Name: Wen Shiuan Tan

Student ID: 100994558 

Email Address:  Wen.Tan.2021@live.rhul.ac.uk

Word Counts:  2498 Words
Question: 4

The importance of innovation for organisational performance is critical as it helps

organisation to create a long-term competitive advantage and often contribute to a long-
term success. Recent research shows that the average life span of an S&P 500 company has
decreased from 61 years in 1958 to less than 18 years today. (Anthony et al, 2018)
Therefore, to minimize the risk of extinction that all businesses confront, today's company
leaders must be aware and actively seeking out innovation strategies will allow them to
adapt to changing market conditions and position themselves better. When we think of
company who has succeeded through innovation, names like Google, Apple or Amazon
immediately came across our mind. Of course, it’s undeniable that these tech companies
are powered by innovation, but the term “innovation” thus is often misunderstood or being
oversimplified as merely the new creation or exercise of technology centric products or
services. It is not a surprise to see that many organisations jump into investing in
“innovation” wanting to follow the path of these successful use cases wanting to create the
next “market disruptor”, but only hope for the best. This type of gesture is no different than
gambling away their hard-earned resources. But can they get lucky sometimes? The short
answer is, yes, it is possible. Luck plays apart in almost every aspect of our life. But no
organisation should waste their resources when pursuing for innovation without having a
firm plan or strategy.
Most of the time when we are considering what goes into innovation, it's not a surprise
that people tend to understand innovation as creating a simple solution to decrease the
complexity of it all and make it simpler. However, innovation is much more than that, it is
not just a single event or product created which can be beneficial to an organisation, but
rather a thoroughly well planned and managed process, a process which can be found in
many different environments, be it a start-up company, a corporation with centuries of
history or even in the public sectors. Therefore, some of the researchers stressed that
innovation process is often viewed as a complicated and detailed chain of events involving a
wide range of activities, decisions, human behaviours, and social systems. (Gopalakrishnan
& Damanpour, 1994). While having new ideas around is important as it’s always been part
of the initial innovation process, it will however not be going any way further if there’s no
proper execution and value being created at the end. Some familiar examples we can relate
to is the history of the lightbulb invention, how Thomas Edison lifted the ideas from other
innovators and merged them with his own expertise to develop into his own “invention”. Or
the example when Mark Zuckerberg took the idea from the Winklevoss brothers and
Narendra who had Zuckerberg to work on an inter-campus social network site called the
“ConnectU” in 2003 while the trio attended Harvard University. But later, Zuckerberg were
sued and accused that he had stolen the source code and ideas while working on
“ConnectU” and went on to create his own version of social network, “thefacebook.com”.
Zuckerberg saw the opportunity and took the initiative and expand his website to serve and
build up the user base, and within the same year the site not only had over 1 million of users
but also secured funding and resources for further development from angel investor, Peter
Thiel. (History, 2019) This brings us to the idea of why it is so important to view innovation
as a process stems rather than just a single event, as we must lay down processes to move it
milestone to milestone otherwise, it will not happen by itself. From an inspiration, to having
a clear vision and continuous development, and later securing resources to launch a
commercialized product, these few steps are the keys which lead to a successful innovation
journey for Zuckerberg and his multi-billion dollars company, now known as Meta Platforms
Inc.
OECD defined process innovation as “the new or significantly improved production or
delivery method of innovation” which helps firm to achieve competitive advantage. (OECD &
Eurostat, 2005) And according to model of innovation process developed by Joe Tidd and
John Bessant, we can classify the process into 4 different stages, starting from Search,
Select, Implement, and Capture. (Tidd & Bessant, 2014) It works like a funnel which helps
innovation manager to plan and measure the efforts and resources required to convert
ideas and opportunity into a successful innovative product or services. First and foremost,
ideas and opportunities can come in many different forms, it can come from within or
outside of the organisation, it can be identified through an employee who are struggling to
achieve a certain task, a customer who has an unresolved pain point, or even like how
Thomas Edison achieved his invention, simply acquire it from external party. The point is, at
the searching stage, the organisation must find ways to reach out to these pools of ideas.
For instance, if the purpose is to find innovation in improving internal processes, organizing
company event like Hackathon or Ideathon could be useful to help churning out ideas
internally, by having employee to participate and contribute their ideas. After the
consolidating useful ideas, which then brings us to the selection stage where we select the
idea based on our understanding of the organisation, from business strategy, resources, and
capabilities and kick start the internal assessment to identify the risk and rewards ratio, do
we have enough resources? Do we have the capability internally to build or do we have to
acquire it externally or considering collaboration and find a new strategic partner? And most
importantly, how does the organisation benefit from this innovation. And based on the
assessment and internal analysis, it helps the innovation manager to decide on whether it
should be carried forward or eliminated while taking a step back to the searching stage for
more feasible ideas. But do bear in mind that ideas which made through to the
implementation stage does not guarantee a successful innovation journey as innovation by
itself is a risky endeavour, no one will have any firm forecast on how it will turn out to be.
But one thing that is firm is that if no resources are being invested, it will surely not succeed.
To quote from Martin Luther King, “Faith is taking the first step even when you don't see the
whole staircase”. (King, 1962) But the idea is not just having faith, but also to leverage on
the organisation knowledge and capabilities to build a balanced project with controlled risk.
For instance, organisation may be setting different milestones and gatekeeping process
while the innovation project moves forward and constantly review the results and feedback
from the team members to ensure the project is on track and meeting all the criteria. And
lastly, capturing the value from the target audience, be it internal employee or paying
customer of the product or services. For instance, if the purpose of the innovation project is
to help streamlining the sales processes through developing an internal ordering system,
the adoption rate and efficiency rating during the soft-launching phase could be capture and
review. If the satisfaction level is high and most of the users are benefited, that’s the value
created through the innovation. But at time when it fails, maybe due to user friendliness or
steep learning curve when adopting the innovation, it does not mean the organisation did
not gain anything from throughout the innovation process, but rather the value captured
here are the learning experience which can be applied in the next project. There is no single
manager or organisation has control over innovation success, but they can only support and
increase the odd by constantly developing and practising skills to overcome challenges that
arise in different situation. A good analogy to quote is that innovation is like an uncharted
river, often in the process, most managers are terrified to let go but to cling to the
riverbank, having the fear of unknown. But if they do not take the leap of faith and jump
into the river, they will never learn about the flow of the river and pick up navigation skill to
guide their route further. But once they have acquired the skills and practiced navigating
diverse river currents and obstacles, it is also when they will improve their chances of
succeeding, because no one has authority over the river. (Ven & Andrew, 2016)
Now that we have discussed and understand that managing a successful innovation
journey is not merely just a random gambling activity but rather it is a thorough process
with different stages involved, firm however must find ways to organize innovation within
the organisation and incorporate the culture of innovation and collaboration into the day-
to-day operation. For start, internal innovation strategy has always been the starting point
for a firm pursuing innovation since it is convenient and easier to be managed. By
encouraging collaboration and discussion within the organisation with the people who know
the company best, whether it is from R&D activities to commercializing through internal
development, manufacturing, and distribution (Chesbrough, 2017) internal innovation start
working when every employee start to think more independently and have strong belief
that their ideas are worthy to the organisation and will be heard of, so that they can
contribute their ideas and find new ways to solve problems. A good example is the open
office concept which has been around in many innovative companies started out from being
a “tech like” company like Google or Facebook and now it has been widely adopted by many
non-tech firms because by displacing cubicles, it makes people more visible and reachable
without constantly thinking about the company hierarchy and make conversation and
discussion between departments easier. (Bernstein & Ben Waber, 2019) An idea can be
easily shared across different employees from different department effortlessly through
having a conversation and that means these skilled employees from the ground who has a
deeper understanding on the day-to-day operation can help generating ideas like reducing
production or distribution times, making use of inputs in more efficient ways, or even
developing an in-house technology to improve productivity or lower the cost of operations.
Besides working internally, when an organisation is working towards improving their
offering and widen their portfolio but lack of internal skillsets and experience, partnering
with strategic partner who possess the relevant knowledge and experience could provide
technology and knowledge sharing which may require costly upfront investment in both
time and money to develop internally yet no guaranteed success. (De Clercq & Dimov,
2008). Beside strategic partnership, external innovation can also be in the other forms like
licensing, merger, acquisition, and joint venture. In fact, the rise of external innovation has
been growing rapidly and has been adopted in industry like information technology and
pharmaceutical industry with the goal to pursue for a much-balanced portfolio. For instance,
Dell has been struggling with its limited revenue generated from its sales of personal
computer and had vision to facilitate the company to become the one-stop service and
equipment provider for its business customers but faces challenges due to lack of
capabilities in storage and server portfolios, thus in 2016 Dell went on and acquired EMC
who was one of the largest providers of storage and server at that time to strengthen their
portfolio and company revenue. The acquisition later helped Dell to withstand their lack of
sales from their bread-and-butter PC business and doubled their overall business segment
sales in 2018. (Finley, 2018) On the hand, the biopharma industry has also been seeking
such external deals to source assets for innovation due to higher cost of internal R&D
activities. Based on Deloitte research, the return on biopharmaceutical innovation have
been on a declining spree, dropping from 10.1 percent in 2010 to 3.7 percent in 2016.
However, the revenue generated by drugs sourced from other companies has rose to 9
percent within the period of 2005 to 2014. (Phrang et al, 2017)
To succeed in the innovation journey, it is important to understand that while senior
management are the one enabling innovations and understanding what is required when
developing innovations, innovation management however should not only be limited to a
single manager responsibility. Establishing strategic leadership is crucial as it helps manager
to get their employee to make their own decisions with the company in mind. (Schoemaker
et al, 2013) Directing and committing resources as well as encouraging knowledge sharing,
and creativity should always be a part of the innovation principle embracing by the
organisation, this is because innovation management does not only apply at a particular
department level, like product and portfolio development, but rather encompasses all
aspects of the organisation. Therefore, innovation managers need to understand that while
making smart decisions is crucially important, organizing a culture where everyone in the
organisation are being listened, mentored, trusted, and empowered are also playing a key
role in securing a successful innovation journey. A good leader will lead by example to live
up to the organisation culture and value system and prove that it is not just a hollow set of
values. When Google’s Larry Page and Sergey Brin introduced the “20% Policy” where
employee are encouraged to spend 20% of their time working on what they think will most
benefit Google out of their regular duties, the employees were given full support and trust
by the management. And the result? The fruits of this policy include some of the famous
services like Google News, Google Mail, and even AdSense, which brought billions in profit
for Google. Beside a strategic leadership, organisational learning is also playing a part in the
innovation journey. So, what does it mean to be a learning organisation? According to
Harvard Business Review, organisational learning is one that can help produce, gain, and
transferring information, as well as adjusting its behaviour to reflect new knowledge and
insights. (Garvin, 1993) In a nutshell, never settle in chasing after new skills and knowledge
in the ever-revolving business world. A good example to cite is when the CEO of General
Electric, Jack Welch introduced the “reverse mentoring” approach by tipping the
organisation upside down and have the youngest, and much junior employee teaching the
senior executives to pick up the internet. And by the end of the day, not only the senior
employees were benefited from the knowledge transferred, but it also helps building up the
culture and relationship between the millennial and senior leader. (Wingard, 2018)
To conclude, it takes time and resources to nurture an innovation culture from the
ground up. Failure is acceptable as innovation is not a one-time event, but a long-lasting
manageable process which require manager to take risk and venturing into a new and
uncharted territory. The key to a long-term success is how organisation manage the risk
rightfully with a clear sense of direction and a framework within, which is far from just a
random gambling.
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