Innovation encompasses a broad variety of creative improvements incorporated into company practice to enhance organizational performance and nurture creativity. Thus, innovation is a component of the creative process, since it enables the discovery of the most effective and, in many cases, new solutions to existing problems through altering business practices. There are many distinct definitions of innovation, which can be summarized as follows:
Innovation is always a change from the status quo; it develops from the need to tackle organizational problems with technology solutions; innovation is both a process and its end result.
Innovation management, on the other hand, is the process of allocating human and technical resources to improve production and marketing through change implementation.
Innovation's significance is difficult to overstate in the context of globalization and the expansion of businesses. Prior to only a few decades ago, economic theories emphasized a finance-based strategy focused on capital accumulation. However, current theories have switched the emphasis to technical advancement and the development of worldwide networks. In the information age, innovation and globalization processes have intermingled to become the driving engine of company progress.
According to Belloc (2012), the continual process of seeking and acquiring information has elevated innovation systems to the worldwide level to facilitate knowledge exchange across nations. Modern businesses are required to participate in the process if they wish to survive in today's highly competitive market. Global innovation generates new quality standards for goods and services, as well as new employment, manufacturing, and management models. Innovation enables businesses to expand their market position, access new markets, replace obsolete technologies, and adopt a more eco-friendly approach.
To determine which element needs innovation, it is vital to regularly evaluate all organizational processes. At current time, organizations must adhere to the following innovation rules:
Exert Strong Leadership Regarding the Direction and Decisions of Innovation
If a corporation wishes to be innovatively successful, it must have strong leadership. Steve Jobs and Bill Gates are CEOs whose presence has propelled their respective firms to the pinnacle of success. It has been demonstrated that the strength of the leader is the most important aspect for company success, followed closely by the strength of the project team and the chosen strategy. Technology is only ranked third. According to a survey, 95 percent of respondents are only willing to invest in a firm if it has a notable CEO, while 72 percent believe this company must also have market domination (Chen, Tang, Jin, Xie, & Li, 2014).
64% of respondents stated that technology leadership trumps the aforementioned considerations. The premise is that the CEO and top management are responsible for all choices, even technological ones, within the organization. They are responsible for communicating them to other staff and ensuring their implementation. This is why leadership is the most important aspect in deciding the success of any invention, as it is intended to establish the direction and pace of innovation. Innovation is not intangible. In contrast, it must be a theory in action, which necessitates the participation of individuals.
Incorporate Innovation into Your Business Mindset
A CEO can introduce innovation, but it cannot flourish if it does not become ingrained in the business's culture. It cannot be a voluntary component of the organization. According to Markides (2013), innovation has the potential to be beneficial only if it equates to existence and survival. Innovation is founded on two primary activities: the first is technological advancement, and the second is business model transformation. If the company focuses on only one, it will surely fail. This is the error that many firms make: they feel that introducing technology breakthroughs to adjust the manufacturing process is sufficient, but their primary strategy and business model remain untouched. As a result, the old and the new crumble, putting success to an end.
Integrate Innovation into Corporate Strategy
Profit is the primary objective of any business strategy, regardless of its methods and tactics. Innovation can therefore be considered as a strategy for achieving long-term success and gaining a competitive edge. Innovation cannot be a continuous process, as it needs a great deal of time, effort, and resources, as well as significant transformations that encounter numerous obstacles, such as a lack of funding, opposition to change, misunderstanding, etc. When a corporation intends to innovate, it must ensure that the innovation is consistent with its primary business plan. The greatest error made by CEOs is choosing innovation based on external market conditions and client demand. Although these variables are extremely crucial, relying solely on them while ignoring the company's internal circumstances would result in failure.
Manage the Natural Conflict between Innovation and Value Capture
As previously stated, innovation always requires originality. Introducing a revolutionary technology necessitates the management of a multitude of inventive processes, structures, and resources (Johnston & Bate, 2013). A business must be able to identify the characteristics that will capture the attention of prospective customers and generate profit and client loyalty (Davila, Epstein, & Shelton, 2012). Apple is a fantastic example of successful creative management since, despite its expensive costs and upper-class emphasis, its originality attracts a large number of customers. Despite the introduction of new developments, a corporation should not lose sight of the fact that its values must remain constant.
Neutralize Organizational Antibodies
One of the primary issues with innovation is that it rarely occurs without difficulty. In the majority of instances, the organization must overcome many hurdles, or "antibodies," that threaten its success. Generally speaking, the more radical an innovation is, the more antibodies it will meet. Moreover, if the firm is effective and has excellent performance indicators, it is likely to face stronger antibodies. To innovate, the organization must have a culture with the confidence to adapt. Typically, it is erroneous for successful businesses to believe that the elements that contributed to profits in the past will continue to do so in the future.
Develop an Innovation Network Outside of the Organization
Instead of focusing on an individual and his or her characteristics, the establishment of a network across enterprises should be viewed as a top priority. Using these networks, both internal and external concerns can be expanded. Cooperation across multiple companies will help, for instance, marketing and production, as well as suppliers and business partners (Lai, Lin, & Wang, 2015). A skill in innovation can be readily exemplified by the example of a 3M firm that has developed substantial technological contacts. At this time, innovation platforms can be utilized as a framework for integrating all innovation-required procedures. Specifically, partners, customers, supply chain information, etc., must be considered while designing and implementing network creation innovations.
Create the Right Innovation Metrics and Rewards
To foster innovation, businesses offer appropriate incentives and measures. However, managers want to minimize risks and invest in only safe projects, which hinders the creation of creative tactics and procedures. According to Anderson, Potonik, and Zhou (2014), the suggested reward system cannot motivate employees. Many organizations continue to struggle with the assessment issue. There is a need to establish suitable reward and measurement mechanisms for revolutionary inventions, so producing a more balanced view of the potential hazards and obtaining better long-term outcomes.
Importance of Innovation for International Business
Due to the expanded significance of scientific and technological potential in modern production, multinational business is increasingly focusing on the innovation and enhancement of its products, services, and technology. The release of new or improved products serves the primary purpose of distinguishing and differentiating a company's products on the market, hence achieving enhanced efficacy and client preferences. The same is true for the market for services: the supply of new services based on the use of new equipment and new materials stimulates demand, creates new markets, increases sales of new products and services, and lays the groundwork for the formation and rapid growth of new businesses.
Occasionally, organizations may find themselves in a scenario where their efforts were misdirected, preventing them from receiving a satisfactory return on investment. Another error is to adhere to the maxim "the more innovation, the better." It is improper to be swept away by innovation efforts, as every firm requires stability to exist between technological breakthroughs. Due to the fact that time and resources are always limited, a CEO should be able to focus on a single field at a time.
The issue is that very few businesses have effective diagnostic tools that would allow them to choose innovative operations, preventing them from knowing where to begin. The most significant hurdles to innovation are coordination and organizational issues (Moreira, Silva, Simes, & Sousa, 2012). Impossible is the circumstance in which managers attempt to impose changes based on views and ideals they do not share. Consequently, a successful leader is a change agent who supports innovation via the strength of his or her dedication.
In order to achieve success, a business must address the so-called organizational "antibodies" that may hamper innovation. As a general rule, "the more radical the innovation and the more it challenges the status quo, the greater the number and potency of the antibodies" (Davila et al., 2012, p. 123). Additionally, the bigger a company's historical triumphs, the greater its organizational antibodies. Management should develop a culture that encourages employees to change, investigate, and innovate, while maintaining consistent in implementing innovations, in order to foster innovation (Dunning, 2012).
The establishment of an innovation-friendly culture aids in overcoming customer resistance to change and achieving success when introducing innovations. Innovation is not a unidirectional process that sits in a single division of a business (Unger, Rank, & Gemünder, 2014). In contrast, it necessitates the coordination of all departments in order to transform a concept into reality. Collaboration is now a fundamental aspect of any innovation, which is why so many businesses are merging and outsourcing. Thus, innovation is a very complex process whose success is dependent on a vast array of conditions. Consequently, this study will investigate the rules of innovation and analyze its function in international business.
In conclusion, it is crucial to underline that innovation is a significant issue that must be considered by all businesses, particularly those that operate internationally. Innovations give the necessary degree of change, taking into consideration the fact that customers' expectations alter and rise with technological advancement. Specifically, the dimensions of innovation highlighted in this research demonstrate how innovations can affect the success of a business.
Anderson, N., Potočnik, K., & Zhou, J. (2014). A state-of-the-science review, prospective commentary, and guiding framework for innovation and creativity in organizations. 40(5) Journal of Management, 1297-1333.
Belloc, F. (2012). A survey of corporate governance and innovation. 26(5):835-864 in the Journal of Economic Surveys.
Chen, Y., Tang, G., Jin, J., Xie, Q., & Li, J. (2014). The roles of corporate entrepreneurship and technology orientation in the performance of CEOs' transformative leadership and product innovation. 31(1), 2-17, Journal of Product Innovation Management.
Davila, T., Epstein, M., & Shelton, R. (2012). How to effectively manage, measure, and profit from innovation. New York, New York: The FT press.
Dunning, J. H. (2012). International manufacturing and multinational corporations (RLE international business). Routledge, New York, NY
Johnston, R. E., & Bate, J. D. (2013). The power of strategy innovation: a novel method for connecting creativity with strategic planning in order to identify excellent business possibilities. AMACOM, New York, New York
Lai, W. H., C. C. Lin, and T. C. Wang (2015). Investigating the compatibility between innovation capability and business sustainability. 68(4), pp. 867-871, in Journal of Business Research.
Markides, C. C. (2013). Business model innovation: what can the literature on ambidexterity offer us? 27(4), 313-323, Academy of Management Perspectives.
Moreira, J., Silva, M. J., Simões, J., & Sousa, G. (2012). Marketing innovation drivers in Portuguese companies. Amfiteatru Economic, 14(31), 195-206.
Unger, B. N., Rank, J., & Gemünden, H. G. (2014). Corporate innovation culture and project portfolio success dimensions: The moderating effect of country culture. 45(6) Project Management Journal: 38-57.