Managerial Planning and Leading in Organizational Innovation
The account presented here is intended to examine the role of innovation in modern business practices. Particularly, this will be examined from the perspective of management and with a focus on the two primary management functions of Planning and Leading. The literature review hereafter considers these functions of management in direct relation to the complex questions pertaining to innovation. Primary areas of consideration are the decision-making which enters into the determination of whether to innovate or to follow market patterns; the impact of market externalities and economic cycles on this decision; and the correlation of internal factors and personnel matters on this decision. The discussion ultimately produces the finding that innovation is only suited for those firms possessing the right mix of internal and external conditions.
Corporate innovation is often thought of as an inherency in the world of business. That is, the impetus to engage in innovative practices is typically viewed from the outside as a highly desirable one. To this perspective, innovation is seen as a way to gain a competitive edge in the marketplace, to leap ahead of other firms in terms of process efficiency, to forge a new technology that alters behaviors industry wide and to create a wake of imitators that underscore the importance of your firm's market contributions. While all of these dimensions may be true to an extent, they are not accessible to all firms. To the contrary, firms wishing to engage in innovative practices must first engage in studied consideration of the implications of such endeavors. While some firms may possess the resources, may exist in the appropriate markets and may be prepared for the costs of entry for their ambitions, other firms may lack these qualities. The discussion hereafter considers the implications of innovation according to several key functions of management with the intent of providing an account that might be useful for a firm attempting to determine into which category it falls. Using the management functions of Planning and Leading, the discussion below considers innovation as a strategic business approach.
Innovation and Theories of Management:
Before proceeding to a discussion on innovation according to the Planning and Leading functions of management, it is appropriate to arrive at a definition of innovation. In his century-old text on the implications of innovation, Barnett (1906) provides the discussion with some basic conceptual definition. Here, the author characterizes innovation as "the appearance of novel ideas," framing it as a social event with widespread implications. He additionally characterizes innovation as a "mental phenomenon," highlighting the importance of the human aspect of innovation. (Barnett, 1906; p. 1)
According to the much more current discussion on innovation framed in the Abramson, et al. (2002) text, innovation retains these relative aspects in today's definition. Abramson, et al. gather the varying definitions found in texts coming before theirs to determine that "while there are clearly different nuances in various definitions of innovation, there appears to be general agreement that an innovation is 'new', usually 'novel,' and aspires to 'change' the way an organization (or part of an organization) operates and delivers service to the public." (Abramson, 2002; p. 2) As we proceed, this means that we come to understand innovation not just in terms of a company's output but also the way that it achieves this output. Particularly, innovation may also refer to a process, an internal technology or even a simple way of conceptualizing data that ultimately has a revolutionary impact on a company's behavior or performance and, consequently, on that of other company's in its sector or beyond.
That said, it is appropriate to proceed to an assessment of innovation according to the functions of management. Indeed, planning plays an absolutely crucial part in not just ensuring the success of innovation but in simply determining if innovation is a fitting strategy for the company in question. On this point, Guile, et al. (1988) point out that it is very challenging to gain concrete findings on the improvement of service end-user satisfaction after innovation implementation. Guile, et al. indicate that "service and profit benefits are virtually impossible to quantify, because side-by-side analyses with and without a model are never available." (Guile, et al., 1988; p. 137) To this end, we may deduce that Guile is suggesting an innovation model which graduates only certain parts of an organization toward implementation while maintaining a control group for evaluation under the same contextual circumstances.
This would allow us to measure for important factors such as cost differences and waste differences under existent vs. innovative conditions, as in the model proposed by Ulwick (2005), who offers a service environment in which "companies must understand all the outcomes employees and customers are trying to achieve when engaged in a customer/company interaction." (Ulwick, 2005; p. 4) Here, the author presents a model that reinforces that offered by Guile, et al., proposing that that implementation may best be measured by first executing a partial and scientifically measured implementation. Both the research by Guile at al and by Ulwick imply that planning is crucial where evaluating attempted innovation is concerned. A scientific approach to assessing the likely outcomes of a company-wide reformation can be taken without making sweeping and potentially costly changes. Using the partial induction method described here, management can begin to initiate change in a steady and incremental fashion that is planned out according to expected opportunities, obstacles, costs and gains.
The need for such an approach, and the ability of such a model to improve the assurances of implementation success, are both underscored in the text by Evans (2002), which proposes that the current corporate atmosphere drastically favors larger corporations with the economic means to engage implementation of innovative projects with this measure of caution. This will help us to understand a key obstacle to the success of implementation of the scientific model, with Evans contending that "the next wave of emerging technology innovation is being led by these major players who have the funds and resources to keep the industry advancing." (Evans, 2002; p. 11) Providing a bevy of examples of organizations which have remained innovative in their respective sectors by virtue of their ability to engage technology from a carefully planned position, the Evans text induces us to consider that even in the adoption of improved technological models for innovation, planning is a centrally required function that is more often afforded by resource-wealthy businesses. Here, the resource advantage not only provides the framework for execution of the aforementioned experimental controls in measuring implementation, but it also denotes that innovation is driven by a company's ability to accommodate technological advance. It remains the unique task of individual organizations to remain aligned with this pace in the personnel and infrastructural capacities, suggesting another area in which careful planning can help a company to preemptively avoid many of the natural pitfalls of a company-wide change.
Again, this reiterates the stark differences between opportunities and obstacles for large and small organizations with regard to innovation. To some extent, we find that there is a mixed outlook for both, with company structure and industry lifecycle playing a part in determining the proper orientation to be taken. This mixed outlook might be characterized as the Pattern of Innovation which should, if properly understood, help the prospecting organization plan its own approach. As Keklik (2003) explains, we exist in a cycle of market atmospheres which vary in their favorability of small entrepreneurial firms or massive corporate entities, each abiding its own patter of opportunity. As Keklik contends, when the sun sets on a period of wild independent innovative opportunity, "the visionary entrepreneur as the driving force behind innovative activity in the former innovative pattern is replaced by the large R&D laboratories in the latter." (Keklik, 2003; p. 9) This pattern naturally repeats itself when new opportunities abound once again for smaller firms as response to the typically incremental pace of large-scale innovation. Effective planning will help the aspiring firm to determine which of these atmospheres is most in effect.
Beyond just effective planning, a major managerial function of importance is that of Leadership. Innovation is as a matter of inherency a gesture of leadership within an industry or sector. Simultaneously, the decision to engage this process will typically come from within. Some mode of leadership will stimulate the company to attempt innovation and said leadership will also be essential in shaping this innovation which might be either radical or incremental in nature. The differences between radical and incremental innovation arer highlighted in our research as being somewhat self-explanatory. Supported by the Audretsch (2006) text, we are given a conceptualization of both. Radical innovation is that which requires a company to significantly restructure its strategy, business plan, personnel or infrastructure in the interest of implementation whereas incremental innovation is much more gradual and less contingent upon such structural change. Typically, this will be more contingent upon operational change to meet goals of innovation.