IBIMA Publishing Journal of Innovation & Business Best Practice http://ibimapublishing.com/articles/JIBBP/2018/863719/ Vol. 2018 (2018), Article ID 863719, 10 pages DOI: 10.5171/2018.863719
Research Article Strategic Innovation Management Through Organizational Change
Takács Ildikó-Csilla
Bucharest University of Economic Studies, Bucharest, Romania
Received date: 9 October 2017; Accepted date: 24 November 2017; Published date: 23 May 2018
Academic Editor: Cerasela Adriana Pirvu
Copyright © 2018. Takács Ildikó-Csilla. Distributed under Creative Commons CC-BY 4.0
Abstract
Strategic management and innovation management have to consider the top competing factors that ensure successful organizational change, since innovation management has a fundamental strategic position and is directly interrelated with the corporations’ objectives. Whilst innovation management is deeply embedded in the new dynamics of global economic development and competition, enterprises have to be able to design incorporated innovation management methods or models that are flexible and adaptable to all changes.The objective of this paper is to highlight strategic innovation management as an important administration implement in order to support the hypothesis that governance principles have a huge impact on the organizational accomplishment in the innovation management, simply because innovation is central to strategy. All gathered data are applied in a case study to propose a model of analysing strategic innovation management and determine the need for organizational change.The methodology used embraces empirical research based on qualitative methods, defining the decisive innovative factors towards more effective routines and innovation excellence. The results show which the weakest and the strongest associations can be when planning organizational change and highlights the importance of strategic innovation management.
Keywords : strategic management, innovation management, organizational change
Introduction Agendas. R&D spending is not the key driver for innovation success but a number of A great deal of studies shows that global elements that structure a successful corporations face a challenging growth innovation system to create value across the prospect and new innovative mind-sets have lifecycle of organizations. At the core, there premier spots on the Top Management are strategy, IT processes, governance, culture and innovation management, which ______
Cite this Article as: Takács Ildikó-Csilla (2018)," Strategic Innovation Management Through Organizational Change", Journal of Innovation & Business Best Practice, Vol. 2018 (2018), Article ID 863719, DOI: 10.5171/2018.863719 Journal of Innovation & Business Best Practice 2
______are a combination of the innovative According to Berger et. al. (2009), three processes and changes management or the essential traits are advisable for innovation business process of organizational management: positive encouragement, a innovation through development. tolerance for failure (Patrick Cescau, George Buckley) and patience (Olli-Pekka Kallasvuo). Many SMEs fail because they do not Additionally, an innovative organisation recognise the need for change; on the other should be closely linked to the company's hand even to giant firms, the core strength vision and overall business strategies based can sometimes become an obstacle to see the on comprehensive and relevant information, need for change (as proved to be the case of both from inside the corporation and from IBM in the ‘90s). Therefore, the company’s the market and the environment. Thus, supporting culture need to launch strategies today's companies must constantly adapt, and plans to close the identified gaps. develop and innovate, so as to handle the challenges of future innovation management, In a research study by Mateescu et.al (2015), including the importance of quick results, the in recent years not only international value of data-driven decision-making and the corporations but also national ones have particular environment of emerging markets. started using new management implements and methods, and started focusing on The 2017 KPMG’s Global CEO Outlook distinguishing their innovation management divulges insights from nearly 1,300 CEOs in strategies from the competitors by adapting 10 of the world largest economies focusing to the customers’ needs and providing high- on how managing their organizational quality services. Consequently, as Drucker change has become their vital opportunity to (2011) describes, innovating firms develop transform and re-shape their business model, their own unique realisation and subsequent since new technologies emerge, new markets capabilities that generate organisational appear, in addition, financial policies, social performance. rules, information flow, targets and new challenges are constantly changing.
Fig.1: Global CEO Outlook 2017 Source: KPMG
RegTech is another significant driver of according to Fintech insights provider Let’s organizational change, as the global demand Talk Payments. CEOs recognise the need of for regulatory, compliance and governance making changes, yet they are refraining from software is expected to reach €100.98 billion harnessing the power of disruption for their by 2020. Besides, investments in regulatory organisations. software can lead to an ROI of 600% plus,
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According to a very recent research by insight, supply chain knowledge and Burrowes (2017), PwC’s global chairman Bob technical expertise, which allows companies Moritz working on the 20 th year of annual of all sizes to make innovation an integral CEO survey revealed that 84% of Banking part of their business. and Capital Market CEOs consider that technology will completely reshape, or at The core process of innovation management least have a significant impact on involves four steps: distinguishing competition within their industry over the opportunities, discovering resources, next five years. developing the enterprise and capturing value. The procedure of strategic Theoretical Considerations on Innovation management starts with creating a flexible Management organization in order to determine if the innovation management is consistent with In the book by Peters and Waterman (2012), the strategic management objectives and to the principles and disciplines of the pitch a great idea to the right market at the productive innovation management are right time. crucial determinants and focus on how the enterprise accomplishes the initiative and There is a substantial double role of studying process towards more effective innovation management: the challenges in practices and business excellence. The finding new innovations, such as an concept of innovation management unexpected use for technology, as well as incorporates networks of people that have developing new directions for innovation appropriate knowledge including customer management models.
Fig.2: Conceptual Framework of Innovation
Furthermore, organisational merit within innovative solutions. Accordingly, the success innovation management will be achieved by of Johnson & Johnson, 3 M, Wal-Mart, and HP companies which can react quickly to new lies in the fact that they organise themselves market conditions and customer needs, and into small, independent units and hold which constantly look for creative and together by common goals and cultural
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______norms, on the other hand, IBM is satisfying with these state-of-the-art findings, prefigure the individual’s need to be a part of the best organizational change strategies. something great. Moreover, as Knight and According to these changes, the global Cavusgil (2004) state in their research paper, corporations have to apply continuous due to technological advances, cross-border innovative strategies in order to maintain unions for product distribution as well as the global competitiveness. increasing homogenization of consumer preferences have been facilitating In 2017, the Boston Consulting Group extraordinary growth in global analysed the top 210 firms in seven competitiveness. industries (automotive, chemicals, consumer goods, financial services, media and Empirical Considerations on Strategic publishing, technology, and Innovation Management telecommunications) and found that the proliferation of new technologies are making Innovation management has a gap between the new models competitive necessities, not scientific and organizational progress, since optional activities. Consequently, 1,500 the problem with innovation determinations survey respondents were asked to rank is embedded in the lack of innovation innovators within their industries. Evolving strategy. A precise innovation strategy helps data from multiple sources has helped scores the company to design an organization to of companies better recognise the choice of match its specific competitive needs. Senior prospects open to them and pinpoint leaders of the corporations need to organize possibilities for business model innovation. around long-term strategies for growth in a The BCG’s 10 th annual global survey shows sustainable way, not only short-term that 79% of respondents ranked innovation technologies; accordingly they have to start the top-most priority or among their three planning for the next 10 years, not only for top priorities at their corporation. the next one-two years. The failure to prioritize innovation over short-term profits According to the Information Technology and can have negative flows through capital Innovation Foundation, revised by McKinsey markets. (2015), the profits of corporations will drop 20% - 60% by 2025 if they downfall to There has been little empirical research advance digitally. Therefore, companies have aimed at uncovering the actual packages of to make the leap from the Industrial Age to know-hows that characterise truly the Information Age and CEOs will need to innovative firms, therefore I will try to embrace strategic innovation management, reduce the literary framework and focus which requires alternative capital allocation mainly on the recent period, and consistent that leads to exponential growth in the pursuit of longer-term goals.
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Takács Ildikó-Csilla (2018), Journal of Innovation & Business Best Practice, DOI: 10.5171/2018.863719 5 Journal of Innovation & Business Best Practice ______
Fig.3: Global Innovation Survey 2005 – 2015 Source: BCG
The 2016 European Innovation Survey in the top 10% on innovation experienced shows that only 16% of the respondents annual rates between 1% and 3% faster than apply effective business methods and those corporations with only an average pace practices regarding innovation strategy, idea of innovation. According to Andrews (2017), management, innovation budgeting, using the simplest and most economic innovation funnel and innovation board models indicate that an innovative flow simultaneously. Professor of Finance at increases the total economic growth by at Stanford Amit Seru claimed that companies least 4.5%.
Fig.4: Strong and Weak Innovators; Based on BCG Global Innovation Survey 2016
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Takács Ildikó-Csilla (2018), Journal of Innovation & Business Best Practice, DOI: 10.5171/2018.863719 Journal of Innovation & Business Best Practice 6
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Despite the above seen positive results, even Research Objectives and Methodology the strong innovators are faced with a truly difficult assignment: The objective of this study is to identify the key criteria that affect the organisational 1. Find the next big idea (Competitive change strategies, as well as to do research intelligence 72%) on the degree of innovation management in global companies. The author has focused on 2. Avoid disruption (Customer the top most innovative corporations as key suggestion 70%, Customer players in transforming strategy into complaints 57%) practical accomplishment and their relation 3. Fast-track innovation (Social to the owner of business superiority to be network or big data mining 65%, applied. Suppliers or vendors 65%) 4. Build networks of collaborators This research shows that innovative (Strategic partnership – company companies are especially skilful at 66%, strategic partnership – continually responding to change of any sort academia 64%) and encourage practical risk taking and support worthy attempts, as well as organise 5. Stay on top of the revolutionary the root source of quality and productivity technology (Acquisitions or licensing gain. In terms of research approach, I have deals 63%, Incubator 62%) used the rational model as my contextual 6. Identify growth opportunity framework to illuminate what values and (External firms they hire to generate practices ought to be incorporated into the ideas 62%) innovative companies and to emphasise the role of the CEOs to manage the innovative 7. Attain a position of innovation principles of the organisation. management (Internal sources 78%, Employee ideation forums 68%) The methodology used involves interviews with managers and experts from global On the one hand, the huge amount of data, corporations in order to gather information which is available to help senior leaders for the time frame 2007 to 2017, according to shape and pursue innovation strategies could Le Merle & Davis (2017) that was evaluated be a prominent advantage, on the other hand, and applied in a case study so to propose a the hard work of sorting, organizing and method of analysing innovative factors. This gathering usable insights from thousands of study debates the increasing diversification files and sources can be overwhelming and of implementations these global corporations exasperating to make analytics-driven have used to practise innovation strategic decisions. management.
Overall, in a previous study, Takacs (2017) Assuming rational choices, the top companies states that a successful innovation were studied into various categories in order management should invest in strategy to analyse them according to long-term thinking methods, and support for diverse superiority: high technology companies (HP, cultures in order to join people with different Intel), consumer goods companies (P&G, J&J), perspectives to share ideas and new general industrial goods companies of approaches, combining entrepreneurial interest (Caterpillar, 3M), service companies mind-sets with recognized and functioning (Marriott, McDonald’s), project management expertise.
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companies (Bechtel and Fluor) and resource- attributes, namely an emphasis on speed, based companies (Arco, Exxon). well-run R&D processes, the use of technological platforms and the systematic Having reviewed a list of the world’s most exploration of adjacent markets. In addition, valuable companies, which are ranked by by way of Dogsofthedow (2017) states, these market capitalization, it was found that they companies also apply the most innovative are all strongly associated with four vital strategies in the world, as we can see it comprised in the table below:
Table1: Market Cap Rank in 2017
Source: Dogsofthedow.com
Summarizing a number of different role of innovative culture is better perspectives, as Schwab (2016) revised it, understood and new insights reveal the key focusing on each part of the 12 pillars of innovation management strategies that global competitiveness, the case study brings maintain global competitiveness and a more comprehensive and brighter professional merit among the global evaluation on the innovative strategic system corporations, as also Greenberg et.al. (2017) to have an integrative understanding of all its state. parts, while this is the only way that leads to sustainable development, indicated Maier The presented results of my research et.al. (2014). highlight the traits of the organizational change and offer some practical solutions Research Results and Proposed Models and models for integrating as well as promoting innovative advances into strategic My key findings from the analysis are that management that enhances financial results. global companies have a huge positive While the need to innovate may threaten impact on the growth of organisations they business models, it also creates short-term fund, thus, with the analysed case study the
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Takács Ildikó-Csilla (2018), Journal of Innovation & Business Best Practice, DOI: 10.5171/2018.863719 Journal of Innovation & Business Best Practice 8
______and long-term openings for the companies labs further along the development chain to that grasp organizational change. fast-track time to market and they often interacted with external entrepreneurs. The Wrigley & Straker (2016) suggested several main focus of this model is on advancing models that can be employed and selected by products or services that are head-to-head to each company according to their profiles and the core business. ventures. While innovation management and strategic management processes can be All the three models can be employed at a defined through organizational change, particular stage with a specific goal: corporations show great interest in Corporate Venture Capital when the implementing these models, which can restraints are related to funding, promote creativity and motivational Accelerators and Incubators for young ideas, orientation to succeed through innovation. and Innovation Labs for mature The following models have been examined corporations, which have a strong strategic with a view to provide steps towards actual fit and approach to innovation within the applications: corporation.
1. The use of Corporate Venture Capital Companies are also employing many other increased from 27% in 2010 to 40% in 2015 implementation tools, such as Hackathons among the 30 largest companies. Likewise, (software developers), jurors or mentors (to among the top 10 companies it has boosted spot business models), scouting missions (to from 41% to 57%, where the investments seek out innovations), corporate-university were strategically focused on software partnerships (between corporate R&D and industry reflecting the increasing value of university researchers), strategic data and the transformation of hardware to partnerships (to bring the latest innovations software. CVC is an effective tool for both to new market), start-up acquisitions (to constructing value and developing innovative access new technologies or market), and results that help a corporation in creating licensing (customer segments). new revenue streams, and building up competitive market position. According to Conclusions KPMG analysis, 30% of projects are financed globally by this model. The research showed that organizations need a play-to-win strategy system, which 2. The use of Accelerators and Incubators are provides a clear measurement (Dobbs & the most common alternative to CVC, which Koller 2015), motivations, reasons and increased from 2% to 44% among the 30 rewards to foster improvement that is largest companies as well as from 4% to 66% aligned with their innovation management. among the 10 largest corporations. Growing Successful corporations develop innovation accelerators and incubators form management models that are well-matched partnerships with venturing operations from with their positions and reflect their other organisations or teaming up with corporate strategies, in addition, they also independent accelerators with common adapt their models to change times as the interests can support the progress of pace and stake of technology advancement innovative developments, especially at an progresses. early stage. Companies that assign adequate assets for a 3. The use of Innovation Labs among the 30 flexible and dynamic innovation and venture largest companies increased from 5% to 19% culture have the greatest chance to assure and from 16% to 41% among the top 10 long-term business achievement. The success largest corporations, which worked these of Johnson & Johnson, for example, one of the
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strongest long-time innovators in any 6. Greenberg, E., Hirt, M. and Smit, S. industry, is that their innovation programs (2017), ‘The Global forces inspiring a new are strategically aligned with the narrative of progress’, McKinsey Quarterly . corporation’s innovation management objectives. 7. Burrowes, K. (2017) ‘Banking on disruption: how the BCM sector can turn In conclusion, innovation management stems change into a competitive advantage’, PwC from a management team that combines Global. deep scientific and technical expertise focusing with an equally deep knowledge on 8. Knight, GA and Cavusgil, S.T. (2004), market needs. Therefore, innovation ‘Innovation, Organizational Capabilities and management must be one of the greatest the Born-Global Firm’, Journal of progression strategies that companies International Business Studies 35(2):121- employ, coupling scientific precision with 141. stable senior-management cohesion and the resolution to pursue high-risk, high-return 9. Le Merle, M C. and Davis, A. C. (2017) initiatives. The case study meant to be a Corporate Innovation in the Fifth Era: thorough analysis of recent data for reasons Lessons from Alphabet/Google, Amazon, connected to the methodology and leaving Apple, Facebook, and Microsoft, Cartwright room for future academic and practical Publishing, Corte Madera. expansion. 10. Maier, D., Olaru, M., Weber, G. and Maier, References A. (2014), ‘Business Success by Understanding the Process of Innovation’, The 9 th European Conference on Innovation 1. Andrews, E., (2017), “Is Tech disruption and Entrepreneurship (ECIE), ISBN: good for the economy?”, Stanford Business. 978-1-910309-45-2, 18-19 September [Online], [Retrieved September 12, 2017], 2014, Belfast, UK. https://www.gsb.stanford.edu/insights/tec h-disruption-good-economy 11. Mateescu, R., Olaru, M., Lange, S., Rauch, M. (2015), ‘Study On Supplier Invoice Risk 2. Berger, R., Dutta, S., Raffel, T., Samuels, G. Management in A Global Supply Chain’, The (2009) Innovating at the Top: How Global 26 th IBIMA conference on Innovation CEOs Drive Innovation for Growth and Management and Sustainable Economic Profit, Palgrave Macmillan, New York. Competitive Advantage: From Regional Development to Global Growth, ISBN: 978- 3. Dobbs, R. & Koller, T. (2015), ‘Playing to 0-9860419-5-2, 11-12 November 2015, Win: The new global competition for Madrid, Spain. corporate profits ’, McKinsey, 55-65. 12. McKinsey, (2015), “The Fight for the 4. Dogsofthedow, (2017), “Largest Customer: McKinsey Global Banking Annual companies by market cap today”. [Online], Review 2015” 3, [Online], [Retrieved August [Retrieved August 30,2017], 29, 2017], http://dogsofthedow.com/largest- http://www.mckinsey.com/industries/fina companies-by-market-cap.htm ncial-services/our-insights/the-fight-for- the-customer- mckinsey-global-banking- 5. Drucker, P. F. (2011) Innovation and annual-review-2015. Entrepreneurship: Practice and Principles, Routledge, New York. 13. Ringel, M., Taylor, A., and Zablit, H. (2017), ‘The most Innovative Companies
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Takács Ildikó-Csilla (2018), Journal of Innovation & Business Best Practice, DOI: 10.5171/2018.863719