Dogan 2017 A Strategic Approach To Innovation

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The key takeaways are that companies must adopt a strategic approach to innovation to create and maintain sustainable competitive advantage in today's rapidly changing business environment.

 
 Journal of Management, Marketing and Logistics -JMML (2017), Vol.4(3),p.290-300 Dogan
 _______________
 __________________________________________________________________________________ DOI: 10.17261/Pressacademia.2017.491
 
290
A STRATEGIC APPROACH TO INNOVATION
DOI: 10.17261/Pressacademia.2017.491 JMML-V.4-ISS.3-2017(11)-p.290-300 Ebru Dogan
I
stanbul University, Faculty of Economics, Department of Business Administration, İ
To cite this document
Dogan, E., (2017). A strategic approach to innovation Journal of Management, Marketing and Logistics (JMML), V.4, Iss.3, p290-300.
 Permemant link to this document:
 http://doi.org/10.17261/Pressacademia.2017.491
Copyright:
Published by PressAcademia and limited licenced re-use rights only.
ABSTRACT
Purpose-
The aim of this study is to examine the concept of strategic innovation - which includes a strategic approach to innovation - within the framework of its antecedents, the elements forming it and the advantages provided to the company.
Methodology-
Theoretical analysis: Innovation has been analyzed from a strategic point of view by examining the current literature extensively.
Findings-
 Along with the impact of globalization and the emerging new technologies, companies must manage the change by perceiving it as an opportunity to be able to sustain, grow and compete in a rapidly changing environment and respond to change with innovation.
Innovation reflecting the perspective of companies on change creates value through change. In today’s business world, there a
re true opportunities for the ones that can manage the process of change well. At this point, a company desiring to create value and maintain the sustainable competitive advantage should use innovation strategically.
Conclusion
- A strategic perspective on innovation leads the organization to look at the whole system beyond the product and the process in order to create value. Successful companies in innovation deal with it in a holistic and systematic approach by developing a fully integrated innovation strategy with its mission and objectives and by making organizational culture and organizational systems compatible with the strategy. Strategic innovation is a future-oriented concept that contains a creative discovery. The strategic consideration of innovation involves the use of appropriate strategic management techniques to increase the impact of innovation activities on growth and performance of the company.
Keywords
: Innovation, strategy, strategic innovation, strategic management, change.
JEL Codes:
 M10, M13
1.
 
INTRODUCTION
 
Today's business environment has changed qualitatively from many directions since the late 1980s. An economy based on manufacturing and commodities has quickly become an economy where information, services, support and distribution issues are more important. This change has increased the importance of information workers being a new class of wealthy, educated and mobile people who see themselves as free in the seller's market. Along with the information age, the acceleration of technological change in almost every sector, besides the domination of information technologies, has created entirely new businesses, they have destroyed those who cannot adapt to this change and have created an ever increasing demand for innovation. New product, process, and distribution technologies provide powerful levers for creating competitive value. More companies have realized the importance of disruptive technologies; innovation has attained a potential that invalidates a product line or even an entire business division. Another fundamental trend has become the decoupling of consumer and labor markets. Consumer expectations are changing very rapidly and even similar customer groups can have very different preferences for the products they want to buy. Today, new technology has made it easier, faster and cheaper to reach target micro markets that were physically impossible and too expensive to reach in the past. Moreover, this tendency is self-sustaining and the ability of a company to serve sub-markets is accompanied by an increasing demand from customers for more specific presentations (Nadler&Thusman 1999: 48,49).
 
Year: 2017 Volume: 4 Issue: 3 Journal of Management, Marketing and Logistics
 –
 (JMML), ISSN: 2148-6670, http://www.pressacademia.org/journals/jmml
 
 Journal of Management, Marketing and Logistics -JMML (2017), Vol.4(3),p.290-300 Dogan
 _______________
 __________________________________________________________________________________ DOI: 10.17261/Pressacademia.2017.491
 
291 Such changes in the competitive environment affect many companies unwittingly due to the features that can appear at any time and can have important consequences for the development and management of products, markets and organizational capabilities. They have to get away from monolithic and rigid organizational strategies and practices in such an environment (Ahmed and Shepherd, 2010: 82). These changes in the business environment challenge the basic assumptions about organizational design. While the purpose of historically organizational structures is to institutionalize the stability, the purpose of design in today's organizations will be the institutionalization of change. In this regard, there is a profound change in the purpose and meaning of organizational design (Nadler&Thusman 1999: 49). Past accomplishments do not guarantee a survival in the long run now. Managing the continuously changing aspect of change is the challenge to strategy. In this context, successful firms are those that can innovate and develop strategically (Ahmed and Shepherd, 2010: 82). Today, change has become a natural part of the business; however, even more important is the increasing speed of change. The life span of products, processes and technology is rapidly shortening and the critical issue at this point emerges as managing the time. The demands revealed by the time pressure push the companies towards competing, innovating and finding creative ways and methods while doing it. As a result of this change, firms must strategically use innovation to compete effectively in local and global markets, to gain competitive advantage, to adapt their strategies to changing market and customer demands, to create value and to achieve
superior performance (Keupp, Palmié and Gassmann, 2012: 367). In this study, innovation is addressed from a strategic
point of view, the basic elements of strategic innovation are examined and the role of strategic innovation for companies in creating value and maintaining sustainable competitive advantage is put forward.
2
.
INNOVATION
 
The word innovation comes from the Latin, innovare, and is about change. Innovation is a process of creating value from ideas (Tidd and Bessant, 2014: 3).
According to Drucker, “Innovation is the act that endows resources with a new capacity to create wealth. Innovation,
indeed, creates a resource. There is no such thing as a resource until man finds a use for something in nature and thus e
ndows it with economic value” (Drucker, 1985: 27). “An innovation is the implementation of a new or significantly improved product (good or service), or process, a new
marketing method, or a new organizational method in business practices, workplace orga
nization or external relations”
(OECD-Eurostat, 2005: 45). When the most successful innovations are analyzed, it is observed that they are the beneficiaries of the change. As a matter of fact, change always provides opportunities for the new and different
one. “The discipline of innovation is a diagnostic discipline: a systematic examination of the areas of change that typically offer entrepreneurial opportunities”.
Systematic innovation means tracking seven sources for innovative opportunity. The first set of sources is included in the business or
industry. These are ‘the unexpected’ which means an unexpected success, failure or an event in outer environment, ‘
the
incongruity’ indicating the innovation based on the process need –
 the changes that cannot follow everyone in industry or market structure. The second set of sources contains the changes apart from the business or industry. These are demographics (population changes)
 –
 changes in perception, mood and meaning
 –
 and new knowledge (Drucker, 1985: 31,32) The ability of companies to innovate is not limited to the development of products; it may target four main procedures.
These all begin with a ‘P’: P1 innovation to introduce or improve products; P2 innovation to introduce or improve
processes; P3 innovation to define or re-define the positioning of the firm or products; P4 innovation to define or re-define the dominant paradigm of the firm. P4 provides a structured approach in order to analyze the opportunity field for innovation (Francis and Bessant, 2005: 172). The alternatives can be arranged in four dimensions as shown in Table 1 according to the type of change.
Table
1
: Dimensions for Innovation
 
 
Dimensions Type of change
Product Changes in the things (products/services) which an organization offers Process Changes in the ways in which these offerings are created and delivered Position Changes in the context into which the products/services are introduced Paradigm Changes in the underlying mental models which frame what the organization does
Source: Tidd and Bessant, 2014: 24 
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 Journal of Management, Marketing and Logistics -JMML (2017), Vol.4(3),p.290-300 Dogan
 _______________
 __________________________________________________________________________________ DOI: 10.17261/Pressacademia.2017.491
 
292 Pressures on firms to make innovation can come from trajectories (such as technological progress and changes in the economy) or actors (such as shareholders, suppliers, customers and competitors). In order to eliminate the tension between the impairment of the status quo and existing competencies, organization starts to search for opportunities and resources to innovate and build new core competencies. Thus, firm starts an innovation process. Management shapes the nature and activity of the process by dividing the resources into the operational skills and transforming these resources into basic skills that are difficult to imitate for competitors (Sammut-Bonnici and Parautis, 2013: 925,928) Innovation is any product or service that creates extraordinary value for shareholders, real and sustainable competitive advantages and unique and effective solutions valued by customers. Sustainable competitive advantage can be achieved through the identification, creation and use of unique organizational knowledge, skills and experience that cannot be imitated by the rivals. Organizations must start positioning the innovation as the fundamental capability (Snyder and Deborah, 2003: 6-8). In a study conducted on innovation leaders in twenty-five sectors, it has been delivered that such firms have drawn away their competitors and displayed a performance over the average stock prices. All the economic growth that has taken place since the eighteenth century can be attributed to innovation. Innovation involves a dynamic goal; effective management if
innovation doesn’t guarantee the success due to the fact that technology, markets, arrangements and other factors are
continuously changing. Successful innovators are interested in developing dynamic talent to change their approach (Tidd and Bessant, 2014: 9). Companies faced with a complex and uncertain future and operating in such areas as information technology, multimedia and communications need to find a new direction in the 21st century in order to master the competition. They need to manage a radical transformation of the basic framework used in the past including current strategies, structure, culture, competencies and business processes. Organizations should be flexible in order to respond to competition threats coming from their competitors on the one hand and they should still maintain the growth based on their strengths by ensuring a sustainable working environment on the other. In this regard, it is necessary to ensure more effective operation of managers, to develop creativity through innovation management and to think on global scale while acting locally (Kodama, 2003: 235). Although innovation has different meanings, it manifests itself in different ways in a similar way. These formats are derived from the variety of meanings implied. Formats are generally divided into two categories; those under the control of an operator and those outside the scope of company or affecting each other. Strategic innovation forms the types of innovation that are under the control of the enterprise together with product and process innovation (Figure 1). Any form of innovation occurs when value is added to produce a hitherto novel outcome (Ahmed and Shepherd, 2010: 7-11). -Product innovation is the most visible manifestation of innovation process. The products consumed by the market represent the visible traces of the innovation process or action. New products are the result of the innovation process and product innovation can be focused on technology or marketing. -Process innovation expresses the change in execution of the organization activities of an enterprise. How a company organizes and manages its functions can be a result of the technological improvements or it may come from the acceptance of the latest structural or operational form. - Strategic innovation usually involves a major adaptive change in the firm's business model or the adoption of a new business model. They can sometimes be driven by innovations that occur within the organization such as strategic change, product and process innovations or by external innovations and challenges. External strategic changes such as mergers are the most common manifestations of strategic innovations. Also, internally focused strategic innovations generally involve structurally remodeling. - Social innovation is the result of many factors that come together in order to drive a society that is constantly changing towards a new direction (e.g.: heightened awareness of atmospheric pollution has made society environment conscious and this in turn led to social innovation). - Political innovation is often observed in the form of legislation, institutional reform, social orientation and governance. The changes that take place in the political arena often have important consequences for the direction and development of the society as well as the organizations. -In philosophical innovation, new philosophical thought has profound influence on society, promotes the knowledge of the society and enables the community to be guided by defining what is right and wrong. Companies have now realized that business management is not only behavioral but also an intellectual discipline and that different thinking is a necessary condition to be different (Styles&Goddard, 2004: 65):
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 Journal of Management, Marketing and Logistics -JMML (2017), Vol.4(3),p.290-300 Dogan
 _______________
 __________________________________________________________________________________ DOI: 10.17261/Pressacademia.2017.491
 
293
3. STRATEGIC INNOVATION
 
3.1. The Concept of Strategic Innovation
The competitive environment that companies face today is very different from the competitive environment that created the concept of strategy fifty years ago. However, the rapidly changing strategy environment has become a power that partially depresses some traditional strategy concepts such as industry structure analysis while evoking a lot of new thoughts at the same time. Indeed, this context changing for the strategy has encouraged many new ideas on strategy content. The new themes in the strategy world include foresight, knowledge, competencies, coalitions, networks, extra-
market competition, ecosystems, transformation and renewal. In order to maintain their existence in an “innovate or die”
environment of the new economy, companies must develop a new strategy, which is highly important for them (Hamel, 1998: 9,10).
A new competitive situation called “hyper
-
competition” emerged in the 90's. Hyper competition is a structure in
which the core competitive success factor is to constantly develop new products, processes and services with increasing functionality and performance for customers. There are also increasing technological pressures on firms. It has been acknowledged that the technological life cycles in some industries have declined compared to previous times. New technologies have a strong competitive influence and therefore technological dynamics will affect the competitive dynamics and strategy of companies. Organizations should be more innovative and think proactively in their strategic management (Drejer, 2006: 143,144). At the same time, a company should try to institutionalize innovation by establishing appropriate cultures, structures, incentives, systems and processes that will realize innovation as a part of everyday work (Markides, 1997: 22). In recent years, widespread researches into scientific and managerial conception of strategy and innovation have been observed. Nevertheless, most of these researches are either focused on strategy or innovation; so that strategy and innovation have evolved considerably separately in the schools of thought. In this context, the strategy literature is primarily focused on the level of the institution and the business units while the innovation literature is mostly focused on
 
Process Innovation
 Administrative /managerial
 Operations
 Technological
Product Innovation
 Technological
 Marketing
Strategic Innovation Philosophical Innovation Social Innovation
Figure 1:
 Innovation Formats
Source:
 (Ahmed and Shepherd, 2010: 7)
Political Innovation
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