Discuss the Significance of Innovation for the Competitive Position of the Firm. Why Is Innovation Important for Business Organizations? in What Areas of the Business Might Innovation Be Significant?

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Discuss the significance of innovation for the competitive position of the firm. Why is innovation important for business organizations? In what areas of the business might innovation be significant?

The need for organisations to innovate is one of the most important functions to undertake in order to stay viable. There are many factors that impact on the organisation, mainly the internal and external environments. However, the external environment is largely the main cause to innovate, with the use of technology helping organisations of all sorts become more efficient and effective in the way that they do business. Also, technology is making it a lot easier to access information from all over the world with a single click of a mouse button. Many organisations also have to deal with their competition, especially the new companies that are setting up in the powerhouses of China and India. What’s more, climate change is a concern that is on everybody’s mind and organisations will have to innovate to become more sustainable. Innovation goes deeper down than just the organisation as a whole, all the departments the make up the organisation all play different roles to help the innovation take place. These tasks will differ depending what role the department plays in the innovation process and what is needed and who will undertake the innovation. Lastly, the leaders of innovation whom will be discussed is a science-based company known as 3M, they have thought of, and innovated thousands of products and we will see what makes 3M so successful.

Firstly, what is innovation? It can be defined as any change to a product or service that will enhance the consumer’s experience of using the product over another product (Johnson, 2001). An example of innovation that has affected almost every child is innovation in the education system. Many schools are now moving from the traditional method of teaching to online learning and interactive learning systems. These new methods of teaching are designed to get students more involved in their learning in this new technological savvy world. Another great company which has innovated very successfully is 3M. This company has a way of virtually innovating anything, as there is always a customer out there looking for a product that will suit them. What’s more 3M had sold more than $27 billion worth of products during the financial year 2010, proving to its customers and competitors that it is the number one choice for government, businesses and consumers (3M, 2011).

Innovation is happening all around us, and more and more organisations need to do this in order to stay competitively viable. Many people think that innovation is more outputs from fewer inputs (McMillan, 2010). However, that is not the case; the external environment has a large impact on an organisations ability to compete (McMillan, 2010). With many organisations facing uncertainties such as climate change and ever changing technology they need to ensure that they stay ahead of their competitors. Many firms focus on their competition and innovate accordingly to keep or gain their competitive advantage (McMillan, 2010). As expressed earlier, technology changes all the time. This can make innovation very complex as many organisations need to establish what is the best investment their organisation can make that will make them more efficient (Cavusgil, Calantone & Zhao, 2003). Due to these rapid technological changes innovation can also be costly and risky, with many organisations undertaking similar or better innovations. This leads to innovation becoming difficult implement throughout the organisation (Cavusgil, et al., 2003). Thacker & Handscombe (2003) stated that the correct technology that fills customer wants is crucial for successful innovation. What’s more they also said that the introduction of a new product or innovation of a previous product will help market share growth thus putting the organisation in a better...
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