Problem Statement and the Planned Innovation
Introduction: The Overview of the Company
Amazon.com is a global online commerce retailer initiated by Jeff Bezos in 1994 as an Internet shop (Rozdolskaya, Evtushenko, Somina, & Degaltseva, 2014). The organisation not only sells all kinds of products but also produces electronic devices and is involved in cloud computing. It currently manages to be successful in everything it does: Amazon.com has more than 200 million active customer accounts in all countries, and its popularity is still on the rise.
It is explained by the fact that the organisation provides the most convenient way to deliver goods, a moderate price, all the necessary information, and a wide variety of options–as a result, it has good reasons to compete for the title of the most client-oriented company in the world (Foss & Knudsen, 2013). Due to these facts, the organisation has good chances of being named the world’s most innovative company of 2017 as, unlike its major competitors (Apple, Google, and Microsoft), Amazon.com does not tie the customer to its ecosystem offering platforms that would meet everyone’s individual needs (Barnard & Van der Merwe, 2016).
Innovation-Related Problems
Despite the fact that the effectiveness of the customer-oriented strategy is unquestionable, Amazon.com must cope with a number of inner challenges and issues related to its strategic management as currently this aspect is rather questionable (Kantor & Streitfeld, 2015). The three major issues related to innovation that have to be overcome are (Ejdys, Ustinovičius, & Stankevičienė, 2015):
- The corporate culture of company relies on scientific management and digital Taylorism, which creates a negative perception from the perspective of employees and leads to problems in the market (Aitken, 2014).
- The company fails to attract new employees due to the lack of innovative HR practices. Furthermore, it runs the risk of losing its current labour force as employees dissatisfaction is growing while the company’s managers do not seem to take any measures to deal with it.
- Although Amazon’s sales are on the rise, its profits are gradually falling. This failure is linked to its management. The tendency is worrying indeed, taking into consideration the fact that the company is an unquestionable leader of the industry and for a long time its position has not been questioned.
The Proposed Innovation
Since the organisation is lagging behind its competitors in terms of management practices, it would be reasonable to suggest a new HR-strategy as the most suitable and relevant innovation (Villar, Alegre, & Pla-Barber, 2014). While services provided to customers are excellent indeed, employees have to suffer from neglect as far as their needs are concerned (Alexander, 2013). As a result, the workers who know that the organisation is not going to protect and support them in need will never do anything for its benefit (Albrecht, Bakker, Gruman, Macey, & Saks, 2015). Therefore, the suggested innovation consists in (Donate & de Pablo, 2015):
- preventing the dehumanisation of labour, since currently, Amazon.com does nothing to assist people who learnt that they have an incurable disease or have other serious causes of their low ratings;
- increasing job satisfaction by introducing financial and non-financial incentives (developing a system of rewards to increase the sense of achievement among workers);
- encouraging employees’ creativity and their breakthrough ideas (generally discarded by scientific management);
- cutting the number of metrics against which employees are measured every day, which makes them concentrate only on the quality of their work, killing creativity.
- stepping away from a rigid hierarchy as the company runs the risk of turning into an autocratic unit.
Streamlining with Current Practices
However, despite the necessity of new practices, innovation should not be immediate; on the contrary, new practices must be streamlined with the organisation’s current policies. This can be done through the following steps (Helper & Henderson, 2014):
- using the advantages of the scientific management that gives a working system of regulation, determining recruitment, supply chain, working schedule and other aspects, but enriching this list with employee advantages;
- making the best of the company’s approach that provides methods of labour division as well as specialisation: creativity must be encouraged when everyone performs a restricted number of functions;
- assuring cooperation between the employer and the employee and providing guidelines for their collaborative operations as part of the company’s strategy to pursue one common goal of becoming the most innovative organisation of 2017.
Innovation Plan
Innovation Design
In order to ensure the success of the innovation, it is necessary to design it in the clearest, most precise and comprehensible way to avoid any vagueness and abstraction (Holahan, Sullivan, & Markham, 2014). Since the current problem consists mainly in the fact that the managers of the organisation do not recognise any other values in their employees except for their ability to complete assigned tasks in due time, it would be reasonable, first and foremost, to make it clear what constituents of human capital may serve to the benefit of the company. Thus, the innovation design can be represented by the following diagram (Járgensen, Becker, & Hyland, 2014):
The diagram illustrates that:
- innovation is a complex process, which means that its design involves numerous components that have to be addressed;
- the company should take into consideration not only the skills and abilities of an applicant but also his/her creative potential that has to be further developed by encouraging innovative ideas and providing a system of bonuses for those who go beyond the boundaries of their narrow field;
- the practical application of skills is impossible without theoretical background; the organisation must ensure professional development opportunities for its employees to obtain new knowledge;
- life experience (which is totally ignored by the managers of Amazon.com) also ranges among the key components as it determines whether the employee’s system of values, beliefs and ambitions corresponds to the company’s vision, mission, ultimate goals, organisational styles, etc.;
- only the combination of all factors within the framework of the management innovation plan will allow turning the labour force into the human capital.
User Involvement
In order to involve users in the innovation process, the company will need to develop a special strategy that would ensure credibility and increase the motivation of all stakeholders. The problem now is that managers are unlikely to be willing to take an active part in such innovation as there is no direct benefit for them from the new policy (Kianto, Ritala, Spender, & Vanhala, 2014). At the same time, if the initiative is dull and is not supported by managers, employees are unlikely to meet it with enthusiasm. Conceptually, there are two constituents of user involvement that should be considered:
- which users of the innovation are able to provide valuable inputs;
- which interaction patterns are appropriate for which group of users to ensure the overall involvement.
It would be reasonable to approach the innovation from the point of view of high management in order to see what gaps the plan has to fill to be perceived adequately by those who do not directly benefit from it (Marti & Scherer, 2016). User involvement is crucial for radical innovation as otherwise it runs the risk of being split between those who are eager to change and those who believe that conservative methods are the best (Liu, Chow, Gong, & Wang, 2016).
I believe that non-financial incentives are the best for ensuring user involvement since it is unreasonable to pay everyone to accept new rules. What the company really should do is motivate upper management to be more responsive to innovation, as otherwise, they are unlikely to achieve employee loyalty (Ma Prieto & Pilar Perez-Santana, 2014).
Fast Integration–Time, Costs, Resources
As it has already been mentioned above, the timeline of innovation is not rigid: Amazon.com managers should introduce changes gradually in order to ensure that they are met with approval. It would be reasonable to devote a year to the introduction of the new system of management for everyone to take time to adjust to it (Jain & Jeppe Jeppesen, 2013). However, some immediate changes are also necessary (such as the elimination of excessive control and the introduction of bonuses for extra work) (Sadriev & Pratchenko, 2014).
Despite the fact that the innovation may turn out to be rather costly, as new financial policies are to be tested and approved, in fact, the company may save money and resources in the following ways (Watada, Xu, & Wu, 2014):
- risk-reducing programs should be launched to eliminate accidents that might be costly to the company;
- if Amazon.com steps away from its bottom line approach and concentrate on long-term goals, its managers will be able to control overloads and save the company’s money;
- cutting salaries is far from being the most popular measure; yet, the organisation may review its salary policies to ensure an affordable raise for every employee according to his/her merits;
- unnecessary programs must be eliminated as Amazon.com currently spends a lot on bonuses (such as a long-term insurance) that are not popular.
Besides solving money problems, the establishment of human resources department will be required: the company needs to hire specialists to provide adequate education to the personnel.
Testing Capabilities
It is rather difficult to test how successful HR management is. However, the success of the innovation can still be tested according to the following criteria (Hill, Jones, & Schilling, 2014):
- Organisational design (which refers to how well the roles of stakeholders are restructured);
- Engagement (showing if the innovation has made the work more efficient and satisfying);
- Learning (whether employees receive all the improvement opportunities they need);
- Analytics (how statistical data supports the innovation).
Furthermore, the company can also introduce anonymous opinion polls to identify whether the innovation is successful. Currently, the problem is that most of its employees are afraid of expressing their thoughts for fear of being fired. Thus, this practice is likely to be met enthusiastically as employees would see no threat in expressing their views (Gureva, Kirillov, Vinichenko, Melnichuk, & Melnychuk, 2016).
Cross Functional Management
Cross-functional management is crucial for the company as it ensures that the innovation runs smoothly without facing resistance. The problem is that Amazon.com management has adhered to Taylorism for too long, which may imply that managers have lost their flexibility and cannot demonstrate their knowledge and skills in their new roles (Waring, 2016). Cross-functional management would involve inputs from other areas of the business and the ability to use networking in order to achieve success since a cross-functional team would involve people with different functional expertise who are to achieve a common goal.
Moreover, it is unprecedented for the company to compose teams of employees from all levels of the organisation – from the lowest up to the highest – as now the division is very strict. Currently, Amazon.com must create self-directed teams that can work on a specific task and include representatives of all related departments as it will allow increasing the level of creativity and achieve out of the box thinking (Engel, Dirlea, Dyer, & Graff, 2015).
Conclusion
Despite the fact that the company is generally successful in introducing innovative products and services to increase the satisfaction of its customers, it is still far behind its competitors in terms of ensuring employee satisfaction (Shafritz, Ott, & Jang, 2015). To achieve success, it must divert its attention from introducing innovative products and services to increase customer satisfaction to its management issues in order to bridge the existing gaps in its strategies and increase competitiveness. In future, it has to shift from its traditional management practice to innovative management, which will make the suggested innovation a part of a well-organised, continuous practice.
References
Aitken, H. G. 2014. Scientific management in action: Taylorism at Watertown Arsenal, 1908-1915. Princeton, NJ: Princeton University Press.
Albrecht, S. L., Bakker, A. B., Gruman, J. A., Macey, W. H., & Saks, A. M. 2015. Employee engagement, human resource management practices and competitive advantage: an integrated approach. Journal of Organisational Effectiveness: People and Performance, 2(1): 7-35.
Alexander, K. 2013. Facilities management: theory and practice. London, UK: Routledge.
Barnard, Z., & Van der Merwe, D. 2016. Innovative management for organisational sustainability in higher education. International Journal of Sustainability in Higher Education, 17(2): 208-227.
Donate, M. J., & de Pablo, J. D. S. 2015. The role of knowledge-oriented leadership in knowledge management practices and innovation. Journal of Business Research, 68(2): 360-370.
Ejdys, J., Ustinovičius, L., &Stankevičienė, J. 2015. Innovative application of contemporary management methods in a knowledge-based economy – interdisciplinarity in science. Journal of Business Economics and Management, 16(1): 261-274.
Engel, K., Dirlea, V., Dyer, S., & Graff, J. 2015. How to build the permanently innovative company: five tested sets of management practices. Strategy & Leadership, 43(1): 3-10.
Foss, N. J., & Knudsen, C. 2013. Towards a competence theory of the firm. London, UK: Routledge.
Gureva, M. A., Kirillov, A. V., Vinichenko, M. V., Melnichuk, A. V., & Melnychuk, Y. A. 2016. Management of innovations and innovative process: concept, essence, classification and diffusion. International Review of Management and Marketing, 6(6): 147-153.
Helper, S., & Henderson, R. 2014.Management practices, relational contracts, and the decline of General Motors. The Journal of Economic Perspectives, 28(1): 49-72.
Hill, C. W., Jones, G. R., & Schilling, M. A. 2014. Strategic management: theory: an integrated approach. Boston, MA: Cengage Learning.
Holahan, P. J., Sullivan, Z. Z., & Markham, S. K. 2014. Product development as core competence: how formal product development practices differ for radical, more innovative, and incremental product innovations. Journal of Product Innovation Management, 31(2): 329-345.
Jain, A. K., & Jeppe Jeppesen, H. 2013. Knowledge management practices in a public sector organisation: the role of leaders’ cognitive styles. Journal of Knowledge Management, 17(3): 347-362.
Járgensen, F., Becker, K., & Hyland, P. 2014. Profiling human resource management practices in innovative firms. International Journal of Human Resources Development and Management, 14(4): 187-204.
Kantor, J., & Streitfeld, D. 2015. Inside Amazon: wrestling big ideas in a bruising workplace. The New York Times. Web.
Kianto, A., Ritala, P., Spender, J. C., & Vanhala, M. 2014. The interaction of intellectual capital assets and knowledge management practices in organisational value creation. Journal of Intellectual Capital, 15(3): 362-375.
Liu, F., Chow, I. H. S., Gong, Y., & Wang, H. 2016. Mediating links between HRM bundle and individual innovative behavior. Journal of Management & Organisation, 1-16. Web.
Ma Prieto, I., & Pilar Perez-Santana, M. 2014. Managing innovative work behavior: the role of human resource practices. Personnel Review, 43(2): 184-208.
Marti, E., & Scherer, A. G. 2016. Financial regulation and social welfare: the critical contribution of management theory. Academy of Management Review, 41(2): 298-323.
Rozdolskaya, I., Evtushenko, E., Somina, I., & Degaltseva, I. 2014. Problem-oriented way and multi-aspect character of research of innovative management of competitive enterprises at the stage of global transformations. Life Science Journal, 11(9): 963-970.
Sadriev, A. R., & Pratchenko, O. V. 2014.Idea management in the system of innovative management. Mediterranean Journal of Social Sciences, 5(12): 155-158.
Shafritz, J. M., Ott, J. S., & Jang, Y. S. 2015. Classics of organisation theory. Boston, MA: Cengage Learning.
Villar, C., Alegre, J., & Pla-Barber, J. 2014. Exploring the role of knowledge management practices on exports: a dynamic capabilities view. International Business Review, 23(1): 38-44.
Waring, S. P. 2016. Taylorism transformed: Scientific management theory since 1945. New York, NY: UNC Press Books.
Watada, J., Xu, B., & Wu, B. 2014. Innovative management in information and production. New York, NY: Springer.