Global competition and continuous innovation
Globalisation leads to immense competition among businesses in the same industry. They now have to reduce business cycles in order to accommodate these changes. Companies that succeed in the global market are innovators. They are able to operate in some of the most dynamic and demanding markets in the world (Nierenberg 1982).
Examples of such industries include fashion and electronics. Global competitiveness has caused firms to adopt a long-term approach to innovation. Introduction of new products is no longer enough; great emphasis has to be given to process innovations, as well.
Most of these international competitors now reach out to suppliers and other members of the supply chain as sources of innovation. It is not sufficient to rely on customer feedback alone (Shapley & Rustum 1985).
GlaxoSmithKline is a Pharmaceutical organisation that embraces the concept of continuous innovation for global competiveness. The firm has a two-stage process in which it first discovers and tests new products, ideas, or processes. Here, most efforts appear theoretical and ideal. In the second phase, the organisation then refines and implements the concept practically.
At this stage, only those concepts that have been tested will go through to the next phase. Glaxo follows a rigorous and repeatable process that ensures valuable products are created in the company. The organisation’s policies exist in various parts of the world; therefore, in order to stay competitive, all branches need to follow this rigorous innovative procedure (Van de Ven 1990).
The firm had to employ such a mechanism in order to amalgamate all the various ideas that stem from its branches. Glaxo ensures that continuous innovation occurs in an organised and sustainable manner.
Relevance of innovation and creativity in business
Businesses need to stay creative and innovate in order to curb obsolescence. If an organisation only dwells on old ideas, then present work can easily become redundant. Although old ideas may have yielded satisfactory results in the past, they often get surpassed by time.
For instance, Xerox underestimated the usefulness of the fresh idea of a personal copier and banked on its older formats; these types were overtaken by peers (Sternberg 1999). Similarly, Kodak was on the verge of obsolescence by insisting on the old idea of analogue cameras.
It was only through continuous innovation that the company stayed relevant; it patented the right to install cameras on mobile phones. This ability to embrace and implement new ideas is what prevents obsolescence in various companies.
In situations where a business is not under immediate threat of extinction, it still needs to increase shareholder value by staying profitable. One way of achieving this is increasing worker output. Professionals in most industries rarely tap into their full potential, yet most of them have the same capabilities (Waterman & Peters 1982).
Consequently, companies will get greater value for money if their professionals are more productive. Creativity is the platform that boosts workers’ productivity if professionals are involved. Conversely, if blue collar staff or minimum-wage workers are involved, then businesses need to embrace innovation in their processes so as to enhance worker performance.
Why businesses foster innovation and creativity
Businesses embrace innovation and creativity in order to grow. Many products or industries are maturing. Therefore, innovation is the platform that will enable continuous satisfaction of market needs (Nelson & Tushman 1990). Innovation causes new businesses to come up and also causes others to grow.
A case in point was IBM; the company used creativity and innovation in order to provide personal computers at an affordable rate to members of the public.
It found a creative way of building the personal computer (PC) and provided it to the public at a ground-breaking low price. It continued to innovate and improve its PCs even when the PC market had matured. Innovation, therefore, created a new company and caused it to grow even after maturing.
Innovation and creativity ensures that companies are competitive enough. Those organisations that act on creative ideas through innovation tend to become market leaders. They stand out from the crowd because they are not drawn to security alone. Most of these companies may defy predictable corporate perceptions and upset the industry scene dramatically (Perkins 1981).
A case in point was the introduction of ATMs by Citibank. Other financial institutions, including the country’s market leaders had not embraced the idea of automated money dispensation and thus lost most of their consumers to this innovator.
The ATM machine revolutionised banking by providing teller services 24-hours a day. Citibank increased its market share dramatically and caused other organisations to frantically follow in their steps.
Companies need to boost their business revenues even though conventional methods, such as cost cutting, are not sufficient. Therefore, this is an important motive for creativity. Several western companies are notorious for squeezing their businesses too dry.
By trying to minimise operational costs excessively, these companies stifle employees and other members of the organisation (Schein 1992). Innovation is a safe way for boosting profitability by increasing business revenues; it provides more of what a company can sell and thus a new revenue stream.
For instance, Samsung tapped into a relatively new market and added more revenues by creating its own tablet. The company continued to churn out mobile phones and other electronic devices, but the tablet expanded it sales.
Sometimes companies foster innovation in order to survive in dynamic environment. Businesses may need to redefine who or what they fundamentally do in order to survive (Ginsburg & Guth 1990). Opportunities present themselves at unexpected times. If a company does not have an open attitude towards creativity and innovation, then it may miss out on an opportunity that occurs at an unexpected time.
The firm’s external circumstances may make business untenable and thus cause extinction. For instance, several oil companies ceased being exclusive oil firms after crude became more and more scarce.
Those who did not redefine themselves through innovation became phased out. Those that stayed in the market became oil and gas firms. They seized the opportunity inherent in excessive quantities of gas and thus survived.
Organisational culture, creativity and innovation
Anabile et al. (1996) explain that organisational culture can foster innovation and creativity through creation of a climate that favours these two qualities. First, they can encourage individuals to be creative; this should be manifested by top executives. Supervisors and junior level managers should also foster creativity.
Companies need to allocate sufficient resources towards innovation and should give employees the freedom they require to be creative (Martin 2002). The same authors also found that an organisational culture in which autonomy exists can foster creativity and hence innovation (Anabile 1988).
Kanter (1988) found that organisational cultures in which few hierarchical structures exist tend to have greater innovation. If the structures in a company are multiple and integrated, then chances are that greater creativity will occur (McLean 2005). Additionally, it was found that organisational cultures with more teamwork and collaborative activities tended to develop more innovative solutions than those that did not.
Companies that control employees’ decisions and actions tend to stifle creativity. Lastly, the organisations needed to show pride in their workers’ capabilities as this would translate into encouragement and innovation.
Angle (1989) explained that companies with organic organisational cultures tended to be more innovative than those without them. These institutions ensured that communication and information sharing occurred seamlessly. The parties sharing information need to be individuals who have different frames of reference so that the mixing and generation of new ideas can occur.
Change as the only constant
Innovation may be regarded as a response to the dynamic and ever-changing business environment. Unless companies embrace change, then the long-term viability of their organisations will be questionable (Bird & Drazin 1996). Some of the occurrences may be external or internal, and either of them can lead to positive or negative consequences.
Internal factors are those triggers that can be controlled by an organisation directly. They include product development, administrative structures, employee commitment, and use of technology in company operations. A case in point was the development of Six Sigma quality management.
Toyota embraced this change in management and operations thus leading to cost effective and high quality vehicles (Cummings & Oldham 1996). If the company had not embraced the change, its competitors would probably have eliminated it.
External drivers of change are those factors that a company cannot control, such as, political turmoil, high tariffs or taxes, dwindling economic performance (GDP) in their chosen market, changes in customer tastes, excessive competition and changes in technology within the industry.
A case in point was the 2007 US economic. Many fast food consumers stopped buying food from costlier organisations like Wendy’s and took their business to McDonalds. McDonalds’ competitors had to close a number of their restaurant franchises because external circumstances (the economic downturn) altered market characteristics.
Biggest challenges when remaining competitive
One of the biggest challenges in staying competitive is having sufficient resources to foster innovation (Teshik et al. 1997). If top management is not committed to innovation, then lower or mid-level staff will not have the financial backing to innovate.
This will cause the company to lag behind its competitors and thus perform poorly. Change leaders need to convince investors to support them in this process of boosting the company’s competiveness.
Organisations that operate in highly dynamic industries also find it difficult to stay ahead of others because sometimes their products have very short life cycles. This means that the input placed into the development of the product, service or process may not match the revenues obtained from the innovation.
Therefore, the product may not stay in the market long enough to break even (Van de Ven 1986). One such industry is software development; the sector has numerous players who keep creating new products in short amounts of time. If a company takes too long to release its new software, then market needs may change and render the innovation irrelevant which can be quite frustrating.
Maintaining a competitive edge is also difficult owing to the challenges of change resistance (Andrews 1996). Companies that stay ahead often alter their structures, strategies and ways of doing business. Employees or other stakeholders in the organisation may stifle these change efforts by resisting them. If resistance is improperly handled, then a company may loose its competitive edge.
References
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