Develop Your Potential: December 2012

The Importance of Innovation in Today’s Business Environment

People usually say “necessity is the mother of invention”, but the reality is that innovation is a necessity in today's global business environment. The globalization, the faster advances in the technology and financial crisis have caused that the 21^stCentury is become more challenging than others centuries. The challenge today’s is “creating an organizational structure that facilitates innovation” and “focusing innovation in the right places.

According to France, Mott & Wagner (2011) innovation involves the introduction of something new, particularly something radically different. The “something new” could be products and services, business processes, product/service delivery, business designs, or new ways of managing. According to Tidd, Bessant, & Pavitt, (2005) innovation type could focus on four categories:

1. Product Innovation – change in the thing (products/services) which an organization offers.

2. Process Innovation – change in the ways in which they are created and delivered.

3. Position Innovation – change in the context in which the products/services are introduced.

4. Paradigm Innovation – change in the underlying models which frame what the organization does.

According to O’Sullivan and Dooley (2008) the ability to manage the innovation process is an essential competence of any organization, but members must first understand the working of the process to be successful. Executives generally agree that innovation should be everyone’s responsibility, but that employees can’t innovate unless their leaders empower them to do so in an environment that values and rewards their contributions (France, Mott & Wagner, 2011). To produce innovation product the organization need to create a culture, which encourage employee to make experimentation and learning experience.

The innovation provokes changes and to implement changes, is important that the leaders apply the characteristics of the transformational leaders.

Leaders need to use their wisdom to identify when the organization needs a process of renewal and innovation. Organizations are always focused on how to achieve a better future. In this sense, the leaders need to be innovators (Selman, J. n.d).The leaders need to take awareness about the renovation need and would support the organizational growth process. For this, it has to know in what cycle of the “S curve” is the organization and identify the exact moment that the decline period will start to introduce a product or process and begin the cycle again.