The challenge of innovation in the economic crisis.

Tilina, Dana ; Ispas, Constantin ; Tilina, Dragos 等

1. INTRODUCTION

From 1 January 2008 to 1 January 2009 the term "economic crisis" has generated 70.000 results on the search engine Google Blog Search compared to 360.000 results between 1 January 2007 and 1 January 2008. There is no doubt that this subject of discussion was the world news in 2008 and is also at the news of 2009, especially as the forecasts of some experts are not encouraging because they believe that the current crisis could be worse than 1929. How can an organization survive in this economic environment?

The financial and economic crisis that came to light late in 2008 is the kind of extreme development that calls for one essential quality when seeking solutions: creativity. We need creativity to find the best answers.

But creativity is not only useful in crisis situations, of course. Creativity and innovative capacity have crucial long-term benefits for the economy, society, enterprises as well as individuals. Innovation and creativity are fundamental pillars for sustainable economic and societal growth.

Innovation and creativity have, without question, been the driver of human development. Investing in them is not only a safe bet; it is the most vital one. So we need to place our bet on creativity and innovation.

2. HOW ORGANIZATIONS CAN INNOVATE

One of the few certainties of today's business environment is that it never stands still. Only one approach to this unsteady state of affairs makes sense: perpetual innovation--the constant shifting of strategies and tactics to reshape the business and take competitors by surprise. The winners will be the companies that find ways to release their innovative potential and apply it to the way they think and the way they work.

We can't speak of innovation without reffering to creativity. That's why is necessary to delimitate the two concepts.

Creativity is a process of generating new ideas, and innovation is a process of changing these ideas in products, services, etc. This limitation is justified because the creative skills involve the generating of the new ideas and it is not compulsory to transform these ideas in products.

Innovation is often associated with creativity, luck or a flash of inspiration. However, these factors, even though they are crucial, are only a few elements of a much broader process. As stated by one of the world's leading experts, Professor Peter Drucker: "Innovation is not flash of genius. It is hard work". Indeed, it is easy to have ideas, but developing good ideas is a much harder task. The real strategic challenge companies are faced with is to manage to continually generate good ideas and convert them into products and services that are successful in the marketplace.

Innovation can also refer to the changes made in a company's set of processes. In actual fact, redesigning the production processes of a company can help increase the value of a final product due to lowered manufacturing costs, reduced response time and higher quality. This redesigning process, implies supplying the same service or product in a totally different way. Any innovation due to an industrial application of scientific knowledge is a technological innovation. Another misconception should be highlighted here: there are no high-tech or low-tech sectors. All sectors can use technology to innovate (Terre, 2002).

In fact the process of innovation rallies all the functions of the enterprise, beginning with the definition of a strategy up to the introduction in the market of a new or modified product (Figure 1) (Ispas et al.,2006).

Organizations in the twenty-first century can hope to be innovative all the time only if they shift their innovative thinking out of the laboratory and take it to the broad base of the entire organization. A culture of innovation must be nurtured like a living organism, permeating everything the company does, all the time, including the design and operation of its processes (Shapiro, 2002).

[FIGURE 1 OMITTED]

A culture of innovation can be an organization primary source of competitive advantage, and it can pay off steadily over the years. Any high-performance culture is difficult to replicate, but innovation is in a class by itself. Once embraced by employees, innovation becomes a way of life. It ensures that all the human capital is in step and striving to produce outcomes of value for the organization. Most importantly, competitors cannot copy an innovative culture.

Employees have to be trusted to search intelligently for improvements on their own initiative. But they do need guidance, training, and the tools to implement whatever solutions they come up with. It's not a straight choice between imposing rigid structures on employees and allowing them total freedom. It's a matter of finding the right balance.

To be perpetually responsive to today's fast-changing markets requires a radically new approach to designing businesses. Customers have more consumer power than ever before for three reasons (Shapiro, 2002):

* there is greater competition due to reduced barriers to entry;

* the cost and effort of switching from one company to another have been greatly reduced;

* customers have more knowledge than ever before because the Internet has made information on prices, ratings, and alternative products widely available.

If companies are counting on innovation to add value, what sort of innovation should it be? The sort that completely reshapes a company or the sort that leads to more modest increases in efficiency (incremental or radical)? In the traditional concept of pure research, scientists and engineers search in isolated laboratories for dramatic discoveries that will take the progress of their own organization a distinct step forward. On another patch, developers are looking to progress by means of a series of tiny steps, making small improvements in something that already exists--be it a product or a process. These small innovative developments, when combined, have the power to make a big difference (Shapiro, 2002).

3. HOW INNOVATION PROCESS WORKS

The approach we are calling for, innovation process, combines the adoption of a process view of the business with the application of innovation to key processes. What is new and distinctive about this combination is its enormous potential for helping any organization achieve major reductions in process cost or time, or major improvements in quality, flexibility, service levels, or other business objectives (Davenport, 1993).

The innovation process includes activities that are related both to the creation of new products and to the ability to do things differently with a view to increasing product value. Moreover, the innovation process must be driven by a well-defined market focus, based not only on market input, which consists of identifying opportunities and unmet needs, but also on market output, that is to say, the customers' satisfaction with the new product or service.

The innovation process comprises five activities (Figure 2):

1. Creating new concepts:

* Identifying new concepts of products and services.

* Anticipating customers' needs.

* Encouraging new ideas and creativity among staff.

* Identifying the mechanisms and criteria used for selecting the ideas to be developed.

* Planning the creation of new product concepts.

2. Developing products:

3. Redesignning the marketing processes:

* The changes in the marketing processes contribute to an increase in the product value or the creation of new products and services.

* Use new information technology to redefine product marketing.

4. Managing knowledge and technology:

* Innovation through technology.

* How do companies decide on which technologies to develop?

* To what extent do companies procure external technology?

* Closely monitoring the technological developments that will have an impact on their products and services in the future (Terre, 2002).

[FIGURE 2 OMITTED]

4. CONCLUSION

Whether it's a faster way to move data, a cheaper way to power a car, or a cleaner way to sweep up dust bunnies, the right innovation can deliver huge profits to an organization. But given today's fast-paced global marketplace and limited resources, companies often struggle simply to survive, let alone innovate. (http://knowledge.wharton.edu)

In a survey conducted by the Knowledge Transfer Partnerships (KTP) programme, the majority of UK manufacturers recognised that "Innovation is even more important during an economic downturn than in the normal business climate" (http://www.processingtalk.com).

Paul J.H. Schoemaker, research director for the Mack Center for Technological Innovation, suggests that, for some companies, the economic crisis can actually provide an innovation platform. "The crisis has multiple impacts. Loss of revenue and profit will at first instill a cost cutting mentality, which is not good for innovation. But if the patient is bleeding you need to stop that first. Then, however, a phase starts where leaders ask which parts of their business model are weak (and perhaps unsustainable) and that, in turn, can lead to restructuring and reinvention."

5. REFERENCES

Davenport, T. (1993). Process Innovation: Reengineering Work Through Information Technology, Harvard Business School Press, ISBN: 0-87584-366-2, USA

Ispas, C.; Tilina, D. & Tilina, D. (2006). Innovation Management, The II International Scientific Conference "The Innovation Technologies of Social and Economic Complex", Podolsk, March 2006, Russia

Shapiro, M. (2002). 24/7 Innovation: A Blueprint for Surviving and Thriving In an Age of Change, McGraw-Hill, ISBN: 0-07-137626-7, USA

Terre, E. (2002). Guide for managing innovation, Available from:www.urenio.org/tools/en/Managing_Innovation1.pdf

Accessed: 2009-04-10

*** (2008) http://www.processingtalk.com, The latest news for engineers in the process industries, Accesed on: 2009-04-10

***(2008) http://knowledge.wharton.edu, Why an Economic Crisis Could Be the Right Time for Companies to Engage in 'Disruptive Innovation', Accesed on: 2009-04-10