How Does the Internal Market for Innovation at Nypro Function?
The idea of internal markets has actually been around for quite some time. The idea usually sounds plausible at first glance. Organizations can give the large numbers of managers the power to allocate budgets for innovation. In so doing, such organizations could exploit the wisdom of the many. Most importantly, the invisible hand of the market might effectively facilitate disruptive innovation within the organization. Essentially, markets generally tend to outperform bureaucracies over the long term. As such, they should be utilized from within the organization. Nypro is such an organization that utilizes the internal market for innovation to increase operational efficiency.
Nypro’s internal market for innovation can be best described as separate distinct sectors that work independently to establish themselves as the organization’s best manufacturing plant. Essentially, each of the independent plants is motivated by the organization to endeavor to improve efficiency, productivity, and innovation in the work area consistently. The independent, competing plants help to improve the organization as a whole by constantly improving their systems in order to increase efficiency. The Nypro management successfully managed to eliminate complacency and stagnation through the creation of an effective internal competition within the organization. As the individual plants within the organization compete against each other, a competitive marketplace is created for good process ideas.
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In the process of promoting internal markets for innovation, Nypro helps to instill a fervent desire among its workers to effectively harness their innovative spirits as well as improve the company’s overall production. It is important to realize that creating an internal competition driven by money presents an effective way to spawn innovation and encourage employee loyalty (Quinn et al., 2006). In essence, the dimensions on which competition manifests have a significant influence on the profitability of a particular organization. As such, the consistent profitability of Nypro has been considerably furthered out of the desire to be the best as well as a competitive attitude inculcated in the employees.
It is worth noting that Nypro has a strategic organization structure that has significantly facilitated aggressive internal competition. As such, the internal competition within the organization helps to fuel the organization’s innovation thrust. The internal competitions in Nypro have facilitated a high awareness and constant focus to performance statistics. As such, the performance statistics are often compared within the individual groups in the respective plants. The performance statistics of each plant are then compared to those of other plants with the objective of identifying the best plant within the firm. Additionally, performance evaluation at Nypro utilizes the element of competition. This helps to motivate individuals to contribute positively to the company’s overall innovation and improvements because of the associated incentives such as internal company recognition and stock programs.
The concept of customer focus and continuous improvement at Nypro helps in contributing to the organization’s long-term growth and profitability. As such, the employees continually develop processes necessary for solving production problems for the customers. Additionally, the teams recognize the need to contribute towards improving the total processes as a whole in the organization. Therefore, customer focus becomes ingrained in innovation and performance pursuits in the organization. All the team members in the organization are keen to identify the key drivers of success. As such, each individual team keeps a close eye on the teams in other plants within the organization in the lookout for good ideas and innovations. If a good idea or innovation is identified, the teams are quick to copy and implement it. Such a continuous flow of ideas within the organization, driven by competition, helps to promote innovation in the organization. The cooperative sharing of useful information promotes the long-term growth and profitability of the organization.
How Does Lankton Manage the Process?
Nypro’s emphasis on internal market for innovation is a product of the company’s aim of maintaining a sustainable growth in profits and revenues. Additionally, the organization endeavors to become the customer’s local source for customer injection worldwide by enhancing its customer focus and serviceability. Lankton’s has effectively handled the process by employing various strategies that proved appropriate for achieving the organization’s goals. He managed to develop superior technology, create a proactive and innovative environment, and standardize processes and offerings, as well as developing customer oriented operations. Under Lankton, the company was able to shift focus from small-scale customers to technologically driving clients who have large-scale needs. As a result, Nypro managed to emerge the fifth largest plastic molder in the United States of America. The standardization of processes at Nypro ensured that all the customers, regardless of their locations, would actually have the same opportunities and offerings to product creation. This was achieved through smooth information sharing within the organization.
Lankton was also able to create a friendly environment within the organization where innovative and proactive employees would be retained. As such, the organization was able to maintain the employees that made it successful in the market. In 1995, Lankton shifted the organizations basis for competition by embracing commoditization as the customer demand began to focus more on delivery time to market. As a result, customer demand in the market focused less and less on high precision on design. The company also adopted a decentralized location strategy and project teams. The move was necessitated by the need for the organization to keep up with technological progress and remain a market leader. To achieve this, Nypro maintained an organization structure that is anchored heavily internal competition in the 21 plants around the world. Essentially, the project teams are formed in the early development stages and dissolved into continuous improvement teams (CIT) thereafter. The continuous development teams are responsible for overseeing the production to market phase (Vega-Jurado et al., 2008). In addition, the continuous improvement teams that are spread across all the plants around the world are continuously encouraged to ensure closer integration between the organization and its customers. As a result, cost savings, higher quality, stronger supplier relationships, as well as more revenues are generated in the process.
The organization, through its structure, facilitates internal market for innovation through competition. The leadership, under Lankton, believes that innovation is the product of competition. As such, product development teams are formed and are the pitted against each other in the same plants and other plants within the organization. Additionally, the continuous improvements teams are charged with the task of helping the customers achieve their goals of getting a commercially successful product to market hence establishing a long-term relationship with the customers as well as improving revenues, margins, profits, cycle time and profits.
Lankton also utilizes rewards and incentives to promote high employee performance. The organization uses stock programs for valuable employees. This ensures that competent employees are retained and motivated to become as proactive and innovative as possible. The organization is keen to ensure that the company strategies are aligned with the stock program scheme in order to push for more growth initiatives.
The company has also been able to shift its focus from product technology to process technology in order to drive further efficiency and improvement. The continuous improvement teams are primarily tasked with continually revising, improving, and refining the product through innovative processes.
How would you go About Making the NovaPlast Decision?
Integrating the NovaPlast technology is very critical in the organization because of the inherent structure of the innovation in the company. The current structure of innovation at Nypro is as a result of the decentralized plant location as well as the strong internal competition of the individual plants. It is important to realize that NovaPlast will allow the organization to compete in an entirely new playing field. In regard to making the NovaPlast decision, I will consider analyzing four alternatives on how NovaPlast could actually be integrated into the organization’s operations.
The first option involves building a new plant that would only employ NovaPlast machines dedicated teams that would monitor the engineering efficiency of the process. The teams would also evaluate the costs and risks associated with construction of the new plant. The second option would entail installing two or three machines in each of the individual Nypro plants. Regional markets can be effectively served under this option although it may be costly at the onset. The third alternative involves implementing the NovaPlast technology and ensuring that it is successful at a single plant before spreading it to other plants if it were commercially feasible. The fourth alternative involves not using the technology at all.
Based on the alternatives outlined above, I would adopt the first alternative in order to be able to effectively focus more on developing the NovaPlast technology. The organization would effectively utilize the management supervision on its development. Importantly, creation of a new business unit will help in separating the innovative technology (Lüttgens et al., 2014). This will ensure that the business unit thrives separately without disrupting the operations of other established plants.
I will consider taking several initiatives in the process of implementing the technology. I will ensure that I understand and communicate to the entire organization that, indeed, the NovaPlast technology is a disruptive technology. The new technology would actually begin to serve as an entirely new market within the organization. I will also consider having a hands-on and firm stance on the adaptation of the NovaPlast technology. As such, the upper management in the organization will have a direct hand in the development and nurturing of the NovaPlast technology. However, the managers may have the option of not adapting the technology given the decentralized nature of the respective plants. This is because the managers are much more inclined on adapting incremental technologies and innovations. Essentially, if in the future, the NovaPlast technology proves mature and viable and demand starts to escalate in the market, the organization can offer valuable incentives to managers who can successfully implement the NovaPlast technology. Additionally, I will ensure that I allow some slack in performance appraisal in the initial phases of the implementation process in order to effectively and sufficiently account for the learning curve.
After adopting the NovaPlast technology, I will make a controlled and strategic effort to not only build up only the organization’s internal value-add capabilities but to also align appropriately with the best as well as the most successful suppliers and manufacturers from around the globe. If the market being served by NovaPlast thrives and goes into mature stage, the organization can consider adopting vertical integration in order to effectively take full advantage of economies of scale.
References
Lüttgens, D., Pollok, P., Antons, D., & Piller, F. (2014). Wisdom of the crowd and capabilities of a few: internal success factors of crowdsourcing for innovation. Journal of Business Economics , 84 (3), 339-374.
Quinn, J. B., Anderson, P., & Finkelstein, S. (1996). Leveraging intellect. The Academy of Management Executive , 10 (3), 7-27.
Vega-Jurado, J., Gutiérrez-Gracia, A., Fernández-de-Lucio, I., & Manjarrés-Henríquez, L. (2008). The effect of external and internal factors on firms’ product innovation. Research policy , 37 (4), 616-632.
