Push and pull innovation.
Innovation is a match between ideas and needs that already exist. It is a deliberate decision to learn and research based on customer or market needs or prospected objectives. Any innovation requires knowledge of both the need or problem and the possible solution (Hitt, Ireland and Hoskisson, 2007). Innovation takes two forms; pull and pull innovation. Demand driven innovation is referred to as pull innovation where the realization of the problem or need comes first then the solution is searched. Under pull innovation, the commercial applications are known before the development of a technology to solve the problem. Under push innovation, new technologies are developed before they are commercialized or applied. The applications are known after a technology has been developed. It involves the development of solutions, and then a search for problems that can be solved using these solutions (Moeller, 2008).
Judging from the risks involved from the two innovation types, the pull innovation is more crucial than the push innovation. Under the former the market risks overdo the technological risks such that, with a felt need, there is an uncertainty on the capability to come up with a solution. Nevertheless, if the solution found fails in application, researchers can still develop other solutions (Hitt, Ireland and Hoskisson, 2007). Diversities in markets may render the push innovation null and void as some prospected problems may never exist. Any organization interested in sustaining its customers, acquiring new customers, and sustaining its revenue capacities should invest in both pull and push innovation strategies. This ensures that the market and technological risks are balanced and that the sales pipelines are covered both in the short and long run.
A significant example of when the pull innovation can be applied is on packaging. This applied in MacDonald’s when there was the need to cater for customers who preferred having their food as ‘take-away’. Such demand pulled the company into investing in plastic containers to solve the customers’ needs. Push innovation can be applied when an existing technology is prospected to bring issues in the future. For instance, in the case of MacDonald, the use of plastics for packaging has raised environmental issues in terms of disposal. The company has invested in landfills, which are not in current use but may be used in the future if the problem continues.
Sources of innovation.
The key source of business innovation is employees; employees have the greatest knowhow of every part of the business since they are involved better than any other stakeholders. During their daily operations, employees identify different areas in need of improvement or areas that could be done in a different approach. More often than not, these employees develop their solutions, or have ideas on how to address these needs. This implies that creativity and innovations come naturally to them. Encouraging these employees and motivating them is, therefore, crucial as it can successfully improve on the levels of technology in a business (Hitt, Ireland and Hoskisson, 2007).
Research and development also plays a crucial part in developing new ideas (Moeller, 2008). Organizations invest massively in research in order to come up with new ideas that can be commercially beneficial. Research and development can also be conducted under small scale entrepreneurship by analyzing past successes and failures or conducting surveys from customers. This enhances development of new and substitutable ideas.
Another overlooked source of innovation is business customers. Customers know what they want from producers or service providers. They understand their needs better than any other business stakeholder, and often have ideas on how to better their needs through products and service. Customers also possess ideas on effective processes that suit their needs. They have ideas on delivery services that they feel can serve their needs effectively. Additionally, they possess ideas on strategies, which can get a business ahead on its competition. Businesses lose a lot of ideas, on focusing on other areas of innovation sources, while overlooking their customers who are more close to business operations that other sources of information (Hitt, Ireland and Hoskisson, 2007). Listening to a customer increases ideas on product differentiation, and quality improvement to fit what they need. This creates uniqueness and improves business competitive advantage.
Importance of following a strategy in seeking new opportunities.
Developing an innovative strategy is vital for any business as without one every effort in acquiring customers may be inefficient. Focusing on a strategy ensures that services or produces meet the needs of customers, and lead to the development of long-term relationships with these customers (Hitt, Ireland and Hoskisson, 2007). To achieve such a status, an entrepreneur needs to have a flexible strategy that accommodates changes in perception and demand of customers. It also assists in identifying new products or markets, which can be successfully targeted. Following a strategy also assists in identifying what an entrepreneur needs to include in seeking a new opportunity, and what to overlook. This enables rationality and cost effectiveness, and in developing a marketing strategy to commercialize the new idea.
Following a strategy assists an entrepreneur to face adversities or uncertainties that may occur while seeking opportunities. It acts as a control and guidance measure, which ensures that the entrepreneur accepts or rejects the limits that circumstances may place on him/her. It allows the entrepreneur to have faith and believe in oneself, and this minimizes risks such as stressful moments that may occur due to market or technological challenges.
Hitt, Ireland and Hoskisson (2007) argue that failure to follow a strategy when seeking new opportunities leads to inefficiencies in terms of resources, energy and time. This implies failure to come up with an idea, and failure to solve a problem or a customer need. This adversely affects the uniqueness of an entrepreneur, and the competitive advantage in the market. It also minimizes chances of developing other opportunities as there lacks focus on the objective.
Importance of absorptive capacity.
Absorptive capacity refers to the ability of a firm to identify the value of new information, assimilate it, and apply it commercially. A firm’s absorptive capacity develops from a prior knowledge and communication of a firm’s innovative performance, organizational learning, and aspiration levels (Moeller, 2008). Such information is then integrated with other external sources of information, and transformed so that it becomes relevant and useful to the organization. Absorption capacity enables an organization to process new information, and change it for its own commercial benefits.
The primary aim of absorption capacity is to encourage organizations in improving their prospects and pursuing customized research and development programs instead of purchasing new information. The process is meant to be a continuous process for any organization that adopts it. It requires close engagement with economical changes, markets, and competitors. Absorptive capacity is crucial in acquiring and understanding, and in using such information to produce new ideas and developments (Moeller, 2008). However, its effective usefulness depends on the ability and employees resourcefulness. While its results are skewed towards tailoring specific needs, employees can only access limited view of the operation as a whole.
Reference.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2007). Strategic management: Competitiveness and globalization : concepts. Mason, OH [etc.: South-Western. Bottom of Form
Moeller, M. G. (2008). Strategic innovation: Building new growth business. Wien: Goldegg.
