Business innovation can be defined in a very simple way: it is all ideas, concepts, technologies or processes that are introduced in enterprises and allow management to improve something, get a higher quality product or create a new product or service. These changes make it possible to achieve the goals associated with the business operations of the enterprise, that is, they allow you to increase sales and increase the level of profitability of the activity.
According to Peter Drucker, one of the founders of modern management theory, innovation is a special tool in the hands of managers, with the help of which they acquire the opportunity to engage in other activities or provide new services.
Essence and concept
Organizational innovation is the introduction of a new method into the working principles adopted by the company, in the structuring of jobs or in interaction with the environment.
Datainnovations do not involve mergers and acquisitions, even if they were carried out for the first time. Organizational innovation is not only a factor that drives product change, but can also have a significant impact on the efficiency of business operations, can improve the quality and efficiency of work, increase information sharing, or increase a company's ability to learn and use other knowledge and technologies.
Innovation is usually about something that hasn't been used in a particular enterprise yet, or about changing something that already exists to make it better. Innovations can refer to various types of processes, phenomena, which are both organizational and technical, as well as social or psychological.
Features
A distinctive feature of this type of rationalization is the introduction of a fundamentally different organizational method (in business practice, in the organization of jobs, in the production process), which was not previously used at this enterprise.
Historical aspect
American and Austrian political scientist and economist Joseph A. Schumpeter introduced the term "innovation" in economics. He understood by him:
- Introducing another product that customers don't yet know about, or some other brand.
- Introducing a production method that has not yet been used.
- Opening another market.
- Search for another source of raw materials.
Innovation conceptis understood differently. For American economist Michael Porter, innovation is the use of progressive ideas. They must bring economic benefits, various technological improvements, or apply best practices. Professor of international marketing F. Kotler has a similar approach to innovation, by which he understood a product, service or idea.
Why change is needed
Among the main goals of organizational innovation should be highlighted:
- Company implementation of new strategy.
- Changing the existing structure of the enterprise to reflect other standards.
- Improve core business performance.
- Elimination of internal organizational problems in the company.
- Enterprise exit from crisis.
Basic shapes
Organizational and managerial innovations should be carried out by introducing progressive methods of production or provision of services adopted by the company. These include supply chain management and transformation of the processes used in the enterprise, business reengineering. Also, improvements may relate to the introduction of other solutions in the distribution of tasks between employees and decision-making powers.
Because this concept can be interpreted in different ways, there are two types of organizational innovation. The first involves the presence of technological innovations, that is, those related to the product or production process.
Second - non-tech options,that is, those relating to organizational and marketing changes.
Among the organizational forms of innovation, there are process and product innovations.
The latter are designed to improve an existing or introduce a new product and service to the market. This improvement concerns the technical side, the materials used for production, the functionality of the products and the ease of use.
Process organizational and managerial innovations are based on changing the method of production. This innovation may be an improvement on an existing method or the use of a completely different method of manufacturing products. Companies choose this type of invention implementation for several reasons:
- The need to reduce unit cost.
- Improve the quality of goods and services.
- Introduction of new production.
Marketing variants of inventions relate to changes in product packaging, its appearance, sales methods, promotion of a product or service on the market, price changes.
The last type of innovation is the organizational type. They make changes in the internal structure of the enterprise, as well as in its relationship with the environment. These innovations lead to the improvement and strengthening of the company's position, its relations with the external environment.
Shaping basics
Demand or supply often drives innovation. Rationalization ideas can be implemented at the enterprise itself or relate to the market environment in which it operates. Alsoinnovations relate to a regional, corporate, national or international market, and sometimes to a global one.
In the process of creating new products, an enterprise can introduce its own rationalization solution or choose a simpler option, that is, apply a method already tested by another company. Innovation can come from a particular enterprise, from outside, or be the result of collaboration between different companies.
In the beginning, an idea for a new solution is born. The next step is to create a concept. Later, one person or a designated team develops the proposed innovation. The progressive method invented by the company is sold like any other product. It is important to remember that all changes implemented in the enterprise must meet expectations.
The main forms of organizational innovation can be divided into small and large businesses. The strategies in these forms differ significantly. Most of today's innovations are created in the conditions of small businesses.
Basic usage
The introduction of organizational innovation is a specific set of activities that together make up a single process. The main idea is to create appropriate conditions for the implementation of progressive ideas. The most important activities that make up the innovation organization process include:
- Selection of departments that manage the implementation of the project.
- Getting the resources you need.
- Coordination of activities, that is, ensuring cooperationunits that perform partial tasks.
- Determine the system of supervision, control and acceptance of tasks suitable for this mode of implementation.
- Determining the information flow method.
- Organization of staff training.
- Preparing a detailed implementation program.
- Developing precise instructions for critical situations.
- Create a group of employees who will be responsible for the implementation and assign them specific tasks.
Factors influencing the implementation process
Innovations and organizational changes in the enterprise can be carried out due to the influence of various factors. The introduction of new solutions is a relatively complex process and is associated with the emergence of numerous difficulties during its implementation. Often the problems are related to the fact that each time the process of changes in production (even small ones) is individual and unique.
Advanced technology is an example of the traditional way of transformation. In the course of its implementation, research and development work is appropriately transformed and turned into a specific product, production method, organizational and economic solution. The implementation participants are both the performers and the authors of the idea.
Besides, the specificity of the innovation forces the implementers and users to take part in it, who will use the new product for their needs. For example, when a new drug is introducedfunds during its implementation, commercial divisions, service centers and consumers determine the demand for the drug. As you can see, there are several levels of targeting. Everyone must accurately indicate the respective area of operation.
Coordination process
In the management of organizational innovation, coordination and control take on an important role.
Coordination, which is considered one of the most important elements of the implementation process. It is seen as the harmonization and unification of all private activities. As a rule, each stage of implementation includes several small individual projects. This situation exists even in the case of implementation carried out at one enterprise. For the implementation of the idea to be effective and efficient, it is necessary to synchronize subsequent stages and elements.
When it comes to timing, there are two main aspects to consider. Firstly, we are talking about the exact timing of all actions in order to introduce this innovation faster. The second aspect concerns proper task scheduling. It should be organized in such a way that the same actions cannot be repeated several times.
Ensuring effective coordination is possible due to the following factors:
- Accurate schedules for the next milestones and specific tasks.
- Detailed implementation instructions.
- The flow of up-to-date information.
- Relevant steering group composed of representativesunits performing partial tasks.
Control process
To emphasize the importance of control in the management of the entire innovation process, one should pay attention to its importance as one of the key management functions at the stage of solution implementation. One justification for such a significant importance of control is that at the stage of implementation it is necessary to involve more serious measures than at other stages of the innovation process. In order to effectively and efficiently use these funds, it is necessary to systematically monitor activities aimed at identifying any shortcomings and violations, and then eliminate them.
The main interest to control organizational-economic innovation should be the three most important factors:
- Results achieved.
- Timing for the implementation of the next stages of the event.
- Costs incurred to fulfill commitments.
As part of the control of the results obtained, the following parameters are taken into account: weight, quality, suitability, efficiency, technical productivity. Comparison of actual costs with expected profit is the basis for making decisions regarding cost reduction, plan changes. Project timeline control includes checking how much time is required to complete specific tasks, as well as determining the start and end dates for implementing innovative proposals.
Conclusion
Main findings on the research topic:
- The role and importance of organizational innovation in the current crisis is increasing dramatically.
- The process of their creation and implementation must be continuous in order to achieve maximum efficiency.
- When putting into practice the introduction of innovations, planning mechanisms are used in all areas of the company.
