1. TABLE OF CONTENT
I. Introduction ............................................................................................................................ 1
II. The global and local applicability of the concept of innovation as a strategy for growth. ... 1
III. Critical review of the management concept of innovation. ................................................. 3
VI. Conclusion ........................................................................................................................... 5
Reference ................................................................................................................................... 6
Bibliography .............................................................................................................................. 6
TABLES & FIGURES
Table 1: The global and local applicability................................................................................ 2
Figure 1: Managing Innovation ................................................................................................. 3
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2. I. Introduction
In light of today’s dynamic business environment, the world around us is changing at a raid
pace. The companies that adopt to change with long term sustainable strategies succeed
whilst others fail because they are unable to keep up with these changes. These successful
organization we will refer in the succeeding sections have not merely survived the turbulent
time but also redefined the industry brake points they operate in. the leaderships of these
organization believes that the difference between survival and extinction lies not just with
their best operation practices, level of customer satisfaction, their competencies and
capabilities of people, but on the ability of the organization to be futuristic farsighted
strategies of innovative. Innovation brings the element of long term sustainability which is
considered key factors for success of many of the firms referred in table 1. Many young
entrepreneurial firms embracing innovation have taken top spots; changing the competitive
landscape occupied by giants which had a rich history. These entrepreneurial firms had one
thing in common, that is innovation as a competitive cutting edge, a culture that nurtured
innovation, integrated process to manage innovation, ambition for hyper growth. This paper
will analyze the global and applicability of this strategy and critically review this concept in
the succeeding sections.
II. The global and local applicability of the concept of innovation as a
strategy for growth.
The adoption and internalization, application of the management concept of innovation as a
competitive strategy for hyper growth is better illustrated by the exhibit in table 1. In a recent
study done by the Boston Consultancy Group together with BusinessWeek, have discovered
that the listed global organizations in below table 1 executing innovation as a key strategy
for growth and this has helped them to occupy market leadership position in various
industries they operate in. Substantiating the argument of innovation being the most
appropriate means for long term sustainability growth, the following KPI as Profitability for
Margin returns & Stock returns and Market share /position for Revenue growth. The figures
illustrated provides a convincing fact that the organizations adopting the innovation strategy
have been successful in achieving sustainable growth over an above their competitors and in
most cases hyper growth.
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3. STOCK PATENT
REVENUE MARGIN
HQ RETURN CITATIO
HQ GROWTH GROWTH
Company Name HQ CITY CONTI S N
COUNTRY
NENT
2001-
2007 2006 2006* 2001-2006* 2001-2006* INDEX**
North
1 1 APPLE Cupertino, CA USA America 50.60 29.21 34
Mountain North
2 2 GOOGLE View, CA USA America 1
3 4 TOYOTA MOTOR Toyota Japan Asia 20.50 8.30 5.21 361
North
4 6 GENERAL ELECTRIC Fairfield, CT USA America 1.11 5.06 1.36 155
North
5 5 MICROSOFT Redmond, WA USA America 0.83 11.85 -3.04 174
PROCTER & North
6 7 GAMBLE Cincinnati, OH USA America 12.20 11.69 3.70 105
North
7 3 3M St. Paul, MN USA America 7.77 7.35 5.49 57
North
8 43 WALT DISNEY CO. Burbank, CA USA America 11.71 6.29 7.35 8
North
9 10 IBM Armonk, NY USA America -3.48 1.26 4.97 94
10 13 SONY Tokyo Japan Asia -2.62 0.60 1.14 418
Table 1: The global and local applicability
Source : The BusinessWeek-Boston Consulting Group 2007 list of the World’s Most
Innovative Companies
In appraising the local context the there are many local brands and corporate who have
capitalized deploying innovation strategies. The top of the mind recall is the success story
Ceylinco insurance had when they introduced “on the spot” claim processing. This created an
insurance industry brake point, which led to many leading insurers coming up with
innovative products with their unique flavor. Ceylinco general insurance was awarded the
Asia’s most innovative insurer (Ceylinco Corporate we site). The market share of Ceylinco
insurance grew substantially as a result, this innovative approach had helped them to
withstand the turbulent times the group had to under go during the recent year. Yet an other
innovative strategy success story comes from an organization which used technological
innovation to position them as a clear market leader is Dialog Telekom. The 3G or the third
generation; of mobile devices with multi sensory communication launched by Dialog
redefined the telecommunication boundaries. Dialog Telekom won the Gold Award for Most
Innovative Brand at 2008 SLIM Brand Excellence (Dialog Corporate website). The Gold
Award was given to Dialog Telekom’s innovative achievements in 3G. this technological
innovation rewarded Dialog not only with market leadership but also with the initial public
offering (IPO). Dialog IPO was oversubscribed by 6.5 times, and the price of the share is
stable through out. (Dialog Corporate website).
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4. The above facts illustrate the relevance of this management concept in the global and local
arena. The evidence presented above reinforces the uniqueness of this strategy. Its ability to
maximize yield and provide a sustainable platform for hyper growth, elevates it as a preferred
strategy for the new entrants as well as reviving descending brands.
III. Critical review of the management concept of innovation.
Innovation bring competitive advantage and sustainability, however the process of innovation
and creating an innovative organization takes high degree of commitment, and perseverance
from the management. It’s an investment the orgnisation need to make considering the long
term benefit it would bring in. The succeeding sections will critically review the process of
setting up an innovative culture, nurturing it and reaping the fruits of innovation from it.
Managing innovation and creating the right culture.
The internal environment within which the managers work includes corporate culture,
production technologies, organizational structure, and physical facilities. Among these
corporate culture surfaces as extremely important to manage innovation. The organizations
value systems, beliefs and artifacts should reflect the following characteristics.
• Sustained commitment from the top management, Management is tolerant of
failure.
• A knowledge sharing, managing culture.
• Willingness to accept risk
• Degree of flexibility
• An ability to commit resources
• Innovation to be seen as a corporate wide rather than functional
• The task culture structure, backed by tough macho culture, work hard play
hard cultures approach towards risk. (Deal & Kennedy, Charls Handy)
External inputs
Team work Exchange of
information
Innovation
Management Reward
commitment
Support and
Systems
Figure 1: Managing Innovation
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5. Nurturing successful innovation
The success of the organizations ability to produce innovation is dependent on how
effectively it’s nurturing the integration of the following CSF.
• Business Environment
This refers to how well the customer need, mega trends, competitor activities, other
macro and micro environmental elements are absorbed into the organizations.
• Organizational process and systems
How effective are the organizations boundary systems (Sagasti 1970) to pick and
translate the business environmental dynamics to the organization. The systems
should be negentropic systems which constantly learn from the environment and
continue to live.
• Organizational skills and culture.
The constant efforts to upgrade skill and manage talent that is capable of generating
meaning full creative concepts and innovations. This should be backed by a
knowledge sharing culture. Adopted from John and Austin 2002,
Nature and impact of innovation.
Although an innovation is generally characterized by a sudden launch of product or service
into the market, organizations innovations include small continues improvements which lead
to greater competitive advantage. Continues improvement is essential for an innovative
organization.
As identified in Doole and Lowe (2004) sources of innovation comes from scientific
exploration, analyzing current and anticipated customer need, segmenting the market further,
identifying new and emerging segments, applying existing techniques in new sectors, vertical
integration, business rationalization, innovation in mature sectors.
Technology has played a major role in propelling innovation in the recent past. Technological
advancements intensify changes, make once sought after innovation become obsolete. This
has put pressure on innovative organization to continue to invest in R&D to maintain their
industry leadership.
ICT development and convergence of technology has triggered the most number of industry
brake points in the last decade. Innovations in processes reengineering, redefining supply
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6. chain & value management, digital production technologies with precision are some areas of
high impact.
Emergence of knowledge workers has transformed once rigid bureaucratic organizational
structure to be more expert centered task cultures. These impacts are creating a snow ball
effect in many industries, Human resource practices and control systems.
CSF of innovation
Even though innovation presents viable proposition the returns could take a longer time and
would highly depend on the following factors as discussed by Bolton and Thomas 2000.
Minimizing the cost at the early stages of innovation process, successfully launching the
product, achieving positive cash flow as quickly as possible, winning a large number of loyal
customers, cost effective market entry method and continues improvement of the innovation.
Its critical to maintain continues improvement of the innovation as the competitors would
soon follow with “me too” products and would start eating into the market potential. Doole &
Loowe 2004. This fact of creating uncontested market space and make competition irrelevant
is discussed by W.Chan Kim & Renee’ Mauborgne. Implementing these recommendations an
innovative organization could keep up to what’s referred as “Blue Ocean Strategy”.
VI. Conclusion
The innovative companies do not need a reason to be the best, its sustainability and ability to
keep competition irrelevant would keep them ahead. With globalization and emergence of a
knowledge economy, innovative companies have risen to occasion and proved innovation is
the way forward. However the investment on the innovation, perseverant management
approach with correct culture are prerequisites.
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7. Reference
- The BusinessWeek-Boston Consulting Group 2007 list of the World’s Most
Innovative Companies.
- http://www.dialog.lk/about/overview/achievements/, viewed on 4/1/10. Link
- http://www.ceylinco-insurance.com/ ,site viewed on 4/1/10.
Bibliography
- John and Austin 2002, Doole and Lowe (2004), Deal & Kennedy, Charls Handy
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