact of Management Strategies on Organizational Performance
There are mainly four different types of aspects, in which the company can bring innovation. The aspects are, products, process, marketing and organizational innovation. Therefore, it is also important to identify the internal gaps and the areas of the company, which needs innovative measures to improve. All the mentioned business aspects have a direct influence on the firm performance. Some of the companies utilizes innovation in every field to enhance the overall performance quality and achieve a higher market share from the market. Amazon is one of the largest global e-retailing business, which has used several management strategies terms of reaching up to the top position. One of the important factors that they have considered for increasing innovation flow in the company is to use appropriate tools as techniques for increasing innovation. The company also focused on promotional and sustainable management strategies, which has helped the company to achieve a 40% market share in the e-commerce industry in US and 30% market share in Europe. The company mainly used innovation through social networking and project management as the main management tools for innovation, which has also helped the company become the most popular online retail destination in the world.
Identification of Risks in Implementation of Management Strategies
Cultivating innovation in the organization is a complicated process, which can hinder the implementation of innovation strategies. There are several internal challenges that the company has to deal with before implementing strategies for innovation, such as employees, limited resources, financial problems and many more. In several companies, the employees lack creativity or knowledge regarding advance technologies, which prevent them from producing innovative ideas that are beneficial for company growth. In often cases the employees remains reluctant to the new innovative policies, due to the lack of motivation. Employees play a crucial role in terms of generating innovative ideas, or willingly participating in innovative programs conducted by the company.
One of the biggest example of innovation failure, due to lack of appropriate management strategies is Kodak company. Kodak was the first company to launch digital camera, with preview film technology and spent over 500 million dollars at that time. The company also bought Sterling Drug for $5.1 billion, in order to produce chemically treated photo, and named the camera Advantix. However, later the company realized that the technology is not worth the value that they had invested in order to bring it to the company. It resulted in the failure of the innovative product Advantix, which also caused the company to get into a verge of bankruptcy. In 2007, the market value of the company declined to 140 million US dollars. Therefore, it can be said that the management of the company failed to understand the effectiveness of the innovative ideas, before including them in the business operations. As a result, the company faced financial problems, and ultimately failed to revamp the company’s previous position in the market. It has been observed that a thorough research is required before implementing the innovative programs in the company, or else it might negatively affect the entire bottom line of the company.
In addition, lack of collaborations and limited commitment of the employees in the organization also affects the innovation growth in the company. Collaborations can be considered as key driver for enhancing the innovation progress within the organization. It helps the company to achieve appropriate finances, resources, labors and multiple other benefits. In often instance s, it can be observed that the customers are unable to acknowledge the changes within the products developed by the company, after including technological advancement. As a result, the customers become reluctant in terms of utilizing the innovative services of the company. In addition, the customer demands are continuously changing in the market. Several companies fails to adapt to the ongoing changes in the market. As a result, the companies cannot increase the customer satisfaction through the innovative programs. It can also be observed that the companies face difficulties in terms of identifying the business aspects, which mainly requires innovation. It can lead to the wastages of financial investments or the additional resources that the company acquired in terms of implementing innovation in the company. In order to mitigate such challenges, a set of beneficial strategies are provided below that the company can apply.
- Developing employee-centric strategies: The individual performances of the employees mainly determines the overall organizational performance in the market. Therefore, it is one of the main responsibility of the organization’s to maintain employee satisfaction, in terms of increasing their performance. The organization’s can develop the employee-centric innovative strategies, which will benefit the employees as well as the overall company outcome. The employees will willingly try to engage with the innovative programs developed by the company, if it benefits them at the end. The company also have to assure that the employees are getting proper training regarding the technological functions and benefits, which also has the capacity to increase the individual performances.
- Open innovation: The employees should be given opportunities to share their opinions, perspectives, and ideas without any restrictions. The company can encourage employees to participate in the decision-making procedures, as well as remove any barriers that restricts the employees to share their innovative ideas. Open innovation also encourages the employees to enhance their creative thinking, and commitment towards the company operations. Therefore, it can be considered that open innovation is beneficial for both employee and overall company growth.
- Encouraging the innovative habits: The organizations need to provide appropriate facilities to the employees, so that they can develop their innovative skills and knowledge. For example, Google has developed an 80/20 rule, which allows the employees to take free break during the working hours. In this free time, the employees can develop innovative ideas, which are useful for improving the business operations.
- Promoting innovative behaviors: It is important to promote the benefits of the innovation among the employees, in order to encourage the employees to make innovative decisions within the company. Creating a collaborative environment and increasing engagement with the employees is also beneficial. It helps the employees to get a safe place for brainstorming. The company has to ensure that the employees do not hesitate about sharing their innovative ideas in the company.
It can be concluded from the overall discussion that developing appropriate management strategies for implementing innovative solutions in the organization’s are required, in terms of making the innovation successful in the company. It has been identified in the critical analysis that appropriate management strategies helps in planning the innovation procedures, as well as making the innovative measures successful. Open innovation is necessary in terms of increasing the innovation flow in the organization. It has been observed that the company is responsible in terms of providing appropriate facilities to the employees, so that they can increase their innovative thinking skills. There are several companies that faced difficulties in terms of implementing the innovative solutions in the company functions, due to lack of appropriate management strategies. Failure to acknowledge the areas that requires innovation, also leads to financial or resource crisis problems. Therefore, it is recommended that the companies need to conduct internal capacity research, and develop innovation strategies based on the internal capacities, in order to prevent any future financial problems. The organization’s can develop an employee-centric innovation strategy, which are beneficial for both the employees as well as the bottom line of the company. There are some barriers like limited knowledge of employees regarding technology, lack of appropriate resources, collaboration problems and multiple others. The organization’s have to take initiatives in terms of mitigating these issues by developing appropriate innovation management.