In strategizing for innovation management, it is imperative that firms analyze the speed and direction of market forces, to predict future shifts in consumer needs (Jaruzelski, Staack, & Goehle, 2014) . This creates a long-term anticipatory effect in decision making, which the firm can utilize in making incremental improvements. Eventually, such continual increments give way to system innovations in a seamless process, which not only provides the firm with enough time to implement changes, but also allows for gradual input of resources within the firm’s profitability margins. When making strategic decisions on innovations, it is imperative that projections made based on such decisions be tested using evidence-based research. Premium brands’ consistence in execution of innovations appears to be a reliable route to profitability, but a good question arises as to how much risk the brand is ready to take (Jaruzelski, Staack, & Goehle, 2014) . It is never a good feeling to realize that the organization’s product is a failure. It is of uttermost importance that such risks are accompanied by verifiable research. The text examines strategic management of innovations, offering insights into successful and unsuccessful innovation. Further, the text highlights the contribution of creativity and flow of information to strategic innovations in innovation-oriented organizations.
Successful innovations: Toyota’s Total Management (Lean Manufacturing)
The Japanese automaker, Toyota, has established its place in the auto industry through its strategic product and service innovation. Just when other automakers like General Motors are rightsizing, Toyota Engineering continues to thrive. Toyota is widely accredited with major technological innovations that have altered the face of the manufacturing industry. By developing and properly implementing innovations in total management and lean manufacturing, the company has risen to become one of the leading global automakers. The radical process innovation maximized the efficiency of machine-human interaction. The innovation characteristically placed responsibility on personnel to control processes at the individual level, to improve processes in the most time and resource-conscious manner possible. This empowered ordinary employees with the responsibility and authority to affect the quality of products in line with the company policy.
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The firm employs both innovation and creativity to transform and reinvent products and services to accommodate the divergent needs and demands of the market. This innovative process, both proactive and reactive, improves and adapts the firm’s ability to remain competitive in the business environment.
Toyota’s success story cannot be told without mentioning the strategic innovations that propelled the firm to global competitive auto market. One of these innovations is the ‘Kaizen’ principle, which means ‘continuous improvement.’ This innovation focused on incremental innovations, as opposed to giant-leap, innovations. This innovation made the company’s policy a responsibility of every employee. Through this principle, it is reported that ordinary employees contribute more than a million new ideas a year, and which the firm implements. Another successful innovation is the ‘Genchi Genbutsu’ which implies an on the spot problem solving. This innovation allows direct interaction between the management and the employees, enhancing instant problem solving. Toyota has an intensive human resource management. The firm recognizes the input of its human resource, organizing workers into small teams to enhance motivation, improve problem solving, and allow for self-improvement.
Failure in strategic management of Innovation: The Mercedes Smart Project
When firms implement giant leaps in technology in the absence of proper market research, huge catastrophic results may occur. Though catastrophic losses are rare in the auto industry, when they occur, they can result into huge losses on the firm. A good example is the Mercedes Smart Project-Smart For Two city car. After taking over the project from Swatch founder, Nicolas Hayeck, the giant automaker took the project as a show of might among the competitor firms in the industry. The firm provided a new platform for the project, developing three-cylinder engines for the Smart Project, deploying huge amounts in the research and development, marketing, and distribution.
The company built a new factory near the French-Germany border at Hambach The first-generation Smart Car, Smart ForTwo, had specs normally associated with super cars. The two-seater micro car boasted high specifications including turbocharged, three-cylinder engine, a uniquely developed safety cell, a sophisticated ABS, rear-wheel drive, aluminum parts and a complex stability controls system. According to Bernstein’s analysts, Mercedes used more than three billion pounds to bring the Smart Project from scratch into reality.
It was disappointing that the first-generation Smart For Two city, launched in 1997, sold so poorly that it failed completely in reaching the planned volume of 200,000 units per year. The firm incurred a per unit loss of 4,470 Euros according to Bernstein estimates, toppling The 10 Most Loss Making European Cars of Modern Times.
Reasons For Failure
The risk associated with the firm’s Smart Project, according to analysts, is the taking on a giant technological innovation, together with the associated investment costs, without carrying out an exhaustive cost-benefit analysis in a market considered volatile. Another reason for failure of the Smart Project innovation is the failure to conduct proper market research to establish the nature of gaps in the auto market, and the consumer preference. The car, having been designed as an affordable city car, failed in its projected sales by more than 40 %. The automaker failed to convince the consumers, resulting into the loss of huge investment costs.
Lessons from Failure
Giant strategic technological innovations carry with them huge risks. The Smart Project was a failed attempt to turn Mercedes into a small car producer (Gehani, 2016) . When premium brands bring innovations into the market, there is a tendency to overprice their products. From the failed Smart Project, we deduce that taking giant innovations head on blindly is a suicidal attempt. The Smart for Two city car specifications resembling those of super cars were beyond what an affordable car buyer would look for. A two-seater car with such specification would be hard to convince a customer to fork out the exorbitant amount of money, which for much less would get a real affordable alternative.
In addition, some of these failures are because of bureaucratic organizational structures that discourage lateral flow of information, and in this way discouraging diversification of ideas through individual contribution and team dynamics. Such systems discourage benefits achieved from creativity both at the individual and team level (Gehani, 2016) .
While it is amazing how such small car can make such a huge loss, no one denies that the Smart car innovation was a good idea. Nicolas idea of a city car for two, uniquely stylish and safe, got to life as conceived, but with a huge financial damage to Mercedes. Mercedes erred in handing the project management to a young group of independently managed engineers who raised the specifications beyond the definition of a cheap city transport. Further, the management erred in building a factory in Hambach, France, where variable costs were high. Coupled with marketing and distribution costs, the innovation was already out of control. The product sales did not improve the matters. With innovation running down such a trend, the management had the chance to make amends, but instead, the idea of Smart For Four took shape. The catastrophic fail that followed serve to indicate the consequences of wrong management decisions.
The Role of Individual and Collective Creativity in the Organization
In the globalization of business, there is a continued growth of information and the need for management of knowledge. While it is possible to codify and store vast amounts of knowledge, coding and storing knowledge and skills inherent in the individual is difficult. The skills and knowledge of individual players in the organization is important in realizing organizational goals.
Whether creativity is an inherent trait unique to an individual or a trait that is gained through the contemporary, system of education continues to invoke interest among scholars. The proponents of the former argue that creativity is an inborn trait, nurtured through continued practice. Research has established that while creativity is an inherent tendency, its disposition to a nurturing environment is critical in expanding its scope and application in problem solving (Daly, Mosyjowski, & Seifert, 2014) . Creativity is characterized into two phase. The first involves the process of realization of unexplored fields in the search for problem solving mechanism. Once this phase is achieved, the second phase involves a thought process of establishing new approaches to solve prevailing challenges using new innovative methods.
In conclusion, creativity is fundamental in an innovative organization. It is imperative that creativity is nurtured both at the individual and collective levels in an organization to realize the full potential of strategic innovation.
Guidelines for Developing an Innovative Organization
For firms to remain competitive amidst the changing worldwide megatrends in economies, technology, politic and societies, they must cultivate the culture of strategic innovations. These innovation strategies ought to consider the trends to meet customer needs, technological advancements, economic aspects, and government regulations. While these trends may fail to inspire creative thinking, it should be noted that the long term repercussions determines the firm’s profitability and thus relevance among peer firm firms.
In order for a firm to remain competitive, it should further assess the functional purpose of the innovation, with respect to market potential, customer acceptance of the innovation, required compliance with set regulations and the pricing strategies to be implemented (Goffin, & Mitchell, 2016) . In addition, the firm should consider the potential technological differentiations as direct a consequence of the innovation and the reaction of the target market.
The firm should consider the magnitude of the strategic innovation to be implemented. While large-scale innovations hold the promise of higher returns, such innovations come with a higher risk as compared to low scale innovations. Prior to implementing such innovations, intensive evidence-based research should be done to ascertain the risk level involved. In addition, careful assessment of the potential risks associated with the technologies to be utilized should be carried out regularly. It is important to assess the chances and risks to which the innovation technologies will affect the existing ones, in order to determine redundancy and thus take corrective action. This assists in establishing the duration of innovation cycles and reducing unnecessarily complex systems (Goffin, & Mitchell, 2016).
As new technological advancements continue to change the way business is conducted and the way people interact, strategic management of innovations must consider the merits of systems innovations as compared to single innovations. This will not only allow the firm to set lofty expectations, but also offer higher returns on investment, reducing innovation cycles. A large amount of innovation spending is largely determined by legislative requirements. In that sense, the research and development agenda should determine the optimal technologies to be used in implementing the proposed renovations in order to be able to associate the innovation with the right periods for proper assessment of the level of success.
The responsibility of management in integration and sharing of information in an innovative firm
Sharing and integration of information is a fundamental factor for proper implementation of innovations in innovative firms (Jaruzelski, Staack, & Goehle, 2014) . The nature of structural organization largely determines the flow of information critical in the strategic management of innovations in such firms. Studies have established that the traditionally vertical-structured organizations, often depicted as the traditional, hierarchical systems, offer little chance for collective decision-making. In fact, such structures have been seen to undermine the process of decision making by other personnel except the top managers.
For proper flow of information, flat management structures have been found more effective in the modern setting, where creativity and knowledge is important in decision-making. The largely horizontal structures allow for lateral flow of information among employees. These systems are largely successful owing to the collective decision making processes by all employees in all levels of the organization. In these structures, both the management and the employees are involved the strategic management of innovations.
During the process of implementation of an innovation, the organization undergoes an extent of restructuring in its system. For vertical organizational structures, the top management has the reserve to make decisions, whereas the employees are left to implement decisions from ‘above.’ In such cases, the complexity of dispersed innovation processes is entrusted to the few in management. The focus of top managers becomes disoriented by the complexity of the processes such that critical decisions are left hanging, with problems going unaddressed. The result is organizational uncertainly and failure ( Goffin, & Mitchell, 2016) .
On the other hand, flatter management structures provide for efficient flow of information between management and employees, where each individual is aware of which decisions are in play at all times. During restructuring, such organizations handle the process seamlessly, and where challenges arise, all members of the organization are well aware of what to do (Lui, Ngai, & Lo, 2016)
Conclusion
In the face of the changing global business environment, organizations must embrace both product and process innovations to remain competitive. The organizations therefore need to establish mechanisms that provide for competent strategic management of innovations. The effectiveness of such mechanisms should be well tested through evidence-based research in the divergent business environment characteristic of the modern competitive global market. Studies have identified that while large-scale innovations promise higher returns on investment, they also carry higher risks compared to small scale or incremental innovations. It has been established that creativity, both at the individual and collective level, is fundamental to successful management of innovations in organizations. To achieve organizational goals, it is imperative that the organization provide a platform through which both the management and the employees interact and share information to enable seamless implementation of innovations.
References
Daly, S. R., Mosyjowski, E. A., & Seifert, C. M. (2014). Teaching creativity in engineering courses. Journal of Engineering Education , 103 (3), 417-449.
Gehani, R. R. (2016). Corporate brand value shifting from identity to innovation capability: From Coca-Cola to Apple. Journal of technology management & innovation , 11 (3), 11- 20.
Goffin, K., & Mitchell, R. (2016). Innovation management: effective strategy and implementation . Macmillan International Higher Education.
Jaruzelski, B., Staack, V., & Goehle, B. (2014). Proven paths to innovation success.
Lui, A. K., Ngai, E. W., & Lo, C. K. (2016). Disruptive information technology innovations and the cost of equity capital: The moderating effect of CEO incentives and institutional pressures. Information & Management , 53 (3), 345-354. Retrieved from: https://ecitydoc.com/download/euro-autos-ecomentocom_pdf
