Information Systems – Businesses should be’wired for innovation’. Discuss. IntroductionInthis paper, I will attempt to depict whether businesses should be ‘wired forinnovation’ and in which manners they should achieve this. I will do so by exploringseveral different points of view on this topic. The areas I will discuss willconcentrate on defining innovation, exploring the processes, which society and businesseshave utilised to achieve innovation whilst taking a broader view on the effectthis has on the movement in the economy.
Para1 – Human instinct + DefinitionIt has been claimed that innovation is somewhat a human instinct.We strive to better our lives by whatever means available. In history, we cansee that we, as humans, have never reached a standard of life satisfactoryenough and thus, since the start of humanity, we have not stopped innovating.
J.Rowley et al. (2011) have disputed that a key concept in the literature ofinnovation is the “type of innovation” in question. These different types ofinnovation come about as a result of the high volume of models, classificationsand frameworks produced by different researchers that have distinctrelationships with each other and which aim to define what innovation really is.To allow for a structured and informed framework around the concept ofinnovation, it is imperative to have a clear outline of the distinct types ofinnovation and the relationships between them. Damanpour (1987) strongly arguedfor a differentiation between types of innovations and stages of adoption, andstressed the importance it held in developing realistic theories in organizationalinnovation. More recently, Kelley and Littman (2006) suggested thatorganizations must value all types of innovation, implicitly supporting theneed for a framework to support all different of types of innovation. If businessesaim to succeed in today’s competitive environment, ‘they need innovation atevery point of the compass, in all aspects of the business and among every teammember.
Building an environment fully engaged in positive change, and a culturerich in creativity and renewal, means creating a company with 360 degrees of innovation’.This, further ties in with the idea that frameworks for innovation must take asimilar approach. Para2 – RevolutionsWhen considering the past, it can beargued that there have been four major industrial revolutions, which all intheir specific way, changed the status quo and contributed to the world wecurrently live in, precisely through acts and instances of radical innovation.
The first major leap forward cameabout by mechanization, followed by the introduction of various sources ofenergy and the transportation by plane and automobile. What followed has beenthe source of many arguments, and was the invention of nuclear power. The ultimateand last revolution to this day, has been the one which saw the phenomenal riseof the Internet of Things (IoT).
These major advances have come as a by-productof innovation by individuals and major businesses and are strongly emphasizewhy business and economies should in fact be ‘wired to innovate’.The Austrian economist, Joseph Schumpeter, made many contributions to economic scientificand political theory which helpus understand why and how the industrial revolutions have taken place and whywe can expect several other instances of major technical progress to take place.His work; “The Process of CreativeDestruction” (1942) perfectly describes how innovation has driven majorchanges in history. He states that industrial mutations, rooted through innovation, “incessantlyrevolutionizes the economic structure from within, incessantly destroying theold one, incessantly creating a new one”. Para3 – Short v Long termFora business it is vital to establish a strategy in order to achieve a goal.Because of this, an organisation needs to decide whether it is aiming to realiseprofits over the long term or the short term.
This is of crucial importance, notonly for the business strategy but also in order to dictate the company’s viewon investment on innovation. To be able to make such a decision, analysis ofcompeting businesses is to be complete. Market analysis to determine product viabilityis also a very helpful tool as it will bring insight of the place forinnovating specific products and services within a specific market.B.Tregoe and J. Zimmerman (1983) have reasoned that strategy is sometimes called”strategic planning” and then is used indiscriminately with”long-range planning”. Executives talk frequently about “marketstrategy” or a “pricing strategy”. These tools enable them to remaincompetitive and penetrate the market with new products, be they sourced fromradical or incremental innovation.
Consequently, it is the aspect of marketcompetition, which sways a company’s’ strategy into specific directions. Theseauthors have argued in their work called ‘Strategic Thinking: The Key to CorporateSurvival’, that ‘Failure to separate strategy formulation from planning andoperations compromises corporate strategic thinking,’ which will then impingeon a business’s ability to innovate in a substantial manner.Figure1.0 illustrates the rapport between strategy and operations. Clear strategy andeffective operations combined are bound to succeed, and if strategy is clear,but operations are ineffective, the outcome is ambiguous. It is not apredefined failure, but winning hinges almost totally on the capacity to forecastand then be carried by the kindness of external forces such as the economy andcompetition. Correspondingly, if operations happen to be effective but thestrategy is unclear, a business may be propelled forward.
Nevertheless, it doesnot find itself in a position of strength or control and is likely to suffer inthe long term. Thisis key for a business to consider whilst putting efforts into innovation. Being’wired to innovate’ can seemingly greatly improve the performance of a company,yet if does not have a real strategy behind its R and operations functions,this success can be very short lived. Businesses which come into a market witha fresh idea will succeed, but if they are dealing with for instance a trendyproduct or service, the ‘hype’ is not sustainable in the long term, it may beadvantageous to in fact not be ‘wired for innovation’. This will happen becauseit would be sacrificing its profits and investing them into R, which in return,will not be yielding any profits in the future.Similarly,being ‘wired for innovation’ can, in some instances, be a tragedy. “Innovationmay result in short-term disruption before any longer-term performance benefitsare accrued by the firm” (Roper et al. 2008).
Such strategy may cause asuccessful framework to decay because of pre-mature innovation for which thebusiness may not yet be ready for.Bothscenarios confirm that there is indeed, a flipside of the coin and being ‘wiredfor innovation’ can in unusual ways go against goals of firms. Hence, it isimportant to consider a business’s strategy and operations to determine, whetherinvestment into R&D to innovate is good business planning. Para4 – The persisting challengeThe true challenge for businesses remains the same asit has been in the past. It is to innovate and keep yourself and yourcompetitors on their toes to persist in trying to discover new products andservices.
It has been previously mentioned that remaining competitive in an environmentthat is not only drenched with large amounts entrepreneurial ventures and reputablecompanies but also by disturbing technologies that canmake industries become extraneous. Thisis also referred to as the ‘Innovator’sDilemma’ (Clay Christensen), which today’s businesses are havingto face. This dilemma consists of a cycle, which starts with acurrently innovative concept. That concept then grows and reaches a largeaudience and is often profitable.
Shortly after, this concept becomes outdatedand over time, is replaced by a new, innovative idea. Inorder to steer clear of this, businesses must be ‘wired for innovation’ whilstbeing prepared to fully question the lifeof its current product or service and eventually replacing it. Sethiet al (2017) state that “Deliberate disruption helps fight off all the othercompanies who are going after the audience” and allows for a company to fuel itsown growth.
For a business to survive past the first stages of creation, itmust own the next disruptive innovation. Seth et al further quote Apple’s Q1 2013 earnings report, where CEO Tim Cook elaborates “Our core philosophy is to never fear cannibalization.If we don’t do it, someone else will.
We know that iPhone has cannibalized someof our iPod business. That doesn’t worry us.” A main factor affecting businesses in the 21st centuryis technological innovation, which is constantly creating new opportunities.Large “old economy” companies have now adapted to the major and wide-spreadtechnological advances of the century, becoming web-enabled firms, in order tolimit the part of their market share that is stolen from them if they are notready to adapt and innovate. This can be seen as a disturbance of “business-as-usual”but can nonetheless not beignored. The businesses which are wired to innovate have the advantage of beinga step ahead of companies which do not possess a culture of innovation, and aretherefore lagging behind in technical innovation.
It is only through constantinnovation that businesses are able to lead the came, instead of having toadapt to other innovative products and services being created. References: ‘Waryinnovation’ · Anotherway businesses must be wired for innovation is through progressivist businessmodels. According to Sako (2012) one way a business model can be defined, isthrough the mannerin which the enterprise captures value and converts it into profit. Technologicalinnovation is undeniably important for progress, but “unlike innovation led bythe R&D department, business model innovation requires cross-functionalmechanisms for creating (and capturing) new value for users”(Sako, 2012). Onecan argue that the effectiveness of technological innovation in business ispartly -if not entirely- dependent of the innovation that takes place at amanagerial level. Sako (2012) further elaborates on this, stating that “Appropriate business models are necessary to translate technical success into commercial success.” · Capitalism, Socialism, and Democracy (1942) page 83 · Benjamin Tregoe, John Zimmerman, (1983)”Strategic Thinking:: The Key to Corporate Survival”, IndustrialManagement & Data Systems, Vol.
83 Issue: 7/8, pp.17-21 · Publishedin Journal Behavioral and Brain Sciences. Volume 30. Issue 04. Page421 – 422.
· JenniferRowley, Anahita Baregheh, Sally Sambrook, (2011) “Towards aninnovation?type mapping tool”, Management Decision, Vol. 49 Issue: 1,pp.73-86· Hewitt-Dundas, N.
, Roper, S., 2008. Ireland’s innovationperformance: 1991–2005. In:QuarterlyEconomic Commentary.
ESRI, Dublin. pp. 46–68· Schumpeter,Joseph A. Capitalism,Socialism, and Democracy. 3d ed. 1942. New York: Harper and Brothers, 1950.· Damanpour, F.
(1987), “The adoptionof technological, administrative and ancillary innovations: impact oforganizational factors”, Journal of Management, Vol. 13 No. 4, pp. 675-88.
· Kelley, T. and Littman, J. (2006),The Ten Faces of Innovation: Strategies for Heightening Creativity, ProfileBooks, London.