An effective way of handling change is through innovation in multiple areas, mainly; process, service and products to name a few. Innovation is about creating value, both internally and externally. In this blog post, I will not explicitly define the word innovation, since innovation has a different meaning to individuals and its application is not constant (Anahita Baregheh, Rowley and Sally, 2009). Although, we could all relate to Rory’s (2014) definition of innovation where he stated; “Innovation is about creating value that increases profit, and in the case of nonprofit organization; it is meant to deliver quality service to end users.” And for it to be effective, it has to be simple and focused (Drucker, 1985). Drucker(1985) stated, “innovation is working, rather than genius. It requires knowledge and often requires ingenuity.” Highlighting the fact that innovation does not always mean the creation of distinct service, product or process. However, it can be seen, as a way of strategically modifying an existing framework to form something new. Companies start by looking at the internal and external factors when they are about to innovate. And Liddell (2003) mentioned, “Innovation should be hard to design, but easy to be recognizable just like pornography.”
Take the example on product innovation using Apple as a case study; a company many can relate to, when we talk about innovation. Apple was able to, first, recognize the opportunity in the changing environment and sort how it can meet those needs with more value. People love music, and can only listen to a maximum of 150 songs per CD (mp3 format) in a Walkman player. Apple created the iPod, through extensive research based on a hard design that may have cost the company a fortune. However, iPod’s as a product, naturally became recognizable by users, because of its value. From a cost perspective, users were able to store the maximum of 1000 mp3 songs in comparison to the existing Walkman player. For instance, the iPod player was efficient based on the fact that the users can play more songs without the need to buy any batteries and by charging the iPod during the night and use it during the day . Thus, the effectiveness was most seen when the iPod was not only seen as a tool for entertainment; however, also used for other purposes like education (Diana and Abigail, 2010).
Furthermore, companies are shifting from product innovation to service innovation. And this is not easily defined because it has many branches; service innovation, service, firm in innovation and service process innovation. One can readily recognize the service innovation in the banking sector. Where some years back if any customer wants to handle a request, it had to be attended to by an individual. And this case, usually causes frustration to customers and to the bank; since, there are some losses that are attributed to human errors. As a result, banks started innovating in their process by introducing technology to replace the way it services customers. For example, customers would easily now have access to the online banking applications to perform all types of transactions, from requesting cheques, paying bills, transferring funds or speaking with customer service representatives. This reduces operation cost for the bank and possible transportation costs incurred by customers who visit the bank. More so, efficiency and effectiveness are increased because the bank can serve more clients and can divert staff’s attention to other pressing matters. Also, the value is created for customers, since the Bank can meet their needs in time, thus increasing efficiency and effectiveness. Reena(2007) cited Rae when she mentioned “Service innovation simply reflects the new playing field of business.” And the product innovation like Apple iPod, also gave birth to an increasing demand for service and Apple had to create the iTunes store. Allowing consumers, to purchase music that is compatible with the iPod.
Lastly, creating business value is mostly about creating process innovation. This usually starts with organizations who think strategically, in an effort to distinguish themselves from other industry players. Take Dell as an example, when it entered into the marketplace, it had to find a way of competing with a giant like IBM. And the company innovated, starting from the product innovation by allowing customers to customize the PC they need online. Dell also altered the manufacturing process, which in turn brought about increased efficiency; by directly moving production plant to a country with a lower economy. Although, the most significant process innovation Dell made, was on the distribution method. Where other industry players had a monopoly on how they distribute products with exclusive contracts and partnerships with stores like Walmart, that prohibit stores from selling PCs other than that of IBM. Dell was able to innovate the process of distribution, by delivering directly to customers. And they used mediums, such as a mailing list and the internet to their advantage. First, this creates value to customers as the cost of buying a Dell product in comparison to others was cheaper. This is because customers, do not have to pay all the extra charges attributed to middlemen and distributors like Walmart.
References
Anahita B., Jennifer R., and Sally S., (2009) “Towards a multidisciplinary definition of innovation”, Management Decision, Vol. 47 Iss 8 pp. 1323 1339 [Online] Available: dx.doi.org/10.1108/00251740910984578 [Accessed: May 30, 2015]
Drucker, PF (1985) ‘The discipline of innovation’, Harvard Business Review, 63, 3, pp. 6772, Business Source Complete, [Online] Available: www.ebscohost.com [Accessed: May 30, 2015]
Dianna L. H., and Abigail D. W., (2010) Effectiveness of Video Modeling to teach iPod use to Students with Moderate Intellectual Disabilities [Online] Available: http://daddcec.org/portals/0/cec/autism_disabilities/research/publications/education_trainin538_effectiveness_of_video_modeling_to_teach_ipod_use_to_students.pdf [Accessed: May 30, 2015]
Liddell, D (2003) ‘Defining innovation’, Brand Strategy, 178, p. 30, Business Source Complete, [Online] Available: www.ebscohost.com [Accessed: May 30, 2015]
Reena Jana (2007) Service Innovation: The Next Big Thing [Online] Available: https://www.bloomberg.com/news/articles/2007-03-29/service-innovation-the-next-big-thingbusinessweek-business-news-stock-market-and-financial-advice[Accessed: May 30, 2015]
Rory M. (2014) Innovation and change: Laureate Education [Video, Online] [Accessed: May 30, 2015]