WHY COMPANIES SEEK INNOVATION
Innovation can be defined as exploiting new ways of doing things for the primary reason of formulating new processes, services, and products. It involves formulation of an idea, introducing it into the market, executing the idea, and exploiting it in a way that new processes, services or products that add value to an organization and also improve on quality are established. Organization in organizations involves transformation of a business’ technological resource and also a restructuring of its management. Innovation in the business context may also involve new technology exploitation and adoption of an out-of-the-box approach to initiate considerable changes within the organization. Companies seek innovation in organizations for various reasons; these include attaining a competitive advantage, improving business’ practices for the future, managing the changing environment, to deal with changing customer desires, and to grow in their respective industries.
Attaining a Competitive Advantage
When competition and a strong demand are combined, a need for innovation in businesses is created. As the intensity of the competition increases so does the desire for productivity and innovation within a business. Besides developing new services and products, it also establishes business systems that are needed to keep in step with the product development speed; this in turn gives the company a competitive advantage in the market. Most organizations are developing innovation networks where their business partners such as suppliers come together to combine their innovative ideas to develop products and services that meet high standards of quality, efficiency, and value (Seybold, 2006, p. 44). It is common business knowledge that customers stop purchasing a company’s old services and products with time. This is why innovation is important to a company as it would help it maintain a competitive advantage by replacing old services and products. Innovation also helps differentiate a company’s products which consequently gives it a competitive advantage.
Improving a Business’ Practices for the Future
Managers are always focused on increasing efficiency, providing amplified value for shareholders, and applying best practices in running their companies. All this is encompassed in the manager’s strategic planning and also includes cost reduction mainly because innovation is associated with high risks.
Innovation is now considered a significant influence in strategic planning as the integral value of efficiency to success is appreciated. According to many managers, efficiency is the next competitive advantage source with it being used diversely in fields such as marketing, medicine, and software engineering. Efficiency is still defined within a broad context, for example, as a process organizations can use to generate value from their knowledge assets (Koulopoulos, 2011, p. 94). The main issue that organizations are facing is the efficient application of knowledge assets to establish more cost effective, faster, and better innovations for use in future practices.
Managing the Changing Environment
All businesses and organizations have or are feeling the effects of migration, knowledge, globalization, and technological revolutions. Innovation helps lessen these effects and making the conditions more favorable to continue with business as it adds value and finds out ways of navigating through the barriers brought about by the changing environment. Several types of innovation have been identified and include product innovation which entails introduction of new services or products. This form of innovation helps the organization develop products and services that are relevant in the changing environments. The same case applies to supply chain, market and also process innovation. It is innovation which helps organizations stay relevant even when changes in the environment threaten to make them irrelevant. Innovation assists in improving the quality of life as the environment and technology keeps changing thus improving the life in the world for the coming generations.
Coping with changing Customer Desires
As evolution in society happens, the desires of its members also evolve especially due to increasing needs placed upon them by the changes in the environment. The innovation department of any organization is responsible for listening to what the company’s clients expect from the company and consequently respond to these needs by formulating new products and services. These new products and services should meet the desires of the customer. This task of innovating to meet changing customer needs is not always as easy as it may sound as at times though the clients know what they want, they are unable to communicate that information in a complete and clear manner to the manufacturer. One way of increasing the ease of meeting the client’s desires is through a process referred to as the Customer Centric Innovative which focuses on development of better value propositions in communication, and providing satisfying and complete customer satisfaction (Richardson, 2010, p. 173).
Growth in Industries
This is one of the most common purposes for organizations to seek innovation as strategies and industrial structures are always changing and products keep being developed and matured. Innovation involves the transformation and creation of new knowledge into new services, processes and products which consequently satisfy the consumer needs. Based on this, then innovation establishes new business opportunities hence allowing for organizations and industries to grow economically.
Innovation is critical in strategic management and planning of an organization since it focuses on the future of the business and the innovation helps the business cope with certainty, uncertainty and risks involved. Innovation should be used to improve the organizational practices in future to be able to meet the consumers need as they maintain a competitive edge and meet their strategic goals.
Richardson, A. (2010). Innovation X: Why a Company’s toughest problems are its greatest
advantage. Chicago: Jossey-Bass
Koulopoulos, T. (2011). The Innovation Zone. London: Nicholas Brealey Publishing
Seybold, P. (2006). Outside Innovation: How your Customers will Co-Design your Company’s
Future. New York: Collins