Saturday, March 6, 2010

Innovation - Key to survival of an Organization

Innovation in an organization can succeed and even thrive in an efficiently run company.
Being aware of and addressing the different external / internal environments, competition, support, skills, and drivers allow an organization to be on top compare to the others lacking the foresight. The challenge is to understand the differences, and create a system that is working against odds. Innovations challenge the norms and assumptions by thinking out- of-the-box and creating new ideas with risks. They can affect current resources, disrupt supply chains, manufacturing processes, product strategies, and even be unsettling for existing customers. Innovations can also affect structures within the company, creating a startling bump in an otherwise orderly progression in an already established and focused business. We always wonder why innovation is so difficult to initiate and maintain especially within a matured organization. The more so we have reasons to effectively manage innovation and it may be one of the best ways of differentiating a company with its strong competitors.

We may approach and manage innovation in an established organization - firstly is to protect opportunities by isolation as the innovations are identified and developed. Secondly is to integrate innovation practices and management systems to become an everyday part of the organization.

Isolating is an attractive approach since it is relatively straightforward and could include establishing separate new business ventures and isolating new opportunities. Isolating a new opportunity has the advantage of freeing the innovative enterprise from the controls of the established organization. While this approach works in some situations, it has several difficulties, including managing conflicting business models (the innovation could likely become a competitor to other operations in the company), the fact that the innovation often needs resources controlled by the established organization.

Splitting innovations from the established organisation certainly makes sense in some situations, such as those that can create an entirely new business. In most cases though, innovations would do better if they could co-exist with established businesses.

Innovations come in all sizes, and an integrated approach allows an organisation to adjust the balance in the approach between ordinary operations and systems designed for those ideas that are highly innovative.
Integrating innovation with normal business operations is done by combining top-down innovation leadership and bottom-up creation and drive of new opportunities and solutions.

Top-down innovation -

The management role in these businesses is to envision a potential new area, increase R&D, or to consolidate otherwise disparate activities within a company in a way that would be very difficult to do otherwise. Possible success initiatives could be those where the management is dependent on often newly established bottom-up ideas to further develop them into new businesses.

Bottom-up innovation -

Bottom-up innovation drives everything from day-to-day improvements to multi billion dollar new-to-the-world products and platforms.

Management systems are designed to allow bottom-up entrepreneurialism co-existing with normal businesses. These management systems recognize the unique needs for internal entrepreneurial activities. They may be :-

Allocation of some time: Spending 5-10% time with employees to work on programmes that they believe are important to the company. The time can either be to work on a programme or innovative quality circle that they initiate, or to support other's activities. Managers are expected to support employees' use of this time, and the employee can stay with the programme as the champion or team member.

Funding: Peer group allocated, self-managed funds to support feasibility work.

Design Forum: A networking program fostering peer to peer exchange and interaction, or could be strategic alliance or brainstorming amongst SBUs.

Use of company capabilities: The company's process and material capabilities are managed by groups that can provide access. Technologies are owned by the company, not by any one group.

Access to the company's markets: While the focus for an employee is to their direct business, they are encouraged through their allocated time to apply ideas anywhere where they think there may be an application. The reward system is designed to recognise both contributions to their business, as well as creating new businesses elsewhere in the company.

There are potential and the innovation determines the degree of one system or the other used. Small, sustaining innovations can be usually assessed and incorporated through normal processes. Moderate innovations often challenge assumptions, and by giving a champion of the idea resources, access, and support, they can lead testing those assumptions.

Large innovations, especially those involving new technologies and opening new markets for the company need the full support of senior management or the board or committee. The champion needs resources, access, and support to protect the innovation. Senior management gives enough independence to the new innovative group to make the right decisions, while at the same time encouraging collaboration and interdependence between the new and established groups.

Integrating innovation opens the organization to improve their style of working with customers, employees, partners, and suppliers in new ways. With this, it could possibly lead to many new opportunities and the experience staff in the organization with the vast experience will eventually drive to grow it’s company to a higher standard and compete in the global arena with stronger product and service.

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