Innovation Management Characteristics

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The Business Context

Macro-environmental analysis

In order to work out a strategic plan for the companys development, the management of this organization should pay careful attention to the external environment or those factors which may affect the performance of the firm in the foreseeable future. For this purpose PEST (Political, Economic, Social and Technological) analysis is a very useful tool, as it helps to identify opportunities and threats to which the firm may be exposed (Johnson et al, 2008, p 86). It can be presented in the following way:

Political Factors
  1. Legislation thatrequires the use of eco-friendly technologies. This can significantly increase the companys operating expenses.
  2. Policies of the government toward foreign lift manufactures.If the government assumes a protective stance toward local producers, the small company has better opportunities to enter the market. It is important that this market is not occupied by international corporations, which have already established their reputation and developed an elaborate infrastructure.
Economic Factors
  1. High intensity of competitionin this market, as many potential customers may already have contracts with other lift manufactures. This can be a significant entry barrier.
  2. Cost of Energy. This firm plans to organize a grand-scale production of lifts, and the outcome of this venture will depend on its ability to use the most innovative technologies, which consume minimum energy
  3. Cost of Labor in the country.

The firm requires a great number of new hires but hiring and recruiting will depend on their work expectations (financial reward).

  1. The purchasingpower of customers.
Social Factors.
  1. Awareness of the population about CSR (Corporate Social Responsibility)
  2. Attitude towards green issues
Technological Factors
  1. Absence or presence of more advanced technologies. If other manufactures of lifts sell products that are less energy-consuming, this firm will have few chances of entering the market.
  2. Availability of suppliers, who will provide spare parts.

So in this section, we have tried to identify those forces which can significantly affect the strategies of this firm. At this point, we can say that the eventual result will be shaped by economic conditions (competition, cost of energy, and labor); and technological factors.

Customer Responsiveness

This firm intends to enter a highly commercialized market; this is why it is of crucial importance for the management to focus on such concepts as customer responsiveness. This notion includes the ability to adjust one’s products to the needs of the clients. In some cases, organizations often have to undergo many transformations in order to better suit the needs of the clients (Davis & Manrodt,1996, p 21). There are several theoretical models which help to accomplish this goal.

First, they need to view themselves as a learning organization, which has several distinctive features: 1) shared values and vision; 2) system thinking, 3) certain mental models about the company; 4) team learning; 5) strife for individual excellence (Chawla & Renesch, 2006, p 7). Only this approach enables the enterprise to survive in a highly competitive environment. At first, it is necessary to mark out one’s strengths and weaknesses. Secondly, the management has to carefully examine the needs of the potential consumers. This will show the gap between the firms current resources and its ultimate objectives. In this respect, we need to say that the most crucial part is to give an appropriate incentive to the employees so that they could better see the rationale for team learning and continuous improvement of their skills.

There are various models and theories which help to increase personnel motivations to change. In this section, we need to discuss some of them. For, instance we may discuss Kurt Lewin’s approach which is normally called Unfreeze-Change-Refreeze (Lewin as cited in Cameron, 2004, p 96). Its major purpose is to introduce new policies which can increase performance. At first, the manager needs to prove that currently, the company is not able to achieve its goals and that attitude towards workplace activities must be changed or at least modified. Normally, it is done by identifying a certain problem within the organization. Afterward, this firm may pass through a period of transition or even confusion as some workers may resist innovations due to such reasons as lack of understanding and trust, different assessment and goals, or self-interest (Daft & Marcic, 2008, p 308). Therefore, a leader must form a coalition or group of people who would support his ideas and strategies. Only when the new strategy yields results, the majority of personnel will see its beneficence and adhere to it. It should be borne in mind that under some circumstances the manager will have to make strong-willed decisions such as dismissing those employees who are reluctant to comply with new rules.

There are other methods which can be used in order to enhance customer responsiveness, for example, Kotters Eight Step Model, Congruence Model, worked out by Nadler and Tushman. Still, each of them takes its origin in Kurt Lewins ideas. To some degree, each of them can be employed efficiently; much will depend on the size of organization. However, the first step of lift for this lift manufacturing company is to know the needs of their potential customers: hotels, healthcare institutions, and airports. This will lay the foundation for their success in this market.

Competitive strategies

Generic strategy for competitive advantage

Judging from the previous section, we can argue that that the best strategy to achieve competitive advantage is to focus on a few specific markets. As it has been noted earlier, they are hospitality industry, medical institutions, and airports. We should refer to Michael Porters views on this issue. According to him, the enterprise can choose from the following approaches: 1) cost leadership and low prices: 2) market differentiation, which means that the product is positioned as something unique or unprecedented; 3) focus strategy, when the company tries to address the needs of its major target audience only (Johnson et al, 2008, p 250). Large corporations usually alternate them but at the initial stage of its development, this lift manufacturing company should select only one of these options.

Under the circumstances, the first two approaches are hardly acceptable, as this enterprise does not have sufficient resources in order to organize a scale production. So they will not be able to enter into price war with their competitors. Furthermore, there is very little likelihood that they products will be perceived as unique by the purchasers. Thus, the most optimal solution is to focus on specific target audiences. It seems that they need to design their elevators according to the requirements of each single buyer. In this case, the role of customization becomes immense. Only afterwards the company will be able to offer discounts to returned or wholesale buyers. Nonetheless, it should be kept in mind that at the beginning the company need to excel itself in quality rather than pricing.

The adoption of this model may have many implications for the management style and relationships between personnel and the management within this enterprise. In particular, the employees will have a higher degree of autonomy. It is quite probable that the CEO of this firm will utilize the Vroom-Jago model. It helps to determine whether the subordinates should be involved in the decision making, or the leader should do it without someone elses assistance (Daft & Marcic., 2008, p 214). Nonetheless, in the future, if this enterprise begins to expand, the managerial style will become more authoritative and hierarchical. The thing is that the number of workers will increase and the structure will grow more sophisticated. This may draw a distinct border between top management and the personnel. Therefore the essential task of the management is to preserve the atmosphere of collaboration, mutual respect, and teamwork in the firm. It is important for employees to feel that they are valued and that their interests and opinions are not disregarded; otherwise their motivation will decline.

Sustaining competitive advantage

In order to achieve continuous growth the management should address the following aspects of their companys performance: design, marketing, production and logistics. In this table, we need to exemplify these key functions.

Area Resource capability
  1. To identify the needs of various customers
  2. To find a solution to address each of these needs
  1. To raise customers awareness about their products
  2. To search for potential buyers
  3. To work out flexible pricing policies, which provide for discounts to returned customers
  1. To organize mass production of lifts using the most innovative and eco-friendly technologies
  2. Minimize costs of energy and labor
  1. To develop a reliable supply chain.
  2. To establish a flow of information between the company, its partners, and customers.
  3. To get into direct contact with clients and avoid mediators if it is possible
  4. To find new markets

In this table, we have outlined those functions which are crucial for the growth or even survival of this enterprise. On the whole, we can say that the aforesaid processes overlap. For instance, logistics and marketing are closely connected with one another, the same goes for design and production. We can apply the Open Systems Theory in order to describe the strategies of this company. This approach postulates that every firm, enterprise, the agency has internal and external relations. It receives inputs from the environment, processes them, and gives them back in the form of products (Beardwell J & Claydon, 2007, p 106). Thus, it is vital to accelerate this flow of information, technologies, and energy. We can say that the marketing and logistics departments are mostly responsible for external relations; in turn, design and production represent internal activities. The role of managers is to ensure that the firm makes full use of those resources which they have in their possession.

Moreover, the sustainability of any organization depends on its ability to keep track of the most recent practices, conducted by its competitors. Again, Opens Systems Theory is quite applicable, as the firm must welcome new ideas, especially if they can enhance performance. When speaking about sustainability, we need to refer to such concept as CSR (Corporate Social Responsibility), in other words, it is the ethical side of business activities. This notion includes working conditions, wages, health insurance protection of the environment, and so forth. The management must convince the public that their firm genuinely cares about the interests of the community.

Innovation management

Organizational design

In order to describe the structure of this company, we need to construct an organizational chart, which shows the relations between different components of the firm. It can be presented in the following way.

Organizational design

This chart describes the hierarchy of this lift manufacturing firm. Yet, it should be pointed out that some of these departments, for example, IT can support the activities of several divisions such as the marketing team, quality assurance, logistics, etc. Moreover, we can recommend such an approach as matrix management, which means that the employees, representing various departments should collaborate on joint projects. This will contribute to a better flow of information, increased time efficiency, and better decision-making (Miner, 2002, 487).

In this case, the role of managers undergoes some changes. They act as coordinators, who allocate the workforce for a specific task. But they practically do not intervene in the decisions of employees, who obtain a relative degree of autonomy. This model appears to be most suitable for the needs of this company.

Creativity and Innovation

Creativity and innovation are vital elements of managerial activities. These concepts include the development or introduction of new workplace models; new production methods, new training, and formal orientation programs for the personnel. In this case, such a term as innovation should not be viewed as the invention of something revolutionary or ground-breaking. As a rule, it is just adjustment of already-existing methods towards the demands of a specific organization at a certain moment. The impacts of creativity and innovation on the firm can be profound: as they may transform almost every aspect of the company: production, marketing, performance assessment, recruiting, positioning, and so forth. However, many managers are reluctant to adopt innovation until its reliability has been tested by other companies. This is one of the reasons why creativity and novelty are often stifled: the managers prefer to be on the safe side. In the long run, this tactic leads to stagnation. The thing is that it is impermissible to stop at what has already been accomplished. The examples of many leading corporations indicate that innovation is the main driver of private business, which brings them into the future.

Scholars single out three types of innovative strategies: exploration, cooperation, and entrepreneurship (Daft & Marcic, 2008, p 290). The first stage involves restructuring the company in order to promote creativity and introduce new models. The second phase of this process is supposed to facilitate information sharing among different members of the firm. At the third stage, the management must turn the innovative strategy into standard practice. We can draw parallels between this policy and the model, Unfreeze-Change-Refreeze, proposed by Kurt Lewin. At the core, they are reminiscent of one another.

We may refer to the diffusion of innovation theory, advocated by Everett Rogers. In his opinion, many organizations accept novelties only due to the fact that they are unable to face severe competition and change is the only possible solution. Other firms accept new ideas only when they have been approbated by others and there is sufficient evidence that they are reliable. According to Rogers (2003), they belong to the category of “laggards”, those who are most resistant to change (p 284). Such businesses are rather unlikely to achieve leadership in any area. So, we can conclude that the main perquisites for the sustainability of this lift manufacturing firm are appropriate structure, creativity, and innovation. Furthermore, we should not forget about such drivers as skill and motivated workforce, cutting-edge technologies, and teamwork. Without them, the probability of success is rather slim.

Change management

Force-field analysis

At this point, we need to discuss those factors, which may contribute to change within the company as well as those forces that may prevent it. For this purpose, Force-Field Analysis, introduced by Kurt Levin, can be a very helpful tool (Daft & Marcic, 2008, p 308). It can be presented in this way:

Force-field analysis

In this diagram, we have marked out those factors which can either promote change within the company or dissuade management from doing it. The most difficult obstacles to change are the unwillingness of the personnel and low awareness of the customers. However, these obstacles can be overcome by creating products that suit best the demands of their potential customer: hotels, medical institutions, and airports. Undoubtedly, this change will involve additional expenses, but this investment will break even after a year. Overall, these innovations will raise the company to a higher level of efficiency and profitability.

Strategic leadership

Strategic leadership is one of the essential components of a companys success. The leader is the person, who motivates others, gives them an incentive to improve their skills; he or she gives them an example to follow. One of the major tasks, performed by this individual is the development of vision. The vision outlines the major objectives which the firm wants to attain. It aims to inspire people and make them share the views of the leader. Additionally, he or she must also convince them that this plan is realistic and feasible. In respect, we need to draw a distinct line between the leader and manager; very often these notions are confused. Management is more concerned with the procedural part of workplace activities, while leadership concentrates on motivation, setting directions. Moreover, the sources of their power differ from one another: the leader relies on trust and persuasion, while the manager can resort to coercion and compulsion.

There are several leadership styles: dictatorial or autocratic and democratic or liberal (John & Gilles, 1996, p 320). People, who prefer the first approach to management, do not include others in the decision-making. Such a person wants to be the only player: others just have to carry out his or her orders. In turn, other leaders are more liberal in their treatment of their subordinates. For them, it is much more convenient to consult other members of the team. There is a different scenario: some managers almost do not intervene in the work of employees. On the one hand, we can argue that democratic leadership is most useful. Yet under some circumstances, the leader has to be autocratic, especially if the situation requires swift action. The person, who is at the head of this lift manufacturing firm, must alternate leadership styles to achieve results.

Reference List

Beardwell J & Claydon T (2007). Human resource management: a contemporary approach. NY: Pearson Education.

Cameron E. (2004). Making sense of change management: a complete guide to the models, tools & techniques of organizational change. Kogan Page Publishers.

Chawla S. & Renesch J (2006). Learning Organizations: Developing Cultures for Tomorrow’s Workplace. Productivity Press.

Daft R & Marcic D. (2008). Understanding Management. NY: Cengage Learning.

Daft R & Marcic D. (2009). Management: The New Workplace 6th Edition. South Western College.

Davis F.W. & Mandrodt (1996). Customer-responsive management: the flexible advantage. Wiley-Blackwell.

John R & Gilles R.L 1996. Global business strategy. New Jersey: Cengage Learning EMEA.

Johnson G. Scholes K, & Whittington R. (2008). Exploring corporate strategy. Pearson Education.

Miner. J. (2002). Organizational behavior: foundations, theories, and analyses. NY: Oxford University Press US.

Rogers E (2003). Diffusión of innovations. Free Press.

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