Stimulating innovation and change

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STIMULATING INNOVATION AND CHANGE

Stimulating innovation and change

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ABSTRACT

Change refers to making things different. Organisational change is the process by which

organisations transform from their present state to a desired future state to obtain or

increase their strategic advantage in the constantly evolving business or economic

environment.

Innovation is a more focused kind of change. Through innovation, organisations are

able to put to efficient use of creative ideas into products, services and business

processes that serve to satisfy customers or help organisations better produce them.

Thus, it is important for organisations to be able to manage change and innovations to

ensure business continuity, sustain competitiveness and profitable growth.

In this paper we will be discussing the concept, type of innovation and how the

managers can stimulate innovation and thereby bring about change in the organization.

INTRODUCTION

IKEA: A case study in stimulating innovation and change

IKEA is a Swedish company that designs and sells ready-to-assemble furniture (such as

beds, chairs, and desks), appliances, and home accessories. IKEA is one of the rare

companies which have innovation at its bedrock philosophy.

As of January 2008, the company is the world's largest furniture retailer. Founded in

Sweden in 1943 by a 17-year-old Ingvar Kamprad, who is one the world's richest people

in 2013, the company's name is an acronym that consists of the initials of Ingvar

Kamprad, Elmtaryd (the farm where he grew up), and Agunnaryd (his hometown in

Småland, South Sweden). The company is known for its modern architectural designs

for various types of appliances and furniture, and its interior design work is often

associated with an eco-friendly simplicity. In addition, the firm is known for its

attention to cost control, operational details, and continuous product development,

corporate attributes that allowed IKEA to lower its prices by an average of two to three

percent over the decade to 2010 during a period of global expansion.

As of October 2011, IKEA owns and operates 332 stores in 38 countries. In fiscal year

2010, US$23.1 billion worth of goods were sold, a total that represented a 7.7 percent

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increase over 2009. The IKEA website contains about 12,000 products and is the closest

representation of the entire IKEA range. There were over 470 million visitors to IKEA's

websites in the year from September 2007 to September 2008. A July 2013 media report

speculated that IKEA is the world's largest consumer of wood after a finding that the

company uses 1% of the Earth's wood supply.

How they have remained on top of innovation and change even after 70 years:

1. Communicate widely about innovation strategy.

Innovation is a daily guideline for innovation in IKEA.

2. Partner everyone in innovation strategy development.

Top management, BU heads and internal innovation experts.

3. Innovate keeping your core strength in mind.

IKEA make sure it has something appealing for everyone at low price.

4. Innovation means maintaining good quality.

5. Flat packing means costs saving on transportation and assembly.

6. Innovation in IKEA catalogue.

IKEA catalogue is a study in how to create a year-long invitation to IKEA

stores.

7. Establish value system to support innovation

8. Manage Innovation

IKEA has a well defined organizational and governance structure to manage

innovation.

9. Measure innovation.

IKEA operative key performance indicators (KPI) measure the achievements in

terms of innovations status and milestones.

10. Innovation and change comes from top.

Ingvar Kamprad (IKEA’s founder) drive the innovation culture.

11. Technology helps innovation

Some innovations by IKEA:

Popup advertising

Moving Showroom

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Storage Balconies

Popup Lounge

IKEA is one of the world leaders in innovation and they are continuously finding out

what their customers spend their money on and using this to develop new service

propositions and improved levels of levels of innovations.

But the moot question is why other companies find stimulating innovation and change

so difficult when company’s like IKEA are thriving on it.

This question becomes much more important because as we have seen that the giants

like Walchand group (Makers of Padmini cars), Smith Corona, Bethlehem Steel and

WorldCom went out of action. Other giants such as Kodak, Delta Airlines, New

Century Financial and Calpine filed for bankruptcy. Companies like Boeing and Lucent

Technologies implemented huge cost cutting programs and eliminated thousands of jobs

to avoid going broke. Those are just the proof that today’s organizations must cultivate

and stimulate innovation and master the art of change not only to be a successful but

also to survive else become dinosaurs soon.

The problem with innovation that everyone loves to talk about it but the trouble starts

when there is too much talk, and not enough action. The ideas that can be withered on

the vine and companies remain in limbo. The problem lies not in ideation – One can

find the ideas even from patent offices – so there are plenty of great ideas out there. It is

the implementation of just one good idea into practical processes, products and services

that companies and customers need. If innovation is to transform the way we do

business then it must be instilled in the management culture, inspire the employees

while being true to the core values of the company.

CHANGE OR DIE

These harsh words provide the rallying cry of today’s managers. The standard of

innovation toward which many organisations strive is that achieved by such companies

as 3M, DuPont & Coca Cola. Their innovations have helped them become familiar

brand names & products used in nearly every household.

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On the other hand, there is Eastman Kodak Company, commonly known as Kodak. It

was best known for photographic film products, during most of the 20th century Kodak

held a dominant position in photographic films, and in 1976 had a 90% market share of

photographic film sales in the United States. The company’s failure to “Inject useful,

usable and desirable changes in to the products led to Kodak losing its market share to

its competitors.

The symptoms of a strategy becoming obsolete are quite clear and easy to catch. You

will find a complacency in dealing with customers and employees so much so that they

tend to be taken for granted; customers are often dissatisfied with your market offerings

and your service offerings have grown monotonous. In this situation, there is a real

opportunity to create value through disruptive innovation, and that is what we do on a

regular basis.

Six ways to stimulate innovation and change

Six key levers built into any project or process effort can dramatically improve results

and create a culture of continuous improvement and creativity. Five of the levers are

directed toward the individual and five toward the organization; together they can make

a big difference in replacing bureaucracy with an entrepreneurial spirit of excitement,

innovation and creative problem solving.

Be open and receptive to new ideas

Being open to new ideas implies that every idea can be discussed, challenged

and enhanced, regardless of its origin. New ideas can come from customers,

suppliers, partners or many other sources. The idea is the hero, not the person.

Every idea that comes your way should be seriously considered, no matter who

came up with it or how similar it seems to something you’ve tried before.

Uncover Change Champions and Future Leaders

Easy, uncomplicated queries can rouse creative insight in startling ways.

Sometimes the most competent route to innovative solutions is the most direct –

for example, asking, "If you launched this product, what would you do?" A

company wants its most thoughtful, bright, inquisitive and creative people

invested in addressing these kinds of questions.

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Take risks and allow yourself to occasionally fail

Trying new ideas involves taking risks and not all of the ideas will work. But not

taking any risks at all, results in passing up the chance of finding a great idea

that might break new ground for your business. So to never fail could be a sign

that you are not taking enough risks!

Take fun seriously.

Fun is part of the journey of realising your largely untapped creative potential.

When people are relaxed and having fun, the potential for creative insight is

dramatically increased. Tap the creative side of the people using fun.

Break Down the Barriers

In general, what is done routinely does not stimulate creativity. Stirring the pot

does – as in breaking down the constraints on lower-level workers interacting

with senior managers.

Rapid Decision Making and Reward Right

Thomas Edison tried 10,000 different approaches in the course of inventing a

workable light bulb, saying, "I haven't failed; I've found 10,000 ways that don't

work." A critical feature is a stepped-up pace with which approaches are tried,

evaluated, and adopted or discarded. Rapid decisions and swift reward system

are essential to keeping an organization innovative.

Five Barriers to innovation

Inadequate funding

Getting the starting funds for an innovation change often means taking money

away from an established budget. Getting the money at just the right time is also

problematic since organizations often work on annual funding cycles which

rarely match up well with real-world opportunities.

Closed-Mindedness

A CEO once said “If I knew that my employees felt they couldn’t bring up an

idea around me, I would go ahead and fire myself.” Employees spend more time

at the bases working with the minute details, so if they come up with a radical

innovation, listen! It could end up saving huge amounts of time and money.

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Risk avoidance

Most of us won’t run toward risks. We want to maintain our health, wealth and

peace of mind. But no progress is made without calculated risk taking.

Siloing

Organizations seek to protect create their identities, get proper credit, sustain

themselves and protect themselves. That’s why they create boundaries, assign

responsibilities and put rules in place. How much artificial the divisions and

processes are, they are usually defended – even when ignoring them is to

everyone’s advantage.

Communication

Communication is essential when presenting an innovative idea. Encourage

employees to present ideas in a concise way that makes it easier for others to

understand.

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Conclusion

The majority of brands (91 per cent) do not budget for innovation because of the

growing need to deliver short-term positive ROI over long-term brand building,

according to a recent study. But 91 percent companies do not last long in the business

world for 50 years or so.

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References:

http://www.forbes.com/sites/johnhall/2013/04/29/10-barriers-to-employee-

innovation/

http://www.flyingsolo.com.au/working-smarter/innovation/six-ways-to-stimulate-

innovation-and-creativity

http://en.wikipedia.org/wiki/IKEA http://articles.economictimes.indiatimes.com/2012-11-09/news/35014581_1_coca-

cola-india-coke-ceo-atul-singh

http://www.marketingweek.co.uk/news/90-per-cent-of-brands-do-not-budget-for-

innovation/4007448.article

http://www.coca-colacompany.com/topics/innovation