In the context of present business environments, it is often said that change is the only constant today. The markets are so volatile that what may be of relevance today may turn out to be a total waste in the immediate future (Reuvid, 2005).
Importance of innovation to a business
In the words of Peter Drucker, “The organizations likely to suffer the most are those with the delusion that tomorrow will be like yesterday” (Drucker, n.d. cited in Swaim, 2010). Experts like Peppers and Rogers (2008) establish that innovation is must for survival and success in such volatile business situations. Chesbrough (2003) even said, “Companies that don’t innovate die”. Innovation is a strategic decision requiring massive employment of scarce organizational resources and it may have crucial implications on business performance (Curseu and Louwers, 2008).
Preparing strategies for innovation
- Alignment to the firm’s overall business strategy: A common mistake observed in case of failed innovations is that there is often no integration between firm’s innovation and overall business strategy. It is important to consider innovation as a part of corporate strategy so that there is no diversion from the firm’s core objectives.
- Openness to outside ideas: Closed innovation under controlled situations was a situation of the past. Innovating successfully today requires openness to external ideas. The firms must be ready to welcome innovative ideas from people outside organizations along with taking help for commercializing the ideas.
- Hiring people from diverse backgrounds: Though an open approach to innovation is recommended today, self-reliance is always important. By hiring people from diverse fields, the firms may save costs of hiring externally and leverage upon diverse talent pool inside the organizational boundaries.
- Efficient management of innovation portfolio: Multiple innovations are often carried out by the R&D department of firms at any point of time, resulting into a tussle for scarce organizational resources. The innovation portfolio must be so managed by firms that there is justified allocation of funds, time as well as personal attention among different innovations.
- Balance between incremental and disruptive innovations: The firms should try to achieve a trade-off between incremental and disruptive kinds of innovations. While incremental innovations involve little change in existing technology, the disruptive innovations usually mean technological breakthroughs including invention of entirely new offering. Since disruptive innovations involve higher risks, a balance between the two types would ensure proper risk management.
- Organizational culture of information sharing: Organizational culture plays significant role in innovations. A culture of open communication promoting free flow of information and ideas enhances the chances of successful innovation.
- Reward the employees for risk-taking: Employees should be motivated to come forward with their innovative ideas. They must be encouraged to take risks. All support should be extended to employees to take innovation-related risks and they must be rewarded not only for successful ideas, but for taking initiative to innovate.
- Adopting long-term orientation: While deciding upon any innovation, the firm’s orientation should always be long-term. Innovations usually involve significant time gap between the time they are developed and the time they are taken to market for commercialization. If the orientation is short-term, the invention may become obsolete even prior to reaching market, resulting into heavy losses for the firm.
- Stress-free work environment: For encouraging employees to come forward with their ideas on innovation, it is important to develop a stress-free work environment. Offering equal and just treatment to all employees and allowing them to maintain a perfect work-life balance would enhance their creativity.
- Employee empowerment: Another basic requirement for innovating successfully relates to empowerment of employees. The employees would come up more aggressively with their ideas only when they are empowered to take routine decisions. If they are asked to take permission every little thing, they would hesitate to take initiatives in this direction.
- Concentrate equally on marketing: The difference between invention and innovation lies in the fact that invention only involves development of a new idea while innovation involves commercialization also. But firms usually fail to understand this difference and allocate maximum resources to research and development (R&D); while neglecting the need to concentrate equally on marketing.
- Offer customer education: Often firms close their innovation process once the invention reaches market. But this is one of the important reasons behind several innovation failures. The target market i.e. the group of customers for whom innovation has been developed must be educated enough about the utility and benefits of that particular innovation. This would minimize the chances of innovation failures after commercialization.
- Chesbrough. H. (2003). Open Innovation: The New Imperative for Creating and Profiting from Technology. Boston: Harvard Business School Press.
- Gessinger, G. (2009). Materials and Innovative Product Development: Using Common Sense. Oxford: Elsevier.
- Peppers, D. & Rogers, M. (2008). Rules to Break and Laws to Follow: How Your Business Can Beat the Crisis of Short-Termism. New Jersey: John Wiley & Sons, Inc.
- Reuvid, J. 2nd Edition. (2005). Managing Business Risk: A Practical Guide To Protecting Your Business. London: Kogan Page.
- Swaim, R. (2010). The Strategic Drucker: Growth Strategies and Marketing Insights from the Works of Peter Drucker. John Wiley & Sons.
- Vermeulen, P. & Curseu, P. (2008). Entrepreneurial Strategic Decision-making: A Cognitive Perspective. Edward Elgar Publishing Limited.