Critical literature review of theories of innovation and change
Modern world is too rush and busy to remain at and the same place, without innovation and change. The main idea of this paper is to consider the theories of innovation and change, critically evaluate each of them and stress on their advantages and disadvantages. The processes of innovation and change are interconnected and cannot be used separately.
Those who underestimate the importance of innovation and change do not know the recent tendencies in the business world. Innovation and change have become key leadership notions in the USA since the end of the WWII. Much discussion is conducted in the sphere of innovation and change implementation.
Scholars are unable to deduce a unique theory which can be applied to all the situations. Thus, much attention is paid to the theories of innovation and change and their criticism.
Adair (2007) considers innovation just as a part of change which may be present or not in the process of innovation. In other words, change is a natural flow of event, it is an obligatory process which may be implemented into intervention, creation or change.
According to Adair (2007) innovation, as a means of change, is easier for implementation, it involves the whole staff and it is “more positive and less threatening than other forms of change” (p. 9). Thus, this scholar considers innovation as one of the processes at the work place which lead to changes.
Birkinshaw, Hamel and Mol (2008) also believe that innovation is just a part of change and offer four perspectives, institutional perspective, fashion perspective, cultural perspective, and rational perspective.
No matter which perspective is used, it should come through four phases, motivation, invention, implementation, and theorization and labeling. However, such opinion is not supported by others authors, who consider innovation and change as two absolutely different processes which still interrelate with each other.
Innovation and change are the interrelated processes. Implementing innovation and change at the work place, managers interfere into something unknown and unpredicted. Clegg, Kornberger, and Pitsis (2007) are sure that it is impossible to predict the outcomes of the change.
Considering the reasons of innovation and change failures, these scholars point at the reasons connected with inappropriate implementation and execution rather that at bad ideas. Clegg, Kornberger, and Pitsis (2007) state three initiatives which may help implement innovation and change management.
Firsts, political aspects should be involved, second, stakeholders should be informed about nearest changes and, third, the availability of human and material resources should be checked (Clegg, Kornberger, and Pitsis 2007).
Kotter (2007) implements a theory of eight steps. Those who are able to complete a change by means of applying those steps correctly and in a proper order are able to succeed.
The steps which fall under Kotter’s theory (2007) are as follows, “establishing a sense of urgency”, “forming a powerful guiding coalition”, “creating a vision”, “communicating the vision”, “empowering others to act on the vision”, “planning for and creating short-term wins”, “consolidating improvements and producing still more change”, and “institutionalizing new approaches” (p. 6).
Having considered these steps, the first problem which catches attention is the absence of long-term predictions. Having applied this theory into action, one is unable to check whether the outcomes are going to be affective within a long period of time.
Change has neither positive nor negative connotation, thus, it is impossible to predict something relying on the basic information about change management theories used by other companies. Thus, the theory applied by Christensen, Anthony, and Roth (2004) is more relevant in terms of constant monitoring and long-term prediction. They offer a three-part process of innovation and change implementation.
The first part is the consideration of the signals of change, the second part is the analysis of the competitive battles, and the third part is the applying to the strategic choices. According to Christensen, Anthony and Roth (2004) the signals of change should be considered within the needs of three specific groups of customers, ‘overshort customers’. ‘undershort customers’, ‘noncustomers’ and within a nonmarket contexts.
The ability to notice the desires and needs of the customers and nonmarket players is the first step in applying a theory of innovation. The second part of the theory is devoted to the analysis of the competitive battles. This part consists of two steps. The first step is the consideration of the advantages, disadvantages and blindspots of competitors (checking the resources, processes, and values).
The second step is the research in the sphere of ‘asymmetries’. The third part presupposes the evaluation of the strategic choices with the purpose to check winners and losers. Entrants should be considered within this part (Christensen, Anthony & Roth 2004).
Evaluating this theory of innovation and change, it should be stated that all three parts should be utilized simultaneously. It is not a step-by-step guide which should be followed precisely, it is a system which should be implemented with the purpose to understand whether the change is really necessary and which actions are to be implemented.
The main advantage of this theory is that it requires constant monitoring and makes the company aware of the changes in the consumer’s tastes, of the entering of new market participants and the changes which occur with the competitors. However, this theory does not implement any specific steps which can be considered in Kotter’s theory (2007).
Bold (2011) closely discusses the concepts for change used in the companies. It is significant that each of the approaches may be used in combination with another one for better performance, depending on company’s goals, values, needs and expectations.
Management by objectives, ad-hoc portfolio analysis, business process reengineering, focusing on basic skills, and the balanced scorecard concepts are considered as the ways for innovation and change in the company. Bold (2011) dwells upon the understanding among the companies of the importance of innovation and building “the competency to rapidly and successfully change” (p. 5).
The concepts enumerated below may be used as the theories, even though each of them has pitfalls and disadvantages.
Management by Objectives theory is based on the company’s ability to set appropriate goals (first corporate ones and then employees’), performing monitoring issues, evaluating this performance, then employees’ rewarding. This theory is based on SMART objectives (specific, measurable, achievable, realistic, and time) which implementation in the company should fit its specific aims.
Even though this concept has always been used for employees’ motivation, it should be applied to change managing. However, stating objectives for successful innovation and change management is not enough. The analysis of the specific environment should be implemented (Bold 2011).
Ad-hoc portfolio analysis is a concept which specifically applies environment and organization analysis for forecasting necessary changes. This theory pays much attention to market attractiveness and competitive strengths. It is one of the main advantages of this theory as the considered matrix may be used for predicting change and innovation (Bold 2011).
Still, this stage does not have the stages explained in the Business Process Reengineering concept. Managing to follow these particular stages is advantageous, nevertheless, the appropriate skills of the employees are not considered as the basic ones. Another innovation and change management theory called Focusing on Basic Skills pays much attention to the specific employees’ skills and abilities.
This model is oriented on future clients and competitors, as well as on particular advantages and skills. This concept aims at reducing the costs by means of involving specific people to particular jobs, covering their interests. One of the main ideas of the Balanced Scorecard theory is implementing strategic planning and management system on the basis of the innovative technological news (Bold 2011).
Thus, having considered the theories of innovation and change management discussed by Bold (2011), it may be concluded that each of them cannot be implemented separately due to their incompletes. It seems that the application of the combination of those theories to innovation and change at the workplace may be useful as each of the theories supplement each other.
The role of organizational culture has been widely discussed from different angles. Mokhber, Ismail, and Vakilbashi (2011) dwell upon the impact of organizational culture on innovation and change management with particular stress on leadership. The role of leadership in the process of innovation and change is significant.
Moreover, looking at leadership from another angle, Mokhber, Ismail, and Vakilbashi (2011) state that globalization has changed the main idea of leadership significantly.
The authors claim that “organizations and leaders try to make a natural and foundational framework that helps the organization and individuals to accept creativity and innovation in the heart of all the changes that are happening as a basic cultural norm” (Mokhber, Ismail, & Vakilbashi 2011, p. 204).
They prove that transformational leadership impacts greatly the companies’ desire for innovation on the organizational level. However, the main disadvantage of this theory is that it works only in the effectively competitive environment. Thus, it may be completed that the theory of the impact of transformational leadership organization innovation and change cannot be implemented in the developing countries.
Michaelis, Stegmaier, and Sonntag (2009) also consider the role of leadership in innovation and change management. Having conducted a research among 194 employees, Michaelis, Stegmaier, and Sonntag (2009) state that “charismatic leadership and trust in top management” (p. 413) positively influence innovation and change.
However, the research results cannot be generalized as the impact on charismatic leadership on employees have not been considered after change implementation. Furthermore, the research has been conducted in a multinational automotive company, but researchers state that they cannot be applied to other industries and additional research should be implemented (Michaelis, Stegmaier, & Sonntag 2009).
Continuing the discussion of the impact of leadership on innovation and change, the results presented by Miles (2007) should be covered. He tries to reconsider the innovation and change from historical points of view. Leadership has always been an important issue in understanding management.
However, Miles (2007) states that modern managers should also pay attention to knowledge they get and leadership skills to maintain innovation and change more successfully.
Francis and Bessant (2006) have developed their personal agenda for innovation and change which consists of two steps. The first step devoted to product/service innovation is a change which should be applied to what is offered and the second step is devoted to product/service innovation is “change in the ways in which it is created and delivered” (p. 214).
Each of these steps may be completed within “do better” or “do different” innovation (Francis & Bessant 2006, p. 214). The main idea of “do better” and “do different” innovation has been considered by Mors (2010) who states that innovation cannot be implemented without appropriate access to new information and its successful practice.
At the same time, the authors states that it is impossible to apply innovation and change management if the information and practices are not integrated appropriately. Mors (2010) gives an advice to use network structure for innovation performance in the global multinational companies.
The main result of the research conducted by Mors (2010) is that in case of homogeneous network context at the workplace the employees should desire to handle a less structure. However, in case the context is heterogeneous, the employees should insist on more diverse structure in their network (p. 867).
Interesting conclusions are drawn by Van de Ven and Sun (2011). Using absolutely different approach to innovation and change management, they consider this process from absolutely varied perspective. According to the article, “organizational change is defined as a difference in form, quality, or state over time in an organizational entity” (Van de Ven & Sun 2011, p. 60).
Teleology (planned change), life cycle (regulated change), dialectic (conflictive change), and evolution (competitive change) are the main models which should be utilized, however, in case of difficulties, it is important remember that the model should remain unchanged, at it is better to review the breakdowns.
Thus, specific theories and approaches to innovation and change which may be applied to the situation depending on specific consequences and environment.
Successful and less successful changes
Being a head of Marketing and Communications in Credit Agricole, I had to build our brand and transform the conventional banking view of what Islamic Banking meant. Islamic banking differs greatly from modern understanding of leading business due to their specific attitudes in the relation income.
Implementing ethical banking, we managed to create a corporate banking. Much work was completed, starting with setting goals and offering specific objectives for reaching those and finishing with new system evaluation. While this evaluation, it was concluded that having managed to implement Islamic banking concept within our organizational cultural, we failed to export that idea to the Western countries.
Reference List
Adair, J 2007, Leadership for Innovation: How to Organize Team Creativity and Harvest Ideas, Kogan Page Publishers, New York.
Birkinshaw, J, Hamel, G, & Mol, M 2008, ‘Management innovation’, Academy of Management Review, 33, 4, pp. 825-845.
Bold, E 2011, ‘Instruments and techniques used in the design and implementation of change management’, Journal of Advanced Research in Management, vol. 1, no. 3, pp. 5-13.
Christensen, CM, Anthony, SD & Roth, EA, 2004, Seeing what’s next: using the theories of innovation to predict industry change, Harvard Business Press, Harvard.
Clegg, S, Kornberger, M & Pitsis, T 2005 Managing and organizations: an introduction to theory and practice, SAGE, New York.
Francis, D & Bessant, J 2006, ‘Targeting innovation and implications for capability development’, in D Mayle (ed), Managing innovation and change, SAGE, New York.
Kotter, JP 2007, ‘Leading change: Why transformation efforts fail’, Harvard Business Review, January, 2-13.
Michaelis, B, Stegmaier, R & Sonntag, K 2009, Affective commitment to change and innovation implementation behavior: the role of charismatic leadership and employees’ trust in top management, Journal of Change Management, vol. 9, no. 4, pp. 399-417.
Miles, RE 2007, ‘Innovation and Leadership Values’, California Management Review, vol. 50, no. 1, pp. 192-201.
Mokhber, M, Ismail, WKW & Vakilbashi, A 2011, The impact of transformational leadership on organizational innovation moderated by organizational culture, Australian Journal of Basic & Applied Sciences, vol. 5, no. 6, pp. 504-508.
Mors, M 2010, ‘Innovation in a global consulting firm: when the problem is too much diversity’, Strategic Management Journal, 31, 8, pp. 841-872.
Van de Ven, A, & Sun, K 2011, ‘Breakdowns in Implementing Models of Organization Change’, Academy of Management Perspectives, 25, 3, pp. 58-74.