Impact of innovation on organizational performance

Innovation

Assessing the Impact of Innovation on Organizations

The impact of innovation on the business processes, models, frameworks, go-to-market and product development strategies of Apple, Disney and Google are changing the foundations of the markets they compete in daily. Apple's exceptional innovation at first MP3 players and now tablet PCs and PDAs changed the music industry, where record labels are reporting in some months more revenues from iTunes than from their own distribution channels (Ritson, 2004). Google's preeminence in advertising model thought leadership and innovation practices today find 57% of their revenues from ideas generated through the Rule of 20% (Gawer, Cusumano, 2008). The essence of this rule is that each engineer in Google gets one day a week to pursue their own invention, and this has generated as of 2010, 57% of total company revenues. The Walt Disney Company has not only created breakthroughs in animation and motion pictures but also in digital forms of entertainment and is a world leader in integrated marketing communications innovations (BusinessWeek, 2007). Each of these company's abilities to innovate is exceptional, and the intent of this paper is to evaluate the impact of their innovations on their strategy, processes, products and service development over time.

Apple's Innovation Begins in their Culture

The innovation that is inherent within the Apple culture stems for the belief of their CEO Steve Jobs that for exceptional products to be produced those designing them must have a strong passion to make a difference in the world with their efforts. Mr. Jobs is one of the most adept CEOs at transformational leadership in the high tech industry (Economist, 2007). As a result, his encouragement of risk taking and seeking out innovative products that anticipate customers' preferences for how they want to communicate, educate and entertain themselves is critical. Apple has concentrated on innovation from the design standpoint, combining that focus with technological leadership of technologies that accentuate ergonomics over just functionality (Scanlon, 2007). This ability of Apple to innovate by bringing together ergonomically-complaint technologies (flat screens for example) and design insight has revolutionized music players, cellular and smart phones and most likely tablet PCs in the future. The impact on the product development strategies at Apple force a high degree of cross-functional focus and knowledge sharing in addition to knowledge management of key design criteria (Economist, 2007). Many members of the design staff attended Stanford University and regularly consult with their processors to gain insights into how best to get new designs to a high level of manufacturability and scalability over time as well (Economist, 2007). Apple's processes are also now more accelerated than they have ever been, specifically in the areas of new product introductions, channel coordination of new product launches, pricing strategies and the development of service partner agreements. What is unique about the Apple culture from its innovation standpoint is the ability it has to over time become a learning ecosystem as well, especially in the areas of design (Scanlon, 2007). In conclusion Apple is consistently ranked one of the most innovative companies in the world (BusinessWeek, 2007).

Google and Continuous Innovation

The culture of Google, like Apple, celebrates innovation and risk-taking, and also has a highly unique approach to managing its engineer's time to support greater levels of innovation being attained. When the company was first founded the Rule of 20% was introduced to provide one day a week for engineers to work on projects and applications of interest (Gawer, Cusumano, 2008). Today the rule of 20% is responsible for just over half of all revenues (57%) generated by Google. The development of Google G-Mail is one of the best-known as is the creation of Picasa and Google Scholar as well. Google's senior management team realizes that to the extent they can continually deliver new applications is the extent to which they will become a platform, not being relegated to only a search engine (Gawer, Cusumano, 2008). The development of Chrome, a Web-based operating system that can work within a browser, to the development of Google Office, and Translate, an incredibly powerful tool for translating documents of all types from one language to another all came into existence due to the Rule of 20%.

All of these innovations have over time completely re-ordered the definition of strategy within the company as well, concentrating the focus more on services and extension to enterprises on the one hand, and being the replacement of individual operating systems on the other. Google's single largest revenue producing service is Google AdWords, which generates approximately 30% of revenue any given quarter (Economist, 2007). Advertising-based revenue models are continually being evaluated as strategic alternatives by Google today, as are the processes supporting them. The processes in fact for the development of the next generation of advertising models based on contextual search and integration to social networking platforms will continue to fuel Google's ascension into a global computing platform (Gawer, Cusumano, 2008). The outgrowth of these innovations taken together will eventually lead to services being tailored to the specific needs of businesses by their relative size, segment and need, in addition to the needs of consumers as well. Google's rapid growth is attributable to unleashing innovation and sustaining it over time.

The Walt Disney Company