Today innovation plays a significant role in organizational development and growth. The introduction of innovation influences the work of every employee, affects an employer’s level of satisfaction and evaluation of an employee’s abilities, and determines the success and survival of the company as a whole (Votteler and Zatrochová 556). Many organizations struggle to make the correct choice to support innovation, while other companies aim to enact innovative management plans and activities. Any innovation usually poses challenges, and the task of a consulting firm is to develop a plan for how to use or apply the process of innovation. This paper will focus its attention on innovation processes by discussing the structures of organizations, taking each step separately (including search, selection, implementation, and capturing), analyzing the capability approach and emerging trends in innovation, and examining the importance of knowledge in order to make effective recommendations.
Process of Innovation and Structure of Organizations
The Boston Consulting Group (BCG) has created a list of companies that can be chosen for analysis. This company offers its services to other organizations and consults leaders concerning their business strategies under development under certain conditions. Therefore, its members are aware of the needs and approaches used by various innovative companies such as Apple, Google, or Nike.
According to the experiences of the companies discussed in the report by BCG, the progress of technological revolution promotes the urgency of innovation, which in its turn creates value (Ringel et al. 4). Innovation is a process of changing and improving a product or a service with respect to its current status and expected possibilities. Innovation is driven by market needs as well as the need for convenience and novelty (Merrill 1). It helps find solutions to existing problems, adapt successfully to change, succeed in a competitive market, and consider the tastes and preferences of clients. However, it is not sensible to approach the steps of innovation chaotically just in order to achieve an objective. A process of innovation should be organized according to a plan.
Among the existing models of the innovation process, the Search-Select-Implement-Capture approach is widely used. Each stage of this process has its own goals and outcomes. When the time to search comes, leaders have to define opportunities and investigate what their employees individually and the company as a whole can do to support change through implementing innovation (Tidd and Bessant 47). In addition, web search and the evaluation of other companies’ experiences cannot be ignored as they introduce a general image of innovation with its benefits and challenges. For the next step, it is necessary to select, meaning that the participants in an innovation process have to understand what they are doing and why. In other words, the company has to be ready for work and improvement, using people’s skills and knowledge. Another step is an understanding of how the goals should be achieved, and what must be done to make everything happen. Finally, the capture stage identifies the benefits of the process that has been developed and elicits the opinions of participants about the achievements made.
As a rule, there are no limitations on organizational structures and sizes. In this case, the main consulting firm, like the other organizations it does business with, is characterized by a flatter organizational structure. This type of structure is usually observed in technology-based companies. Taking into consideration the fact that many modern organizations are involved in technological processes, it is not a surprise that a flatter organizational structure has become popular. Though there is an evident leader (or even several leaders) in a company who control the development and growth, the participation of other workers is not diminished. Employees have the right to define the direction of the company, choose the most appropriate methods of communication and collaboration, and develop projects (Morgan 178). At the same time, transparency and dependence on each other integrate employees into the company structure. As a consequence, a flatter company is open to innovations and has sufficient opportunity to improve, achieve success, and even establish new standards and approaches to work.
Developing an Innovation Capability Approach
There are many ways to improve innovation projects and introduce new standards. The development of a capability approach is one of the frequently used theoretical frameworks offered by Amartya Sen to promote social and institutional contexts for innovation systems (Bajmócy and Gébert 94). This approach is normative by its nature, meaning that its users focus on the ultimate goals. It determines social and moral arrangements that need to be evaluated with respect to personal and professional capabilities, functions, and autonomy. The main task of the supporters of the capability approach in innovation policies is to combine the concepts of autonomy and capabilities and prepare organizations for change. Therefore this approach is likely to achieve valuable goals, with real opportunities and the possibility that its target will be accomplished (Bajmócy and Gébert 95). The realization of outcomes that create value is the benefit of the approach for organizations. To achieve this, information should be gathered about potential clients, cooperation between staff members should be strengthened, and critical thinking should be developed.
One expectation is the definition and support of autonomy through which organizational and personal well-being can be achieved. People have to understand what they do, and if they are ready to do something. The capability approach is based on an assessment of the well-being of countries or companies and an evaluation of the space where information is present, the rules are established, and the demands are defined (Bajmócy and Gébert 94). Its characteristic feature is the possibility of combining organizational well-being with interpersonal relationships and success. To achieve positive results, it is not enough to set goals and instruct people. It is important to check their capabilities and provide them with the freedom to achieve what they want to achieve. Each employee or potential participant of an innovation process has to develop personal ideas and attitudes about change in order to avoid being a passive recipient and a follower. Self-interest, enthusiasm, and personal growth are contributors to developing a capability approach.
In this case, the companies are following an innovation capability approach, paying attention to the details and meeting the requirements set by Sen. However, the ways this approach is used vary among the companies. For example, Cisco Systems aims at making acquisitions, though many other companies find it helpful to focus on commercial arrangements, partnerships, joint ventures, licensing, and empowering users (Ringel et al. 4). Organizations try to consider the value of internal and external innovation simultaneously in order to benefit from both. The first step is using multiple data sources, i.e., scientific literature, global patents, and semantic networks (Ringel et al. 7). As a part of the capability approach, companies define many purposes, including making an important discovery, building new collaborative networks, and discovering technology leadership positions. Then they make use of analytics to obtain a critical overview of their capabilities and their readiness for change. Finally, they make a decision, establish the right metrics and incentives, and move directly to internal improvements and positive external results.
Emerging Trends in Innovation
With the help of this case, it becomes clear that companies are free to use different approaches to promote successful completion of change and innovation. However, before this, companies and their leaders must understand the characteristics of new markets, emerging trends, and technologies, which can bring financial, moral, and organizational gains (Ringel et al. 12). In the BCG case, a number of emerging trends in innovation are presented, responding to the needs of companies, customers, and other stakeholders. Despite the variety, there is one common thing that cannot be ignored. Ringel et al. state that “long-term trends and innovative subjects in industry and society” have to be discovered (5). Such an approach proves that trends should respond to the organizational and moral needs of all their employees and customers, and the examples of different companies show how many ways the desired success can be achieved.
For example, recent technological progress and increased computer literacy influence the characteristics of venture-backed startups. Instead of focusing on technology only, companies should pay attention to “financial services, media and entertainment, travel and tourism, and marketing in general” (Ringel et al. 11). This trend points toward new opportunities for innovation and new perspectives for companies to create a new future (Merrill 5). In addition, companies are free to choose between the methods of innovation and investigate the benefits of corporate venture capital, accelerators and incubators, or innovation labs (Ringel et al. 11). According to the authors, the resurgence of innovation among already established industries is a good chance to combine all the methods not as optional activities but as competitive necessities (Ringel et al. 11). In general, this emerging trend for innovation policies among a variety of industries introduces new options and opportunities for the companies discussed in the case.
Another important aspect of any innovation is people’s need for it. Merrill explains that innovation is about “developing the right things, the products and services that the marketplace truly will need tomorrow” (5). In this case, the example of Under Armour and its idea to make athletes better by using every aspect of technology is an example of a necessity that has its price and its benefits. This endeavor represents a possibility to combine internal and acquired resources and use an ecosystem for planning, monitoring, adjusting, and enhancing the fitness activities of customers (Ringel et al. 4). The decision to observe the needs of customers and not only the needs of the company and its employees seems to be an effective approach in promoting change and explaining its significance.
Finally, special attention should be paid to the quality and quantity of information available to organizations. A trend to use multiple data sources and external materials rather than just organizational ones has to be emphasized (Ringel et al. 6). Innovators have to take a number of steps when identifying new ideas in making financial decisions and assessing benefits. If it is hard to know where to begin, innovators can look through company data and use descriptions and funding events or investigate proprietary data and learn about clients as much as possible. Networks and scientific literature are also a part of this emerging trend.
Importance of Knowledge and Leadership in Innovation
Taking into consideration the emerging trends already identified and the approaches chosen by organizations for their innovation procedures, it is important to consider the importance of knowledge and leadership. These two qualities turn out to be the two indispensible factors of effective innovation. For example, the representatives of Johnson & Johnson (J&J) introduce different innovation vehicles within the frame of a single strategy. There are many “young ideas” that can be discovered with the help of incubators (Ringel et al. 13). Departments that need to mature may use innovation labs. Venture capital is effective when the company tries to change its funding system. However, despite the strategy and vehicles chosen, Paul Stoffels, the executive vice president of the company, emphasizes that J&J’s innovation success is closely connected to its employees’ awareness because it is expected from “our people to know well what’s going on and what they need to go after” (Ringel et al. 13). Knowledge cannot be ignored. It has to be promoted throughout the innovation process.
Knowledge is also a part of the capability approach that has already been discussed in this paper. On the one hand, when a company develops a Search-Select-Implement-Capture process, its core feature is employees’ awareness of their goals, expectations, and abilities. Employees have to understand why they take certain steps and what results they may achieve. A lack of understanding and awareness may lead to unpredictable results and additional challenges. Innovation is based on several outside sources of abilities, and one of them is knowledge of what customers might expect, what they are ready to pay for, and what they want to consider in the future (Votteler and Zatrochová 557). These activities are undertaken during a search stage when opportunities for innovation have to be discovered. On the other hand, the capture approach depends on an employer’s knowledge of their people, the awareness of the staff of their capabilities and functions, and the company’s records about its clients.
Still, knowledge can be a dangerous weapon in the wrong hands. Therefore, any innovation process should have a capable and professional leader. The example of Microsoft shows how its leaders are able to explore multiple possibilities for their company through collaboration between different areas (Ringel et al. 9). It is the task of leaders to recognize great promise and make a final decision regarding available resources and employees’ abilities. At the same time, leadership in innovation is a chance to listen to various ideas, motivate different people, and find one strong idea that can improve the current state of affairs in a company.
The combination of knowledge and effective leadership leads to success for a company that tries to choose new strategies and change its profits. The cases of the companies identified in the BCG report are based on their leaders’ opinions and recommendations. Because employees are impressive sources of fresh ideas and approaches, they have to be organized and inspired. They also need clear instructions and requirements. A leader who will be able to enjoy the benefits in case of success or evaluate the mistakes in case of failure is the key figure of any innovation.
Recommendations on Organizational Structure, Developing Capability, and Leadership for Innovative Companies
In the case under consideration, an impressive list of innovative companies is introduced and discussed. The BCG report contains much information on organizational structures, developing a capability approach, and promoting effective leadership for innovations. Despite the positive results and improvements, the analysis of companies and scientific literature points to several recommendations in order to facilitate change and implement innovation processes.
Modern companies are free to develop any organizational structures they want. Still, experience shows that the majority of companies choose flatter structures as they help to shorten the chains of command and avoid communication and decision-making problems. The enhancement of this type of structure is possible by expanding borders. It is necessary to remember that employees and leaders define structures, but structures can never define people. Therefore, when people discuss their obligations and the standards to be followed, they should always leave some space for alterations and improvements, or in other words, room for change. This recommendation should facilitate tasks and the process of establishing goals.
Capability development is a long-term process with a number of goals needing to be achieved. Still, the core value of this approach is the need to define personal and organizational abilities. As one of the possible recommendations, companies might use special assessment tools and tests to check the general condition of the staff, people’s readiness for change, and their attitudes toward innovation. There are many online quizzes that do not take much time and can reveal options that might be unknown to people. Progress and technological change occur regularly. Therefore, such tests should be taken frequently to track the changes and think about improvements. To receive valid answers that can identify the quality of work and participation in innovation processes, employees have to be invited on a voluntary basis. It is important to emphasize that these tests are not used to influence future salary, promotion, or another aspect of their employment. Its goal is to discover the skills that might influence the future of the company.
Finally, the choice of a good leader is a step that cannot be ignored by innovative companies. Despite a variety of capabilities that have been defined and organizational structures that have been recognized, the absence of a leader is a step backwards with respect to the company’s success and progress. However, instead of recognizing strong and weak aspects of leadership, it is better to define a theoretical framework and follow it. Many examples of how to succeed with a transformational leader are given online. Though some companies still prefer to use hierarchies and choose authoritarian leadership styles, the benefits of transformational leadership are evident. Leaders can cooperate with teams to create a vision and guide change, inspire people, and share standards. At the same time, a leader should know that the task is not just to give orders and set purposes, but to make people willing to change something (Merrill 63). Motivation, stimulation, influence, and consideration are the main characteristics of a good leader according to transformational leadership theory.
In general, the report by the Boston Consulting Group is a good source of information about innovative companies and their attempts to change their organizational structures, develop capabilities, and improve leadership. The cases prove that despite common definitions and explanations, every company is free to use independent approaches. Therefore, autonomy, properly developed skills and knowledge, and cooperation between employees and leaders are the integral parts of an innovation process in modern organizations.
Bajmócy, Zoltán, and Judit Gébert. “The Outlines of Innovation Policy in the Capability Approach.” Technology in Society, vol. 38, 2014, pp. 93-102.
Merrill, Peter. Innovation Never Stops: Innovation Generation – The Culture, Process, and Strategy. ASQ Press, 2015.
Morgan, Jacob. The Future of Work: Attract New Talent, Build Better Leaders, and Create a Competitive Organization. Wiley, 2015.
Ringel, Michael, et al. The Most Innovative Companies 2016. 2016, Web.
Tidd, Joe, and John Bessant. Managing Innovation: Integrating Technological, Market and Organizational Change. 5th ed., Wiley, 2013.
Votteler, Andreas, and Monika Zatrochová. “Should the Companies Invest in Innovation?” Management, vol. 5, no. 6, 2017, pp. 555-562.