| Companies that successfully innovate also successfully manage change | INNOVATION & CHANGE MANAGEMENT MHN221935-12-A| Malgorzata Glowacka S0915718 International Tourism & Hospitality Enterprise | Innovation and change management have been and continues to be an important study on a number of levels. It plays significant part in economic growth as well as it is vital for firms’ survival and development. New ideas, new approaches and new products become critical guidelines in organisational strategy, especially for managers and business leaders.
According to The Boston Consulting Group (2010) employers’ ranked innovation as a strategic priority with 26% citing it as a top priority and a further 45% ranking it as a top-three priority. Organisations such as Apple or Google adapted this tactic and thanks to their right management of change, now are recognized as one of the most revolutionizing and prosperous companies in the world (Business Week, 2010). It proves that successfully innovating companies are the winners and they play major role in industry market.
Therefore, this essay aims to critically evaluate the connection between innovation and change management. The term of innovation is hard to define as it can mean different things for different people. According to Druker (1985) innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity. West and Farr (1990) pointed out that organizational innovation can be characterized as a tangible product, process or procedure within company and something what is new to the social setting within which it is introduced although not necessarily new to the individual introducing it.
They also exanimated innovation being more intentional rather than accidental, mainly aimed at producing benefit to the organization. Traditional categorizations of innovations divide them into four types (Tidd and Bessant, 2010, Fig1): -product innovation can be a change in the function or feature of a product such as Window Vista replacing XP. This kind of innovation is intended to improve the function of the offering to make sales more likely -process innovation is based on transformations in the ways products/ services are created and delivered like for e. g. nline banking system which allows customers to manage their finance. This kind of invention introduces new, or significantly improved, method for production or delivery of output that adds value and better performance -position innovation target changes in market or customer base for a product or service. This kind of strategy change meaning of a product in customer’s eyes like for e. g. four-wheel cars which originally were used for off road work became fashionable family car -paradigm innovations are based on changes in how companies frame what they do; for e. . Air Canada (the largest airline of Canada with scheduled and charter air transport) launched a discount, new low-cost international carrier in Vancouver (The Globe & Mail,2012) Fig 1. Types of innovation. Adapted from Tidd and Bessant, 2010 Innovations are often classified as either radical or incremental (Gallouj and Weinstein, 1997). Radical innovations are generally based on a big change in development that modifies the competitive market and it may results in new markets and product opportunities.
Good example of radical innovation is Apple with their first PC Lisa which had graphical interface. The innovation, despite its limited success, was universally recognised as being far ahead of the competition and it took years for some of the advanced features of its operating system to be incorporated in competitors’ operating system (Rayna and Striukova, 2009). An incremental innovation is a term used when there was a minor change to an existing technology like for e. g. in case of Apple and their iPod.
MP3 players had been present in the market before Apple introduced iPod but the company still succeed because they made better product, which was easier to use, looked more solid and more appealing compared to other MP3 players (Rayna and Striukova, 2009). Organizational change, like innovation, is hard to specify. It can be described as any alternation or modification, which occurs in the overall work environment of an organization. Moran and Brightman (2000) defined it as the process of continually renewing an organization’s direction, structure, and capabilities to serve the ever-changing needs of external and internal customers.
It tend to focus on the management of formally planned changes and it is indicating a macro- level approach, which is concerned with organisation as a whole (King and Anderson, 2002). Due its complexity, many researchers categorised organizational change in different ways, for e. g. Pettigrew (1987) separated it into strategic and non-strategic change while Goodstein and Warner (1995) divided it into incremental and radical change. However the starting point for discussing variations of change is Grundy’s (1993) three variations of change. The first, smooth incremental change changes slowly in a systematic and predicable way.
The second variety of change Grundy terms ‘bumpy incremental change’. This is characterized by periods of relative calmness disrupted by rushing in the pace of change. Grundy’s third variety of change is ‘discontinuous change’, which he defines as ‘change which is marked by rapid shifts in strategy, structure or culture, or in all three’. There are several drivers and models which clarify the need for change. Most of them are grouped into external drivers or internal drivers (Proehl, 2001). External are those forces that are outside the organization, usually it is an economic, political, socio-cultural or technological driver.
The internal drivers are those forces within the organization, which may include finance, limited skill level of employees, changes in leadership etc. Another example, presented by Anderson and Ackerman Anderson (2001) describes seven main drivers of change, which move from what is external (environment, marketplace, organization) to what is internal (culture and people). This model mainly focuses on leaders and management role as they are clearly more aware of external domains and thy play the most important part in internal domains.
This is their job to implement any changes in culture, behaviour and mind-set within their company and if they will fail in that, the change will also fail. It can be assumed then, that change is about innovation and innovation is about change. Williams (2006) stated that to successfully manage innovation, company need to be good at managing source of innovation and managing innovation during discontinuous and incremental change. Once again Apple is the perfect example of company effectively handling innovation and change at the same time. They do it for e. g. y managing leadership within organization. Tidd and Bessant (2005) noted that leadership strongly influences the success of change and innovation. For Apple the key role in the company played Steve Jobs and his visionary leadership: My passion has been to build an enduring company where people were motivated to make great products. Everything else was secondary. Sure, it was great to make a profit, because that was what allowed you to make great products. But the products, not the profits, were the motivation. Sculley flipped these priorities to where the goal was to make money.
It’s a subtle difference, but it ends up meaning everything—the people you hire, who gets promoted, what you discuss in meetings. Isaacson, 2012 According to Hughes (2006) leading change is fundamentally about influencing groups and individuals, therefore leaders of change need to understand people. And that is what Jobs could do. He understood that customers don’t know what they want until it is shown to them. He implemented among his employees the desire of perfect design as to him ‘’…nothing could be further from the meaning of design. Design is a fundamental soul’’ (Isaacson, 2012).
To conclude, the concept of innovation and change is fundamental to business success. It is viewed as being extremely important for company survival and future development. Organisations such as Apple can prove the point that companies which successfully innovate also successfully manage change. References Anderson, D. , Ackerman Anderson, L. , 2001. Beyond Change Management: Advanced Strategies for Today’s Transformational Leaders. USA: Jossey-Bass/Pfeiffer Drucker, P. F. , 1985. Innovation and entrepreneurship: practice and principles. New York: Harper ; Row Gallouj, F. , Weinstein, O. , 1997. Innovation in services.
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