Evolution of innovation capability5
Use of management control systems in innovation and performance5 Innovation & Adaptation from MCS point of view6
Performance from MCS point of view6
Areas of Innovation7
In this paper we look at how different innovation and adaptation initiatives by the corporations have translated into their growth and success and how interactive management control systems have influenced the same. We have identified 6 different levels or elements (from strategy to operation, internal and the external forces affecting the companies) at which an organization can introduce innovation. There on, for each element we have identified a company from the top 25 most innovative companies (as per the S&P/Business week survey) and have explained how that specific organization has translated innovation into corporate success.
In the present situation of fast economic growth and accelerated corporate expansion, innovation is the fuel of new business development. New products, processes, ideas, and services are the backbone of sustained increases in both revenue and profitability of any business. As more companies see to exploit the emerging opportunities and provide similar services targeted on new markets, innovation is a key differentiator. Even in the challenging times of recession, cost reductions, budget cuts, growth subsidies, innovation no longer remains an option to add value and deliver extra competitive advantage but it becomes the core means for survival and that is when it becomes the real case of “innovate or die”!! Innovation influences the financial & non financial performance of an organization & also the industry as a whole. A successful innovation is when the organization acquires a creative culture and there is a motivated work force and also attracts the best talents to join. A successful innovation has a very positive impact on the customers, suppliers, subcontractors and on the industry as a whole. Innovation success within a firm encourages more innovation outside. The other companies in that industry starts to “adapt” to the environment of innovation by spinning out new ventures ,relocation of partner or supplier operations .Today no longer a firm can remain shackled with traditional asset based economies, it has to adapt to the ever changing environment by exploiting its intellectual property across multiple streams ,collaboratively working across networks, matching its equity to brand value and thus introduce a continuous stream of evolving new products and services.
Evolution of innovation capability
Since past 20 years there have been three main waves of innovations and new approaches that have occurred across industry in each phase there was a specific focus. Today we are in the middle of fourth wave of innovation capability development and that is the leading edge. Companies that are developing and refining the new techniques for innovation success are today at the fore front of innovation practice. They are “innovating at the edge”.
1980 1985 1990 1995 2000
Use of management control systems in innovation and performance Innovation is considered to be one of the major determinants of long-term organizational performance in contemporary environments .Many empirical studies (e.g. Capon, Farley, Lehmann & Hulbert, 1992) have shown a positive relationship between innovation and corporate performance. Control systems have been used by organizations to support both innovation and performance. Simons (1991, 1995) defines two different styles i.e. Diagnostic and Interactive styles of use of MCS which include budget systems, balanced scorecards and project management systems for innovation and corporate...