Innovation and Change

Innovation and change are cornerstones to the success of any business. This essay aims to describe both organisational innovation and change and also compare the similarities and differences between the two. Williams & McWilliams suggest that organisational innovation is 'the successful implementation of creative ideas in organisations' (Williams & McWilliams 2010, p.131) and is used to generate and maintain a competitive advantage. Similarly, as companies function in a continuously changing landscape, identifying and adjusting to internal and external changes through organisational change could prove to be the difference between a company's success and its downfall (Williams & McWilliams 2012). Innovation and organisational change go hand in hand when striving to achieve a competitive advantage and an example of this can be found in my workplace, Pentana Solutions. The implementation of TIMS (an automated dialling program) was first thought to boost individual's call rates but recently was proven to do quite the opposite.

Johne (1999) highlights three types of innovation which he believes underwrite a business's natural development and are needed to protect a business from the threat of competitors (i.e. create and maintain a competitive advantage). He cites the three types of organisational innovation as being product innovation, process innovation and market innovation. Product innovation offers the most apparent way for a business to create revenue (Johne, 1999). He argues that the importance of product innovation in assisting businesses to preserve and further their competitive position is indisputable and he draws on Harte's findings which show that improved and drastically changed products are paramount to long term business growth (Harte, 1996, cited in Johne, 1999). However, Johne (1999) states that product innovation for product innovation's sake is not enough, rather businesses need to define exactly what product elements need to be bettered or changed in order to cement a competitive position. 'Process innovation embraces quality function deployment and business process reengineering' (Cumming 1998, cited in Johne, 1999 p.7); Johne (1999) describes process innovation as difficult but increasingly necessary to minimise a business's costs and maintain a competitive position within an ever changing environment. Kippenberger (2000) supports this notion suggesting that businesses are almost planning to fail in times of change, as processes which are proven to have been successful in the past are the most resistant to change and, at times, the reason for a business's downfall. Johne (1999) describes market innovation as the improvement in a business's mix of target markets and improvement in how each target market is best attended to. He suggests that its reason is to recognise new and improved potential markets and hence, ways to better serve them. Recognising these new markets can be done by market segmentation which is critical when aiming to cultivate a business's profitability to its fullest.

Williams & McWilliams (2010) suggest that change is challenging under any conditions let alone when a business needs to undergo organisational change. However, this suggestion in itself exemplifies the importance of organisational change in an ever changing business environment and according to Huczynski (1987), businesses that are integrating new concepts into their strategic approach are benefitting from doing so. Business's that fail to identify internal and external changes at a time of environmental flux face the very real risk of what Williams & McWilliams describe as organisational decline. Organisational decline eventuates when a business fails to foresee, identify, nullify or adjust to both internal and external constraints which can compromise its competitive position (Williams & McWilliams 2010). Organisational change can counteract organisational decline at four of its five stages which are blinded, inaction, faulty action, crisis and dissolution (at which time, it is too late for a business to recapture its position). Organisational decline starts in the blinded stage due to the inability of a business to identify internal and external changes that prove detrimental to a business's position. This can be born of a lack of awareness of the change or failure to understand the impact of the change (Williams & McWilliams 2010). During the inaction stage, business's do exactly that, they may have identified the need for change but take no action as they wait to see if problems resolve themselves, relying on current processes that have proven to be successful in the past. Williams & McWilliams (2010) show that during the faulty action stage, businesses tend to react to organisational decline through tactics to lower business costs and improve efficiency instead of adhering to the need for organisational change, assuming that profit levels will be recovered. During the crisis stage,