Innovation and Technology Management
Table of Contents
Innovation and Technology Management 3
Introduction 3
Literature Review 5
Firms Capacity to Innovate 5
Dyson 6
Shazam 6
Mind Candy 6
Companies That Lack Strategic Management of Technology and Innovation 7
Hawlett-Packard 7
INNOVATION AND TECHNOLOGY MANAGEMENT 2
Nokia 7
Barriers to Innovation 8
Adoption Barriers 8
Mindset Barriers 9
Risk barriers 9
Strategies on Overcoming Barriers to Innovation 10
Resources 10
Culture 11
Networks 11
Competence 11
Recommendations 12
Conclusion 12
References 14
Innovation and Technology Management
Introduction
Innovation is believed to provide firms with a means of creating sustainable competitive
advantage; an imperative necessity in the contemporary turbulent and volatile business
environment. Innovation is strategically positioned as a driving force to economic growth. There
is much consensus on the fact that innovation is a mechanism through which companies draw
upon the core competencies and by which they transition these performances outcomes for
success. As Laukkanen and Patala, (2014, 1) posit, though innovation a firm is able to achieve
production efficiency. Production efficiency in turn allows the company to design, produce, and
market its products more effectively and efficiently than its major competitors. This is possible
INNOVATION AND TECHNOLOGY MANAGEMENT 3
through enhancing of the flexibility of the firm, increasing the speed of delivery, and realizing
economies of scale (Hölzl and Janger, 2014, 709). These activities are a prerequisite to achieving
better productivity and efficiency in terms of lower cost of production, better customer service,
effective production and labour practices, and higher quality.
Organizational innovation is a very broad concept in economics and business analysis
and includes strategies as well as behavioural and structural dimensions (Blanchard et al., 2013,
682). In addition, the concept of innovation is a key component of the competitive strategy and a
basis for the structural processes of the firm such as organizational boundaries, functional lines,
and hierarchy as well as work processes including the use of the a variety of inputs, work
allocation, job design, and the use of suppliers (Laukkanen and Patala, 2014, 1). Innovation is
also closely linked with the human resource management function such as industrial relation
practices and hiring.
By and large, innovation is widely accepted as a key factor in terms of competition in
today’s global marketplace. Nevertheless, the levels of innovation that different firms can
achieve differ greatly even within the same industry (Blanchard et al., 2013, 684). The big
question in such a scenario would be the reason for the big variation in innovation across firms.
This calls for an analysis and evaluation of the factors that constitute the foundation of a firm’s
capacity to innovate and the strategies that can be adopted in the management of the same to
enhance the innovative potential of a company.
Apparently, the realization of the fact that innovation is a prerequisite to organizational
performance coupled with the identification of the factors that will lead to adoption of these
strategies is not a direct ticket to organization success. Indeed, the process of innovation is likely
INNOVATION AND TECHNOLOGY MANAGEMENT 4
to face numerous barriers that could derail the process and cause devastating losses (Hölzl and
Janger, 2014, 712). As such, it is also imperative that an organization is able to identify these
barriers before embarking into any decision-making process concerning their innovation
strategies. Evidence shows that even with the ongoing advancement in technology most firms in
the most developed countries are yet to embrace innovation (Blanchard et al., 2013, 686). This
has partly been attributed to the presence of potential barriers to innovation such as lack of
financing for uncertain and high-risk innovations and lack of market opportunities and
technological knowledge for innovation. There is also an identified lack of connectivity within
the innovative system that causes a failure in providing innovation opportunities. This paper
proceeds to delineate the factors that contribute to innovation potential and analysis of the
companies such as Dyson, Shazam, Bubbery, and Spotify that have realized success through
innovation. It also evaluates the potential barriers to innovation with special interest in
companies that have failed to gain competitive advantage through innovation such as Hewlett-
Packard, Motorola, and Nokia. In addition, the paper provides justification for these arguments
through a review of relevant literature and real examples in EU and across the world.
Literature Review
Zuzek (2014, 105) postulates that the concept of innovation in academic practitioner
literature has been studied at three levels; firm, regional, and national levels. At the firm level,
there have been three broad streams of research-process theory studies, organizational
innovativeness, and diffusion. The regional level emphasizes that the innovative capacity of
companies that are geographically bounded is related to two factors; facilitation by the regional
agglomeration for collective learning process which allows rapid diffusion of information, best
practices, knowledge, as well as the presence of localised systems of production that assist in
INNOVATION AND TECHNOLOGY MANAGEMENT 5
minimizing innovation risks and costs through trade associations, training programs, technology
transfer, and buyer-supplier networks. Analysis at the national level employs the idea of the
National System of Innovation (NSI) to demystify the differences identified among the different
nations concerning their innovative activities. The NSI theory holds that nation specific factors
such as culture, public support schemes, and education are the drivers of innovation (Hölzl and
Janger, 2014, 718). Moreover, each country has its specific NSI or a set of institutions that
facilitate innovative activities within that nation.
Firms Capacity to Innovate
According to (Leković, 2013, 96) a firm possess different capacities to innovate. It is
imperative to note that a company’s capacity to innovate is closely linked to a nation’s/region’s
infrastructure in which it operates. A company’s capacity to innovate can be viewed as its
potential to generate innovative output. In this regard, the innovative capacity of a firm is
dependent on the capabilities and resources that the firm possesses because these allows it
explore and exploit any available opportunities be it in the production, supply, distribution,
management, or marketing. Some of the companies that have been effective in adopting
innovation are Dyson, Shazam, and Mind Candy.
Dyson
Dyson is one of the most renowned companies in terms of innovation. The company has
taken UK and the world by storm through its bagless vacuums and bladeless fans. This has been
attributed to huge investment in R&D in which the company spends more than $ 2 million every
week.
Shazam
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As Norek (2012, 130) notes, Shazam has been recognized for its continued innovation
initiatives which have enabled it to develop products such as Auto Shazam, an opt-in feature
designed to quietly keep a diary of one’s daily playlist. The company has since increased its
global market the current 350 million users with 10 million additions every month (Turut and
Ofek, 2012, 586).
Mind Candy
Another company that has realized tremendous success as a result of innovation is Mind
Candy. Mind Candy’s online phenomenon for children Moshi Monsters allows children to adapt
their own virtual pet. This product has won the hearts of 80 million children and includes
magazines, books, toys, and TV shows. Turut and Ofek (2012, 585) notes that the company is
currently recording in the tune of $ 45 million. The company has also launched an innovation
centre which they call Candy Labs that uses the online space as a testing ground to develop
strong, character-based apps and games before taking them offline (Norek, 2012, 130).
Companies That Lack Strategic Management of Technology and Innovation
On the other hand, Hawlett-Packard and Nokia have been criticized for failing to adopt
innovation effectively.
Hawlett-Packard
Hewlett-Packard recently experienced a costly failed launch of their tablet computer
(Cabrilo and Grubic-Nesic, 2012, 101). HP has recently been facing challenges in its innovation
capacity and in the recent past has not developed any ground-breaking consumer product. As a
result, the company’s revenues, margins, and cash position have continued to deteriorate over the
years, and tens of thousands of its employees are expected to be laid off.
INNOVATION AND TECHNOLOGY MANAGEMENT 7
Three factors have been identified as the causes of the problems facing HP are; a lack of
innovation, bad acquisitions, and outsourcing (Phaal et al., 2012, 34). The three challenges are
interdependent. Bad acquisitions by the company drained funds that could have otherwise been
used for R&D to foster innovation. Henceforth, the company has failed to innovate unique
products that can give it a competitive advantage. An analysis of HP’s management strategies
shows that the company lacks an innovative culture for long-term success. The company,
therefore, needs reengineering through developing resilience in order to accelerate creative
innovation and develop distinctively ground-breaking products.
Nokia
Nokia has been presented in numerous cases as an example of the dire consequences that
awaits companies unable to innovate in today’s competitive markets. In these cases, the
statement “To not innovate is to die” have been used to liken Nokia’s situation. Until recently,
the company had a massive lead across global markets in the sale of mobile phones, but with the
rise of Android and iPhones, its lead has slowly withered (Phaal et al., 2012, 35).
In a market dominated by fierce competition in developing new applications, Nokia
major failure was in lack of a solid platform for its developers to add new applications. Besides,
mobile phones are currently not just communication gadgets, but also banking, gaming, music,
and education devices. The management at Nokia failed to understand these changing trends
within the mobile industry as a basis for changes in the company. The company stuck for so long
within their comfort zones missing the opportunity to develop new applications in the innovation
eco-systems.
As a result of the looming failure by the management to identify and match market trends
and needs, Nokia has been struggling in winning back its market share which has since been
INNOVATION AND TECHNOLOGY MANAGEMENT 8
taken over by other players in the market such as Apple, Samsung, and Huawei among others
(Phaal et al., 2012, 36).
Barriers to Innovation
Barriers to the potential of a firm to adopt innovation are both internal and external. Some
of the internal resistances include organizational structures, adapting new technologies, and
introducing new technologies (Cabrilo and Grubic-Nesic, 2012, 101). Internal resistance
prevents innovation leading to failure by a company to match internal and external changes that
are the basis for innovation.
Adoption Barriers
Adoption barriers are associated with dominant, successful products and path
dependency, and designs. Such adoption resistances usually are increased by excessive
bureaucracy in major enterprises resulting in a status quo bias in which deviations from the
standard are negatively perceived (Roper, Vahter, and Love, 2013, 1551).
Mindset Barriers
These are barriers that are associated with the inability to unlearn the old magic on the
market and product trends. It can also be linked to the lack of distinctive competencies to detect
and exploit opportunities arising from the external changes (Cabrilo and Grubic-Nesic, 2012,
103).
Risk barriers
The risk barriers are linked to the excessive reliance on experiences and routines and the
unwillingness to cannibalise the own product markets. In such contexts, disruptive innovations
will usually threaten the existing products of these established companies (Norek, 2012, 130). A
good example of a company that over-relied on experience and routine is Nokia.
INNOVATION AND TECHNOLOGY MANAGEMENT 9
According to Norek (2012, 130) these barriers are internal to the company and are closely
associated with the specific management and organization of the firm. They do not necessarily
denote that radical innovation cannot take place within the firm; rather they imply that existing
organizations will usually resist changes. These resistances are factors that affect the innovation
process within the firm, deterring changing, or delaying innovative ideas and projects (Cabrilo
and Grubic-Nesic, 2012, 104).
Equally, important are the external factors to innovation which related to the market and
institutional context such as government, market, and system failures. These external barriers
emerge from the interactions of the company with other companies, agents, or institutions in the
innovation, governance, and economic system (Turut and Ofek, 2012, 585). Examples of such
issues arise from the standardization, financing of innovation, technology transfer, availability of
skilled personnel, and regulation.
Strategies on Overcoming Barriers to Innovation
A recent study supported by DTI and CBT provides anecdotal evidence suggesting that
the basic determinants of a company’s capacity to innovate are the eternal environment,
organizational culture, and the internal processes adopted (Roper, Vahter, and Love, 2013,
1548). In terms of the external factors, innovative companies were found to identify customers
and suppliers as a potential source of ideas (Hölzl and Janger, 2014, 718). These companies
reported that government and investors played a key role in the innovation process. Regular
contact between the design, sales, marketing, production, R&D and customers are valued in
these companies Zuzek (2014, 106). In terms of the internal processes, the highly innovative
firms constantly focused and emphasized on generating and capturing new ideas (Leković, 2013,
96). In these companies the ideas of the workers are a valued resource whereby successful ideas
INNOVATION AND TECHNOLOGY MANAGEMENT 10
are highly rewarded. In terms of the organizational culture, innovative companies were found to
have a strong culture, a well-thought out strategy, a business philosophy, as well as a clear sense
of purpose. These companies were found to have empowered employees, an open, multi-
functional team-based style of working, and leadership that demonstrate a strong personal
commitment to innovation (Hölzl and Janger, 2014, 718).
On the basis of this analysis, four factors which determine on a firm’s potential to
innovate can be identified; resources, culture, networks, and competence:
Resources
Resources can be viewed as a set of skills and assets utilised to support or create the
competitive advantage of an organization. The endowment of resources on the basis of structural
and human capital and financing is imperative for innovation. This is the aspects that
differentiate competing companies as such a basis for the different levels of innovation and
competitive advantage (Roper, Vahter, and Love, 2013, 1551). Although companies such as
Motorola had the resources, they failed to utilise the same innovatively to match competition.
Culture
The culture of an organization basically dictates what is valued within it. It shapes the
knowledge and skills that are embedded within its physical and managerial systems and
processes. As such, organizational culture determines the way things are done as well as the
relationships among the workers of that organization (Turut and Ofek, 2012, 587).
Networks
Knowledge forms the basis for the generation of innovative ideas. Innovation is the
commutation of learning, searching, and exploring. It entails the combination of both new and
old ideas and knowledge in pursuit of development of new techniques, new markets, forms of
INNOVATION AND TECHNOLOGY MANAGEMENT 11
organization, and products (Çetinkaya Bozkurt and Kalkan, 2014, 191). In this context,
networking strategies becomes a critical ingredient to the innovation capacity since they act as a
drive for poaching external knowledge. This drive is important because most of the needed ideas
may not be available within the walls of the company. Indeed, the bulk of the innovative ideas
and knowledge may be generated externally especially through informal networking strategies.
Competence
A company’s competence offers it with the ability to exploit its innovative ideas.
Competence as such comprises of such abilities as sharing tacit knowledge and experimentation,
integrating market opportunities with its technological abilities, as well as creating problem-
solving skills. A company’s competence usually lies in its research and marketing assets and
resources, design, and engineering (Çetinkaya Bozkurt and Kalkan, 2014, 194). In this context,
the role of the organizational leadership becomes that of integrating its competence with the
market opportunities to generate innovations.
Recommendations
It is imperative that companies keep in touch with the changing needs of their customers
to avoid being left out and losing out on their market share by more vibrant emerging companies.
It is also important that companies continuously develop necessary technologies to match
changing trends in the market. It is risky for successful companies to be content with their
success and seem to enjoy their comfort zone since markets are continuously changing and so
should the strategic policies of companies (Turut and Ofek, 2012, 588). Companies should keep
in touch with changing competition in the market. Competition in today’s markets keeps on
shifting; what is trendy today may not be necessarily trendy tomorrow. More importantly,
companies should avoid common mistakes such as failure to implement already developed
INNOVATION AND TECHNOLOGY MANAGEMENT 12
technologies, complacent attitude towards new competitors, and arrogant disregard for shifting
customer demands (Çetinkaya Bozkurt and Kalkan, 2014, 196).
Conclusion
Innovation generally involves the exploitation and adoption of new ideas (Laukkanen and
Patala, 2014, 1). In this regard, innovation comprises of all those commercial, scientific,
technical, and financing steps necessary for the successful development of improved or new
manufactured products, equipment or processes, or a new approach to a social service. As such,
innovation is not limited only to product innovation, but also includes process innovation. While
process innovation implies the embracement of improved or new manufacturing or distribution
strategies, product innovation entails the embracement of improved or new service or equipment
successfully into the market. Organizational innovation entails changes adopted in the
functioning of the organization in terms of business process reengineering, team working, and
enterprise resource planning; all of which would possibly contribute and facilitate effective and
efficient utilisation and management of physical and human resources (Çetinkaya Bozkurt and
Kalkan, 2014, 196). Succinctly, innovation encompasses three basic dimensions; a renewal of the
range of products and the associated markets, development of new production, supply, and
distribution processes, as well as the adoption of changes in work organization, management,
workforce skills, and working conditions.
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