Information relationships with each other and which aim to

Information Systems – Businesses should be
‘wired for innovation’. Discuss.

 

Introduction

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In
this paper, I will attempt to depict whether businesses should be ‘wired for
innovation’ and in which manners they should achieve this. I will do so by exploring
several different points of view on this topic. The areas I will discuss will
concentrate on defining innovation, exploring the processes, which society and businesses
have utilised to achieve innovation whilst taking a broader view on the effect
this has on the movement in the economy.

 

Para
1 – Human instinct + Definition

It has been claimed that innovation is somewhat a human instinct.
We strive to better our lives by whatever means available. In history, we can
see that we, as humans, have never reached a standard of life satisfactory
enough 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 of
innovation is the “type of innovation” in question. These different types of
innovation come about as a result of the high volume of models, classifications
and frameworks produced by different researchers that have distinct
relationships with each other and which aim to define what innovation really is.
To allow for a structured and informed framework around the concept of
innovation, it is imperative to have a clear outline of the distinct types of
innovation and the relationships between them. Damanpour (1987) strongly argued
for a differentiation between types of innovations and stages of adoption, and
stressed the importance it held in developing realistic theories in organizational
innovation. More recently, Kelley and Littman (2006) suggested that
organizations must value all types of innovation, implicitly supporting the
need for a framework to support all different of types of innovation. If businesses
aim to succeed in today’s competitive environment, ‘they need innovation at
every point of the compass, in all aspects of the business and among every team
member. Building an environment fully engaged in positive change, and a culture
rich 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 a
similar approach.

 

Para
2 – Revolutions

When considering the past, it can be
argued that there have been four major industrial revolutions, which all in
their specific way, changed the status quo and contributed to the world we
currently live in, precisely through acts and instances of radical innovation.

The first major leap forward came
about by mechanization, followed by the introduction of various sources of
energy and the transportation by plane and automobile. What followed has been
the source of many arguments, and was the invention of nuclear power. The ultimate
and last revolution to this day, has been the one which saw the phenomenal rise
of the Internet of Things (IoT). These major advances have come as a by-product
of innovation by individuals and major businesses and are strongly emphasize
why business and economies should in fact be ‘wired to innovate’.

The Austrian economist, Joseph Schumpeter, made many contributions to economic scientific
and political theory which help
us understand why and how the industrial revolutions have taken place and why
we can expect several other instances of major technical progress to take place.
His work; “The Process of Creative
Destruction” (1942) perfectly describes how innovation has driven major
changes in history. He states that industrial mutations, rooted through innovation, “incessantly
revolutionizes the economic structure from within, incessantly destroying the
old one, incessantly creating a new one”.

 

Para
3 – Short v Long term

For
a 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 realise
profits over the long term or the short term. This is of crucial importance, not
only for the business strategy but also in order to dictate the company’s view
on investment on innovation. To be able to make such a decision, analysis of
competing businesses is to be complete. Market analysis to determine product viability
is also a very helpful tool as it will bring insight of the place for
innovating 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 “market
strategy” or a “pricing strategy”. These tools enable them to remain
competitive and penetrate the market with new products, be they sourced from
radical or incremental innovation. Consequently, it is the aspect of market
competition, which sways a company’s’ strategy into specific directions. These
authors have argued in their work called ‘Strategic Thinking: The Key to Corporate
Survival’, that ‘Failure to separate strategy formulation from planning and
operations compromises corporate strategic thinking,’ which will then impinge
on a business’s ability to innovate in a substantial manner.

Figure
1.0 illustrates the rapport between strategy and operations. Clear strategy and
effective operations combined are bound to succeed, and if strategy is clear,
but operations are ineffective, the outcome is ambiguous. It is not a
predefined failure, but winning hinges almost totally on the capacity to forecast
and then be carried by the kindness of external forces such as the economy and
competition. Correspondingly, if operations happen to be effective but the
strategy is unclear, a business may be propelled forward. Nevertheless, it does
not find itself in a position of strength or control and is likely to suffer in
the long term.

This
is 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 with
a fresh idea will succeed, but if they are dealing with for instance a trendy
product or service, the ‘hype’ is not sustainable in the long term, it may be
advantageous to in fact not be ‘wired for innovation’. This will happen because
it 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. “Innovation
may result in short-term disruption before any longer-term performance benefits
are accrued by the firm” (Roper et al. 2008). Such strategy may cause a
successful framework to decay because of pre-mature innovation for which the
business may not yet be ready for.

Both
scenarios confirm that there is indeed, a flipside of the coin and being ‘wired
for innovation’ can in unusual ways go against goals of firms. Hence, it is
important to consider a business’s strategy and operations to determine, whether
investment into R&D to innovate is good business planning.

 

Para
4 – The persisting challenge

The true challenge for businesses remains the same as
it has been in the past. It is to innovate and keep yourself and your
competitors on their toes to persist in trying to discover new products and
services. It has been previously mentioned that remaining competitive in an environment
that is not only drenched with large amounts entrepreneurial ventures and reputable
companies but also by disturbing technologies that can
make industries become extraneous.  This
is also referred to as the ‘Innovator’s
Dilemma’ (Clay Christensen), which today’s businesses are having
to face. This dilemma consists of a cycle, which starts with a
currently innovative concept. That concept then grows and reaches a large
audience and is often profitable. Shortly after, this concept becomes outdated
and over time, is replaced by a new, innovative idea.

 

In
order to steer clear of this, businesses must be ‘wired for innovation’ whilst
being  prepared to fully question the life
of its current product or service and eventually replacing it.

 

Sethi
et al (2017) state that “Deliberate disruption helps fight off all the other
companies who are going after the audience” and allows for a company to fuel its
own growth. For a business to survive past the first stages of creation, it
must 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 some
of our iPod business. That doesn’t worry us.”

 

A main factor affecting businesses in the 21st century
is technological innovation, which is constantly creating new opportunities.
Large “old economy” companies have now adapted to the major and wide-spread
technological advances of the century, becoming web-enabled firms, in order to
limit the part of their market share that is stolen from them if they are not
ready to adapt and innovate. This can be seen as a disturbance of “business-as-usual”
but can nonetheless not be
ignored. The businesses which are wired to innovate have the advantage of being
a step ahead of companies which do not possess a culture of innovation, and are
therefore lagging behind in technical innovation. It is only through constant
innovation that businesses are able to lead the came, instead of having to
adapt to other innovative products and services being created. 

 

References:

 

‘Wary
innovation’

 

·      
Another
way businesses must be wired for innovation is through progressivist business
models. According to Sako (2012) one way a business model can be defined, is
through the manner
in which the enterprise captures value and converts it into profit. Technological
innovation is undeniably important for progress, but “unlike innovation led by
the R&D department, business model innovation requires cross-functional
mechanisms for creating (and capturing) new value for users”(Sako, 2012). One
can argue that the effectiveness of technological innovation in business is
partly -if not entirely- dependent of the innovation that takes place at a
managerial 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”, Industrial
Management & Data Systems, Vol. 83 Issue: 7/8, pp.17-21

 

·      
Published
in Journal Behavioral and Brain Sciences. Volume 30. Issue 04. Page
421 – 422.

·      
Jennifer
Rowley, Anahita Baregheh, Sally Sambrook, (2011) “Towards an
innovation?type mapping tool”, Management Decision, Vol. 49 Issue: 1,
pp.73-86

·      
Hewitt-Dundas, N., Roper, S., 2008. Ireland’s innovation
performance: 1991–2005. In:

Quarterly
Economic 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 adoption
of technological, administrative and ancillary innovations: impact of
organizational 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, Profile
Books, London.