Innovation is one of the most confused words by many people. However, it is important to note that innovation is a common thing in business organizations and in technological sector. Those who have attempted to define innovation agree with the fact that innovation brings to the world a new idea, a product or a new way of doing something. To organizations, innovation is an important thing for the survival in the market. It is therefore important that the planners in the organization have different and unique ideas, processes, and goods that are to distinguish them from other organizations in the market. This research paper will define what is meant by innovation in detail. It will then evaluate how the different levels of planning incorporate innovation in their daily activities. The research will also evaluate how management engages in planning process and the changes that should be done in the planning process. It will also evaluate the impact of innovation on growth strategies and how the ideas of Joseph Schumpeter relate to the issue of innovation.
Innovation involves coming up with new ideas and then enabling people and businesses to use the new ideas for some benefits. This is what differentiates innovation and creativity. Coming up with new ideas is creativity as long as the new ideas are not meant to benefit the individuals or organizations that brought them into existence. Therefore, ideas should be of help if they are to be termed as innovation. It is important to note that for there to be innovation, the ideas that have been brought into existence should be completely new such that no one else has ever explained such ideas. However, modifying existing ideas involves innovation. Innovation also covers new ways of doing a certain thing. People are able to come up with new ways of doing a process that has been in existence. This is also part of innovation.
An organization that does not engage in innovation activities is likely to be competed in the business environment. This is why organizations should encourage innovation in its daily activities so that efficiency in implementing activities in the work environment is assured. Innovation is also important in that enhancing the productivity of a firm and ensuring that the goods and services offered to the customers are of high quality. When an organization adjusts to new procedures and practices, it gains value and hence differentiates itself from other firms. In this case, it gains competitive advantage as compared to other similar organizations.
Innovation is something that is invested and managed well in an organization that wishes to succeed. Without proper management, the organization lags behind others and chances are that it will perform very poorly as compared to the others. In this sense, innovation should be encouraged such that it occurs continuously for the benefit of the organization and its employees.
In any organization, there are different levels of planning. There are the strategic, tactical, and operational levels of planning. All these levels have different functions. They are different in the way they operate. In addition, the three levels use innovative ideas differently. However, their success depends highly on the ability to come up with innovative ideas that are of importance to an organization. Strategic level of the planning is the highest level of the planning process. It is responsible for the supervision of all other levels of the management. The function of this level of the planning is to set up long term goals of an organization that are to be achieved in a given time. The decisions made by this level of planning have a longtime line. The objectives set may be achieved in a period of 2 to 3 years. This level of planning has the greatest powers since it consists of the top managers. This is the only level of planning that is able to decide the business activity that an organization is to engage in.
Strategic planning requires a lot of innovation. It is required that 20 percent of the planning processes at the strategic level should all consist of new ideas if an organization is to grow and compete effectively in the business environment. The strategic planners should think of the goods that the customers would demand from next year. This means that the planners should be able to predict the future needs of the customers (LAFORET, 2012).
The planners should however develop a product that is in line with its business activities. This means that the strategic planners may not be required to come up with completely new products for their customers. However, modification of the existing products is an important innovative strategy that can help improve the competitive advantage of an organization. For example, apple is a company that engages in manufacture of Smartphone’s. However, innovation has facilitated the development of more efficient smart phones. This is achieved at by evaluating the features that the customers require and then making the decision to include these features in the new model of the Smartphone. This is an innovative strategy of the strategic managers. The move by Apple Company to develop a new watch like device that can be used together with their smartphones is an innovation because it is unique feature of the smartphones that will make the organizations products to be demanded.
The strategic managers may find an unexploited market and then decide to develop a new product that is to close the gap that exists in the market. Creative ideas of the management can identify a product that is not currently available in the market but can be purchased if it is produced. This is an innovation for the strategic managers and can be implemented for the benefit of the organization (CHESBROUGH, 2011).
Innovation is very important in the tactical level of planning. This planning stage involves deciding the activities that are to be done to achieve the set objectives. It involves availing the best resources that is to be used to achieve the set objectives. For example, if two countries are fighting, the country that uses the best tactic is likely to win. One of the tactics would be to transport the police to strategic places where they can attack. For organizations, tactical planning involves acquiring the best machines that are to be used in the production processes. These machines should be unique as compared to the ones that are used by other organizations. They should be efficient and cost saving. Use of machines that the other organizations are not aware of is a strategic plan.
In the department of marketing, tactical planning would involve deciding a unique media that is able to effectively reach the targeted consumers. Supply department would on the other hand involve strategic positioning of the organizational products such that they sell more as compared to those of the competitors. Innovation is therefore important in the tactical level of planning for any organization to be successful (DAVIES, 2005).
Operational planning involves deciding who is to do what so that the objectives of an organization are met. After the tactical planners have made their decisions and passed them to the tactical planners, the activity here involves deciding the tasks that can best achieve the objectives set. There are many ways of achieving an objective and in this case, it is the function of the operational planners to decide the best way of meeting the objectives. The operational planners have the responsibility of developing new methods of doing the normal activities in the organization. It is also the responsibility of the operational planners to schedule the activities in an organization so that objectives are accomplished in time and effectively.
The operational planners are the lowest level of planning and it is supervised by the tactical level. However, this is the most important level in that it determines whether the objectives that are set by the top planners will be achieved or not.
In the current business world, the managers are required to create and sustain a good environment for innovation if they are to succeed. For this to be fully achieved, the management should take several measures. In the first place, the top management should ensure that they are in close contact with the lower employees, customers and suppliers. Through this, the management is able to gather the needed information that is helpful in bringing in new and creative ideas that are of importance to the organization (MCCRAW, 2007).
Even though the various level of the management is aware of their roles, various theories developed do not describe the strategy that these managers should use to achieve the roles. This is why the current method of management needs to be changed if innovation is to be facilitated in an organization for the benefit of the business. In the first place, the managers should be people who are thorough in their activities. They should be able to search all relevant information related to their organization such as potential new products and new markets for their products. In this regard, the management should be willing to risk their funds into implementing the production of new products and venturing in a new market. Any business involves risking and it is important to realize that businesses that are risky to venture in are very profitable if successful. In this regard, the management should risk with the expectation that the innovation will be a success and this will facilitate success of the business (JOLLY, 2003).
The management has the power to facilitate changes in their organization. Most of the tactical, operational, and strategic planners in an organization lack leadership skills. It is the high time leadership skills are instilled in the planners so that they are able to guide the rest of the employees to accept and implement changes in an organization so that a good culture that facilitates innovation is instilled to the employees (CHESBROUGH, 2011). It is important that all the employees learn to question ideas that are brought to them so that the innovative ideas are scrutinized effectively for their validity. The planners and the other employees should be able to co operate with the people within and without the organization to ensure that innovative ideas are brought in place.
The organizational structure whereby there is a long hierarchy of planners is a barrier to innovation. There is a need to restructure the planning department such that all the planners and their juniors are able to work in groups. Working in groups and socializing together creates confidence. It creates the courage to risk together in order to put a certain creative idea in place. When there is a long hierarchy, consultations become difficult which demoralizes the employees at lower levels. There is the need of ensuring that the management works closely with the other employees so that effective innovation environment is created (JOLLY, 2003).
Generally, the current planning systems in most organizations are responsible for hindrance of innovation process. There is therefore the need to restructure the system so that it creates an environment and motivation to innovate. The changes recommended have been applied by few organization and positive results have been witnessed according to research.
Joseph Schumpeter is great economist who contributed greatly to the theory of business cycles. He particularly looked at the issue in relation to capitalist economies. According to this economist, business cycles are associated with industrial innovations ad not banks as argued by monetary and Keynesian economists. According to Joseph, a boom occurs when there is a special innovation in an industry that performs well in the market leading to increase output; hence, the income of the industry increases (DAVIES, 2005).
On the other hand, recession occurs due to failure in innovation. Without innovations, the old strategies and products become less attractive to the customers and their low demand discourages production. Reduction in the production activities means that there is less income to the industry. Such a situation has negative impacts to the economy because less people are employed in the industry while others lose their jobs (MCCRAW, 2007).
The arguments that were brought about by Schumpeter are of great importance to any organization that needs to excel in the current business environment. There are several proposals that the economist recommends to any organization that wishes to succeed. All these recommendations relate to innovation. According to Joseph Schumpeter, innovation is of great importance for growth of any organization (SCHUMPETER, 2000).
Innovation in an organization has several positive impacts to the organization. According to Schumpeter, innovation methods should be applied to realize growth of an organization. In the first place, the combination of the factors of production should be such that it results to low costs of production. This is what is referred to as efficiency. In this case, the organization should develop new methods of production that will reduce the overall costs of production. Machines can be acquired to ensure that raw materials are effectively utilized and the amount of labour required is reduced. Reduction in the costs of production leads to increased revenue to an organization. This profit can then be invested to facilitate further production (MCCRAW, 2007).
Another innovative strategy as proposed by Schumpeter is production of a new good. This kind of innovation is important in diversifying the risks of an organization hence ensuring that it succeeds whether its major product is purchased or not. When an organization has different products, poor performance of one product does not affect the activities of the organization since other products profit the organization. An additional product in the market is important also in that it increases the total revenue of the organization. Coming up with a new product in the market means that the planners have evaluated the needs of their customers and have come up with a product that best meets their needs. In this case, the organization is able to attract more customers. Satisfaction of the customers is also important in ensuring that customer loyalty is created hence sales of the organization can be assured whether in boom period or in recession.
Another innovative idea is identifying a new market and then venturing in that market. This is a risky strategy but is very advantageous. The planners should be able to identify new potential markets for their products. This is important in that venturing into a new market increases sales hence the profitability of the organization. This brings in more funds for investment and development of organizational activities (SCHUMPETER, 2000). New markets also help diversify the risks of an organization. Even though it is risky to venture into the new markets, poor performance of the existing markets does not affect the performance of the organization involved because sales in the new markets bring in funds that can be used in running of the normal activities of the organization.
Schumpeter argues that identification of new sources of raw materials is an innovation. The planners should be able to identify raw materials that are cheap and are of high quality. By having cheap raw materials, the organization reduces the production costs and the revenues in the organization increase. Low costs can also enable an organization to lower its sale price hence attract more customers which leads to increased profits. Quality raw materials are also important in that the final goods produced from the raw materials are of high quality (SCHUMPETER, 2000). Customers hence prefer the goods from such an organization and this increases the demand for the organizational products. Increased demand leads to high profits and this facilitate the growth of the organization.
In conclusion, the answer given by the MBA student, self scanner is one of the strategic innovations in British supermarket. However, the student failed in answering the question. As it has been observed, innovation involves coming up with a new idea of doing something. The scanners cannot be said to be innovations of the British supermarkets considering that they are not the manufacturers. Those who manufactured the devices can be said to be the ones who came up with the innovation. Secondly, the same devices are used in various other places such as offices, other retails shops and even in institutions such as colleges. The British supermarkets were not the first to use the device after its introduction in the market. It therefore means that the supermarkets copied an idea that was being applied by other organizations. It is true that a new method of enhancing security has been applied in the supermarkets. However, as long as the British supermarkets were not the initial users of the devices to help simplify the work, then this cannot be said to be an innovation for British supermarkets (LAFORET, 2012).
References.
MCCRAW, T. K. (2007). Prophet of innovation Joseph Schumpeter and creative destruction. Cambridge, Mass, Belknap Press of Harvard University Press.
LAFORET, S. (2012). Innovation in small family businesses. Cheltenham, Edward Elgar.
CHESBROUGH, H. W. (2011). Open services innovation rethinking your business to grow and compete in a new era. San Francisco, CA, Jossey-Bass.
JOLLY, A. (. (2003). Innovation: harnessing creativity for business growth. London, Kogan Page.
DAVIES, A., & HOBDAY, M. (2005). The business of projects: managing innovation in complex products and systems. Cambridge [u.a.], Cambridge Univ. Press.
CHRISMAN, J. J., HOLBROOK, J. A., & CHUA, J. H. (2002). Innovation and entrepreneurship in Western Canada: from family businesses to multinationals. Calgary, Alta, University of Calgary Press.
SCHUMPETER, J. A. (2000). The theory of economic development an inquiry into profits, capital, credit, interest, and the business cycle. Piscataway, NJ, Transaction Publishers.
