In the essence of analyzing the world’s economic affairs, globalization stands out to be one of the common change initiatives that organizations have targeted. With a clearly sound objective of economic development, organizations that take this course venture into different features such as- free flow of optimized allocation of capital, technology, information and service in the global context. Many senior managers that believe in change are no strangers to having similar beliefs that the organization’s development, progress and prosperity could only be achieved through integrating with the outside world markets. However, I strongly believe that in order for these organizations to follow their visions and objectives through, middle managers have to be involved in the decision making process too.
In an imaginative view of the role of middle managers during planned change, Higgs and Rowland (2005), opine that this type of change is complex in the sense that it covers organizational structures, financial control systems, the incentive mechanism, and the HR system. All this complexity therefore should entail top management to consider some bottom- up approaches in decision making. Similarly, McNamara (2008) views indicate that planned change occurs when leaders in the organization recognize the need for a major change and proactively organize a plan to accomplish the change, hence the need for middle management involvement.
Lewin (1951) indicate that the democratic type of leadership is generally the most effective leadership style due to the fact that not only do such leaders offer guidance to group members, but also participate in the group and allow input from other group members. This kind of view reiterates a belief to me that in order for better performance and communication, middle managers should also be deeply involved to a certain extent of decision making. Further clarification is given by Gioia and Chittipedi (1991) who indicate that the increasing separation of senior and middle managers reduces interaction between the two groups. However, such interaction is important for creating alignment in organizations. On the part of sense making and sense giving, Weick (1995) contends that while it is viewed as a significant process of organizing, sense making unfolds as a sequence in which people concerned with identity in the social context of other actors engage ongoing circumstances from which they extract cues and make plausible sense retrospectively, while enacting more or less order into those ongoing circumstances. Weick’s (1995) views indicate to me that middle managers are so important to the organization
One of the examples where middle managers are very important is in the Chinese business society. For the sake of striking a fit between the organizational and local/ national cultures, middle managers need to begin making decisions for the good of relationship building and communication. A major cultural feature that does apply to the Chinese business network is the ‘Guanxi’, or connections which strongly rely on fundamentals such as loyalty, trust, mutual dependence and favors, honesty and good reputation. Any kind of middle manager that is working in the Chinese economy would definitely require ‘Guanxi’ in order to acquire trust, good communication and cooperation. The above fundamentals may also be related to Hofsted’s (1980, 1991) cultural dimension of cultural ‘collectivism’, which is characterized by societies in which people from birth onwards are integrated into strong, cohesive in-groups, often extended families that continue to protect them in exchange of unquestioning loyalty.
Conclusively, I am in strong support of middle managers for the fact that since they are much closer to the lower employees and customers, they are personally more aware of the issues that would in the end affect the organization. Nevertheless, once that relationship between top and middle managers is lost on grounds of decision making, it may not be so easy to create good communication, effective delegation, and ‘top of the range’ leadership.
References
Gioia, D. A., and Chittipeddi, K. Sensemaking and Sense giving in Strategic Change Initiation. Strategic Management Journal, 12: 433–448, 1991
Higgs, Malcolm and Deborah Rowland. All Changes Great and Small: Exploring Approaches to Change and its Leadership. Journal of Change Management, Vol. 5, No. 2, 121-151, June 2005
Hofstede, G. Culture‘s and Organisations: Software of the Mind. New York: McGraw-Hill, 1991.
Hofstede, G. Culture‘s Consequences: International Differences in Work-related Values, London: Sage Publications, 1980.
Lewin, Kurt. Field Theory in Social Sciences: Selected Theoretical Papers, 1951.
McNamara, Authenticity Consulting Charter. Toronto, 2008.
Weick, Karl E. Sense making in Organizations. Thousand Oaks California: Sage Publications, 1995.
Sunday, November 30, 2008
Saturday, November 29, 2008
Importance of Organizational Structures
Some of the cases that we have covered during this semester have made me think about the importance of organizational structures, as well as management systems such as the internal environment which is so important and crucial while coping with the rapidly changing external environment. One of such cases was Timah (Tin Company) which faced a crisis in 1985 that was triggered by an over-supply of tin, hence resulting in the enormous fall in the price of tin. Due to the above proceedings, PT. Timah went into debt, a scenario that led the company to undergo extensive re-structuring pressure.
When I make sense of the resulting effects, the sudden change in the structure of the industry had a drastic impact over the company to change its internal structure. As if that wasn’t enough pain, the over-stuffed, highly bureaucratic, and mechanistic organizational structure of the company disallowed taking necessary actions hence responding back to the change call immediately. I therefore explicitly assume that if the company had been less hierarchical, more flexible and in the hands of professional managers, the impact of the crisis would have been of little effect to the company. Yet despite the company’s inability to manage the crisis under new management, the company underwent large-scale re-formation movement which proved successful in the following years.
Some of the fundamental changes that had taken place were;
Rethinking hierarchy to increase responsiveness to external changes
Reducing the number of hierarchical layers
Decentralizing decision making
Shrinking headquarters staffs
Emphasizing horizontal rather than vertical communication
Shifting the emphasis of control from supervision to accountability
According to McAllister’s (2004) article titled “The 5 P’s of Change: Leading Change by Effectively Utilizing Leverage Points within an Organization”, it is argued that if the 5 P’s are used constructively, they can help organizations and their members to accept and cope with change. The author lists the 5 P’s as Pain, Process, Politics, Payoff and Persistence. In relation to the case therefore, the deduction is that PT. Timah had no intentions whatsoever to initiate a move from being over-stuffed, highly bureaucratic and mechanistic organizational structure, towards being decentralized, more organic and being a contemporary organizational structure in terms of executive management, re-focusing into long term indicators and having systematic financial reports. This did not happen not until the time PT. Timah was forced by an external change and faced with a high level of pain that left the company with no options but employing the 5 P’s and re-structuring the organization in order to survive.
In regard to these facts, the destructive changes in the structure of the industry can create constructive impacts over the companies. Yet recognizing the pain and executing the necessary change by professional hands can only lead to success. I therefore recommend a road map which is essential for the companies to turn destructive impacts of the external change into constructive pain of change. These steps will be helpful to the whole organization.
• Strategic Planning Systems
• Statement of the goals
Setting up a goal involves establishing specific, measurable and time targeted objectives Goal setting is an effective tool for making progress by ensuring that participants (both employer and the employees) are clearly aware of what is expected from them, if an objective is to be achieved.
• Specific action steps
In order to pursue the stated goals, organizations must set specific action steps. These are to stir the organization in line with the goals, moreover not to lose the track in the course of diffusing the alterations throughout the organizational body.
• Corporate Culture
• Beliefs, values, behavioral norms of the company that influence how employees think and behave
In accordance to Latham (2003), Leaders have a vital role in changing work attitudes, and instituting a strong corporate by injecting a new mind-set, values, behavioral roles and making sure that these alterations pass through the organization. In his article ‘Goal setting: A five-step Approach to Behavior Change’ stresses how leaders must model their subordinates. Similarly, McAllister (2004, 326) opines that no change will occur ‘if it is not constantly reinforced and monitored by the people at the top and then repeated throughout the management chain of command.’
References;
MCallaster, C.M. (2004) “The 5 P’s of Change. Leading Change by Effectively Utilizing Leverage Points within an Organization”. Organizational Dynamics. Vol 33, no 3, 318-328.
Gary P.Latham (2003) Goal setting: A five-step Approach to Behavior Change, Organizational Dynamic, Vol.32, No.3, pp.309-318
Ancok, Djamaludin (2008) Restructuring of PT Timah. Case study, prepared for JIBS seminar on organizing and leading change.
When I make sense of the resulting effects, the sudden change in the structure of the industry had a drastic impact over the company to change its internal structure. As if that wasn’t enough pain, the over-stuffed, highly bureaucratic, and mechanistic organizational structure of the company disallowed taking necessary actions hence responding back to the change call immediately. I therefore explicitly assume that if the company had been less hierarchical, more flexible and in the hands of professional managers, the impact of the crisis would have been of little effect to the company. Yet despite the company’s inability to manage the crisis under new management, the company underwent large-scale re-formation movement which proved successful in the following years.
Some of the fundamental changes that had taken place were;
Rethinking hierarchy to increase responsiveness to external changes
Reducing the number of hierarchical layers
Decentralizing decision making
Shrinking headquarters staffs
Emphasizing horizontal rather than vertical communication
Shifting the emphasis of control from supervision to accountability
According to McAllister’s (2004) article titled “The 5 P’s of Change: Leading Change by Effectively Utilizing Leverage Points within an Organization”, it is argued that if the 5 P’s are used constructively, they can help organizations and their members to accept and cope with change. The author lists the 5 P’s as Pain, Process, Politics, Payoff and Persistence. In relation to the case therefore, the deduction is that PT. Timah had no intentions whatsoever to initiate a move from being over-stuffed, highly bureaucratic and mechanistic organizational structure, towards being decentralized, more organic and being a contemporary organizational structure in terms of executive management, re-focusing into long term indicators and having systematic financial reports. This did not happen not until the time PT. Timah was forced by an external change and faced with a high level of pain that left the company with no options but employing the 5 P’s and re-structuring the organization in order to survive.
In regard to these facts, the destructive changes in the structure of the industry can create constructive impacts over the companies. Yet recognizing the pain and executing the necessary change by professional hands can only lead to success. I therefore recommend a road map which is essential for the companies to turn destructive impacts of the external change into constructive pain of change. These steps will be helpful to the whole organization.
• Strategic Planning Systems
• Statement of the goals
Setting up a goal involves establishing specific, measurable and time targeted objectives Goal setting is an effective tool for making progress by ensuring that participants (both employer and the employees) are clearly aware of what is expected from them, if an objective is to be achieved.
• Specific action steps
In order to pursue the stated goals, organizations must set specific action steps. These are to stir the organization in line with the goals, moreover not to lose the track in the course of diffusing the alterations throughout the organizational body.
• Corporate Culture
• Beliefs, values, behavioral norms of the company that influence how employees think and behave
In accordance to Latham (2003), Leaders have a vital role in changing work attitudes, and instituting a strong corporate by injecting a new mind-set, values, behavioral roles and making sure that these alterations pass through the organization. In his article ‘Goal setting: A five-step Approach to Behavior Change’ stresses how leaders must model their subordinates. Similarly, McAllister (2004, 326) opines that no change will occur ‘if it is not constantly reinforced and monitored by the people at the top and then repeated throughout the management chain of command.’
References;
MCallaster, C.M. (2004) “The 5 P’s of Change. Leading Change by Effectively Utilizing Leverage Points within an Organization”. Organizational Dynamics. Vol 33, no 3, 318-328.
Gary P.Latham (2003) Goal setting: A five-step Approach to Behavior Change, Organizational Dynamic, Vol.32, No.3, pp.309-318
Ancok, Djamaludin (2008) Restructuring of PT Timah. Case study, prepared for JIBS seminar on organizing and leading change.
Wednesday, October 1, 2008
Role of team work during the entreprenural/innovative process
Citing from different authors, it is noted that innovative companies or organisations are very much focused on teamwork. Being innovative is everybody’s business and it is not only for the top and senior management (Ramsey, 2003). In order to create a situation where everybody is obliged to be innovative, it is required that a shared definition is being established. Developing a shared definition and clear expectation is the first step in creating a climate of originality and creativity (Ramsey 2003). In addition to this it is also necessary that leaders enable everybody to be active and give the employees the permission to be creative. Ramsey (2003) opines that it is important that everybody in the company is aware of the fact that nobody has a monopoly on imagination.
The employees should be able to make improvements, come up with ideas and pass them on to other employees (Hargadon and Sutton 2000). Through this atmosphere in the companies the employees are encouraged to contribute something during the innovations process. Rees (2007) suggests that for the team to work effectively, it is important to create a good organisational climate. To make innovation processes successful Rees is in favour of focus groups, which is tantamount to hiring selected individuals in order to get fresh input from them. Hiring “professionals” can be a successful way for the company. So they can benefit from the mentioned above selected individuals. In the short run this solution can be very successful because they may provide the companies with fresh ideas and so forth. However, in the long run this possibility can be dangerous because the companies do not involve their own employees.
In the article “Let go to grow – get people to collaborate” (Sanford 2006) it can be seen that teamwork is by far the most important issue. According to Sanford, it is very important to ex-change ideas, collaborate, as well as discuss the ideas. Only with these important “ingredients” for teamwork it is possible to overcome the barriers of creative thinking and this will lead companies more or less to innovations. Teamwork is very important within the innovation process and this necessary issue fosters innovations as well (Sanford 2006). Moreover the author discusses that it is not easy to find people to collaborate with and also that it is not easy to work within a team. However, most of the literature states that teamwork is one essential characteristic for organisations to be innovative, vital and also likely to overcome the organisational changes, which can occur during the innovation process.
After reading different views from the various authors, I strongly believe that teamwork is one of the most important ingredients for creating a favourable microclimate. Although some employees work independent, they will be still monitored by the top management without much pressure within the teams. The climate within the teams can be more vital and the process of generating ideas is therefore much easier. As mentioned before, everybody within the companies or the teams should be able to add something to the ideas or to improve them. Through the atmosphere within the teams, it is easier to pass on the ideas and to let them emerge, grow and develop. Hence the above clearly explains the importance of team work during the process of innovation. According to Amabile, Hadley and Kramer (2002), one disadvantage or a negative aspect regarding the teamwork could be that because the team members work very independent if they need to come up with ideas and in the long run with innovations, they may find themselves working around the clock, which means almost all day long. It is not all the time such a pressure, but for a better understanding and awareness of teamwork this aspect should be mentioned.
Birkinshaw, Crainer and Mol (2007) state that the employees should come first which means that management should focus more on the employees. If management does not follow this approach it could be according the case that all the innovative activities will fail. During the innovation process the companies are often too much focused on the products or the services, where they would like to come up with innovations. According to Birkinshaw, Crainer and Mol, the employees have to realize that the companies, where they are working are the best. If they show their commitment, they will come up with great ideas and the symbioses between the management level and the employees is valuable. The companies or organisations have to create a comfortable environment for the employees so that they may feel comfortable and willing to show their commitment.
Another perspective comes from Pearson’s (2002) “Tough-minded ways to get innovative” The author’s view provides some more information regarding the microclimate. If the companies require innovations, and they do, the CEO is supposed to spread the word, set up goals, measure the progress and so forth. According to Pearson, innovations need specific people for specific tasks where by every employee is important.
References
Amabile, Teresa M., Constance N. Hadley, and Steven J. Kramer. “Creativity under the gun.” Harvard Business Review 80 (2002): 52-61
Birkinshaw, J, Stuart Crainer, and Michael Mol. “Special report on management innovation.” Business Strategy Review 18 (Spring 2007): 62-87
Hargadon, Andrew, and Robert I. Sutton. “Building an innovation factory.” Harvard Business Re-view 78 (2000): 157-167
Ramsey, Robert D. “The supervision of innovation.” Supervision 67 (2006): 3-6
Rees, Richard T. “The role of HR in organisational development and innovation.” Employment Relations Today 33 (2007): 29-35
Pearson, Andrall E. “Tough-minded ways to get innovative.” Harvard Business Review 80 (2002): 117-126
Sanford, Linda. “Let go to grow – get people to collaborate.” Leadership Excellence 23 (2006): 17-17
The employees should be able to make improvements, come up with ideas and pass them on to other employees (Hargadon and Sutton 2000). Through this atmosphere in the companies the employees are encouraged to contribute something during the innovations process. Rees (2007) suggests that for the team to work effectively, it is important to create a good organisational climate. To make innovation processes successful Rees is in favour of focus groups, which is tantamount to hiring selected individuals in order to get fresh input from them. Hiring “professionals” can be a successful way for the company. So they can benefit from the mentioned above selected individuals. In the short run this solution can be very successful because they may provide the companies with fresh ideas and so forth. However, in the long run this possibility can be dangerous because the companies do not involve their own employees.
In the article “Let go to grow – get people to collaborate” (Sanford 2006) it can be seen that teamwork is by far the most important issue. According to Sanford, it is very important to ex-change ideas, collaborate, as well as discuss the ideas. Only with these important “ingredients” for teamwork it is possible to overcome the barriers of creative thinking and this will lead companies more or less to innovations. Teamwork is very important within the innovation process and this necessary issue fosters innovations as well (Sanford 2006). Moreover the author discusses that it is not easy to find people to collaborate with and also that it is not easy to work within a team. However, most of the literature states that teamwork is one essential characteristic for organisations to be innovative, vital and also likely to overcome the organisational changes, which can occur during the innovation process.
After reading different views from the various authors, I strongly believe that teamwork is one of the most important ingredients for creating a favourable microclimate. Although some employees work independent, they will be still monitored by the top management without much pressure within the teams. The climate within the teams can be more vital and the process of generating ideas is therefore much easier. As mentioned before, everybody within the companies or the teams should be able to add something to the ideas or to improve them. Through the atmosphere within the teams, it is easier to pass on the ideas and to let them emerge, grow and develop. Hence the above clearly explains the importance of team work during the process of innovation. According to Amabile, Hadley and Kramer (2002), one disadvantage or a negative aspect regarding the teamwork could be that because the team members work very independent if they need to come up with ideas and in the long run with innovations, they may find themselves working around the clock, which means almost all day long. It is not all the time such a pressure, but for a better understanding and awareness of teamwork this aspect should be mentioned.
Birkinshaw, Crainer and Mol (2007) state that the employees should come first which means that management should focus more on the employees. If management does not follow this approach it could be according the case that all the innovative activities will fail. During the innovation process the companies are often too much focused on the products or the services, where they would like to come up with innovations. According to Birkinshaw, Crainer and Mol, the employees have to realize that the companies, where they are working are the best. If they show their commitment, they will come up with great ideas and the symbioses between the management level and the employees is valuable. The companies or organisations have to create a comfortable environment for the employees so that they may feel comfortable and willing to show their commitment.
Another perspective comes from Pearson’s (2002) “Tough-minded ways to get innovative” The author’s view provides some more information regarding the microclimate. If the companies require innovations, and they do, the CEO is supposed to spread the word, set up goals, measure the progress and so forth. According to Pearson, innovations need specific people for specific tasks where by every employee is important.
References
Amabile, Teresa M., Constance N. Hadley, and Steven J. Kramer. “Creativity under the gun.” Harvard Business Review 80 (2002): 52-61
Birkinshaw, J, Stuart Crainer, and Michael Mol. “Special report on management innovation.” Business Strategy Review 18 (Spring 2007): 62-87
Hargadon, Andrew, and Robert I. Sutton. “Building an innovation factory.” Harvard Business Re-view 78 (2000): 157-167
Ramsey, Robert D. “The supervision of innovation.” Supervision 67 (2006): 3-6
Rees, Richard T. “The role of HR in organisational development and innovation.” Employment Relations Today 33 (2007): 29-35
Pearson, Andrall E. “Tough-minded ways to get innovative.” Harvard Business Review 80 (2002): 117-126
Sanford, Linda. “Let go to grow – get people to collaborate.” Leadership Excellence 23 (2006): 17-17
Monday, September 29, 2008
The nature of innovation
It is highly important to understand the nature of innovations from the company’s perspective, for the fact that innovations are risky and the potential of failure is relatively high. In order to prevent the innovations failure, there is need to have a good microclimate. (Encyclopaedia of Small Business, 2008).
According to the encyclopaedia of Small Business (2008), innovations are often the first step to success. But it should be noted that not only is it required to have a good microclimate, but also a good network within the company that is meant to make the company have a long run success.
Effective innovation is also an issue that companies or organizations should keep in mind for the fact that without such effective innovations, companies destroy them-selves because they do not pay enough attention to the importance of the issue. (Encyclopaedia of Small Business, 2008). Innovations are a necessary factor in the business world, hence being important for all companies since the global economy needs innovations, new technologies, new services etc. in order to have a competitive edge.
In particular, it is so important to have innovations because of the customers, who play a very important role in the company’s choices. If the customers are not satisfied with the old product, there is need for the companies to replace them with their new ones. For example the electronic industry is a fast changing industry and has new products appearing on the market, hence leaving the customers with a lot of choices. Customers are more likely to buy the latest product in order to be up-to date with the changing technology. Another crucial aspect that is playing an important role is the changing environment and the advancing technology. Technologies develop from day to day and therefore it is important for companies to be open for them and to apply them as soon as possible.
However, if the companies are not able to offer new products or services to the customer, there will be many consequences such as a drop in shareholder’s returns, drop in stock prices, anxiety in key employees, sales drop, etc. All these repercussions may not be a problem in the short run, but the long run effects may be felt through unavoidable problems, up to an extent of completely closing down their business.
References
Encyclopedia of Small Business. "Small Business Encyclopedia: IRS Audits to Investor Relations and from Answers.com." Encyclopedia of Small Business by the Gale Group Inc. Web site. http://www.answers.com/library/Small%20Business%20Encyclopedia-cid-41646, accessed September 2008
According to the encyclopaedia of Small Business (2008), innovations are often the first step to success. But it should be noted that not only is it required to have a good microclimate, but also a good network within the company that is meant to make the company have a long run success.
Effective innovation is also an issue that companies or organizations should keep in mind for the fact that without such effective innovations, companies destroy them-selves because they do not pay enough attention to the importance of the issue. (Encyclopaedia of Small Business, 2008). Innovations are a necessary factor in the business world, hence being important for all companies since the global economy needs innovations, new technologies, new services etc. in order to have a competitive edge.
In particular, it is so important to have innovations because of the customers, who play a very important role in the company’s choices. If the customers are not satisfied with the old product, there is need for the companies to replace them with their new ones. For example the electronic industry is a fast changing industry and has new products appearing on the market, hence leaving the customers with a lot of choices. Customers are more likely to buy the latest product in order to be up-to date with the changing technology. Another crucial aspect that is playing an important role is the changing environment and the advancing technology. Technologies develop from day to day and therefore it is important for companies to be open for them and to apply them as soon as possible.
However, if the companies are not able to offer new products or services to the customer, there will be many consequences such as a drop in shareholder’s returns, drop in stock prices, anxiety in key employees, sales drop, etc. All these repercussions may not be a problem in the short run, but the long run effects may be felt through unavoidable problems, up to an extent of completely closing down their business.
References
Encyclopedia of Small Business. "Small Business Encyclopedia: IRS Audits to Investor Relations and from Answers.com." Encyclopedia of Small Business by the Gale Group Inc. Web site. http://www.answers.com/library/Small%20Business%20Encyclopedia-cid-41646, accessed September 2008
Saturday, September 27, 2008
Today's understanding of innovation
In my personal opinion or perception, innovation is related to introducing something new. But in order to understand it further, the term new does not have to be related to a new product. Rather, it can be a new method for making new products; a new technology that makes it easier to develop a new product. Innovations in that sense, can appear everywhere without being restricted. Examples of these could be services, new technologies, new devices and of course new products.
"Innovation ... is generally understood as the introduction of a new thing or method ... Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services"(Luecke and Katz 2003 p. 2).
The above definition by Leucke and Katz explains the importance of something new in the sense that companies use something new, if they would like to be more successful and competitive in the industry. According to the authors, both products and services can be tested to new ‘innovative pastures’. An example of this is when the company helps the buyers with installing the product and does not charge this service, or online services. A service is innovative if the company is the first one to offer this service. Leuke and Katz opine that if this company is the first one, it is then possible to gain a competitive advantage, hence benefiting from prioritising innovation.
Innovations will definitely work out in companies if there are a clear set of rules that are being followed and respected. As in many situations of the daily business life, rules are the key for success due to the fact that it is difficult to come up with good ideas and later on innovations without a structure. The above statement is a clear depiction of Ramsey; “In today’s global economy, continuous innovation is not an option, it is survival” (Ramsey 2003 p. 5).
At some occasions, creativity and innovation are used with an implication of having the same meaning. Creativity on the one hand implies generating ideas, where as innovation is the transformation from the creative ideas into successful products or services (Davila, et al 2006). Being creative on the one hand is inevitably necessary to be innovative on the other hand. Hence with-out creativity, the process of nurturing innovations and coming up with them could be a challenge or even impossible. Building upon this argument, is Amabile et al;
"All innovation begins with creative ideas...innovation is defined as the successful implementation of creative ideas within an organisation. In this view, creativity by individuals and teams is a starting point for innovation; the first is necessary but not sufficient condition for the second” (Amabile et al 1996 p. 1154-1155).
Most authors of the innovation literature agree that if innovation is not successful on the market or it has not been accepted by the customer, the companies cannot talk about it. On the other hand it should be mentioned that if the innovation is successful, it does not mean that it is accepted on the market.
I can be therefore be envisaged that through innovations, it can be easier to achieve a sustainable competitive advantage which provides a successful competition for the companies within the industry. According to the Business Dictionary (2008), the two different categories of innovations are;
1. Evolutionary innovations
· Continuous innovation in slightly changes of the product
· Dynamic continuous evolutionary innovations – but they require user-learning
2. Revolutionary innovations (discontinuous innovations):
It should however be noted that these innovations disrupt the routine of the staff, e.g.: the personal computer, the Internet and the photocopier. Revolutionary innovations are a risk for the companies, which require a big risk-taking potential. Innovations are ideas that are translated into goods or services. People must therefore be willing to pay for it. After all this general information about innovation, it is very important to note that without a good microclimate, innovations are hardly possible.
References
Amabile, Teresa M., Regina Conti, Heather Coon, et al. “Assessing the work environment for creativity.” Academy of Management Journal 39 (1996): 1154-1185
Davila, Tony, Marc J. Epstein, and Robert Shelton. Making Innovation Work: How to Manage It, Measure It, and Profit from It. Upper Saddle River: Wharton School Publishing, 2006.
Dictionary of business and management. “Innovation: Oxford Reference Online. Oxford Reference online premium web site. http://www.oxfordreference.com/views/ENTRY.html?subview=Main&entry=t18.e3281, ac-cessed March, 2008
Luecke, R., and R. Katz. Managing Creativity and Innovation. Boston, MA: Harvard Business School Press, 2003.
Ramsey, Robert D. “The supervision of innovation.” Supervision 67 (2006): 3-6
"Innovation ... is generally understood as the introduction of a new thing or method ... Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services"(Luecke and Katz 2003 p. 2).
The above definition by Leucke and Katz explains the importance of something new in the sense that companies use something new, if they would like to be more successful and competitive in the industry. According to the authors, both products and services can be tested to new ‘innovative pastures’. An example of this is when the company helps the buyers with installing the product and does not charge this service, or online services. A service is innovative if the company is the first one to offer this service. Leuke and Katz opine that if this company is the first one, it is then possible to gain a competitive advantage, hence benefiting from prioritising innovation.
Innovations will definitely work out in companies if there are a clear set of rules that are being followed and respected. As in many situations of the daily business life, rules are the key for success due to the fact that it is difficult to come up with good ideas and later on innovations without a structure. The above statement is a clear depiction of Ramsey; “In today’s global economy, continuous innovation is not an option, it is survival” (Ramsey 2003 p. 5).
At some occasions, creativity and innovation are used with an implication of having the same meaning. Creativity on the one hand implies generating ideas, where as innovation is the transformation from the creative ideas into successful products or services (Davila, et al 2006). Being creative on the one hand is inevitably necessary to be innovative on the other hand. Hence with-out creativity, the process of nurturing innovations and coming up with them could be a challenge or even impossible. Building upon this argument, is Amabile et al;
"All innovation begins with creative ideas...innovation is defined as the successful implementation of creative ideas within an organisation. In this view, creativity by individuals and teams is a starting point for innovation; the first is necessary but not sufficient condition for the second” (Amabile et al 1996 p. 1154-1155).
Most authors of the innovation literature agree that if innovation is not successful on the market or it has not been accepted by the customer, the companies cannot talk about it. On the other hand it should be mentioned that if the innovation is successful, it does not mean that it is accepted on the market.
I can be therefore be envisaged that through innovations, it can be easier to achieve a sustainable competitive advantage which provides a successful competition for the companies within the industry. According to the Business Dictionary (2008), the two different categories of innovations are;
1. Evolutionary innovations
· Continuous innovation in slightly changes of the product
· Dynamic continuous evolutionary innovations – but they require user-learning
2. Revolutionary innovations (discontinuous innovations):
It should however be noted that these innovations disrupt the routine of the staff, e.g.: the personal computer, the Internet and the photocopier. Revolutionary innovations are a risk for the companies, which require a big risk-taking potential. Innovations are ideas that are translated into goods or services. People must therefore be willing to pay for it. After all this general information about innovation, it is very important to note that without a good microclimate, innovations are hardly possible.
References
Amabile, Teresa M., Regina Conti, Heather Coon, et al. “Assessing the work environment for creativity.” Academy of Management Journal 39 (1996): 1154-1185
Davila, Tony, Marc J. Epstein, and Robert Shelton. Making Innovation Work: How to Manage It, Measure It, and Profit from It. Upper Saddle River: Wharton School Publishing, 2006.
Dictionary of business and management. “Innovation: Oxford Reference Online. Oxford Reference online premium web site. http://www.oxfordreference.com/views/ENTRY.html?subview=Main&entry=t18.e3281, ac-cessed March, 2008
Luecke, R., and R. Katz. Managing Creativity and Innovation. Boston, MA: Harvard Business School Press, 2003.
Ramsey, Robert D. “The supervision of innovation.” Supervision 67 (2006): 3-6
Saturday, September 20, 2008
Sources of entrepreneurial financing
There are quite many different ways of which an entrepreneur can get finances during the stages of a start up. The art of successful financing lies in answering a series of tricky questions: How much money does the business need? How much money is available? How when and for whom should the money be raised? Of course, a few factors are givens: Some of these factors may be from an investor’s expectations of something in return of investing in the venture, and they will demand a higher return if they perceive a higher risk; the entrepreneur seeks to secure a financing at a lowest possible cost. (Roberts and Stevenson, 1992).
All that being said, understanding both the needs of the business and the needs of the financier will assist entrepreneurs in sorting through the maze of potential financing options, which are; equity capital, private investors, venture capital, public equity markets, debt capital, asset-based financing, internally generated financing, etc.
According to Roberts and Stevenson (1992), it is basically true to say that during any start up, entrepreneurs should secure financing at the lowest possible cost. As depicted by the authors, start-ups are quite risky in the sense that entrepreneurs should more so look for investors who view the business as a less risky venture. Otherwise if venture financiers view the business in a risky way, they would demand a higher return on their invested finances.
The only best way for an entrepreneur to have a good start and gain good ground with his/her business is by having some equity capital in the form of buildings or equipment. Similarly, an entrepreneur should at least have some funds to do initial market studies, research, etc on the business that he/ she is about to invest in. This is very true in the sense that it even makes investors more secure and convinced that although the business may be risky, it is worth investing in following the positive action that may be taken by the entrepreneur. Roberts & Stevenson (1992) reiterate that for any entrepreneur that is willing to start a business with the help of an out-side source of finance, there is need to start with a less amount of money. And that if an entrepreneur may need external funding; higher start-up capital is required for survival.
In accordance to Smith & Smith (2000), the vision, determination and passion that an entrepreneur has for his or her business idea is the single most important factor in making a start-up venture successful. A good idea can be adequately funded and still fail if the entrepreneur gives up too much control of his/ her firm in exchange for funding in the early stages of the company. For these reasons, it is of vital importance that the entrepreneur maintains control of the firm, especially in the first stages of development, in order to grow the firm according to the entrepreneur’s vision. Maintaining the right balance between debt and equity throughout all stages of development is important, because it is impossible to separate equity and control. As a point to note, an entrepreneur’s attempt to hold control in one hand, and the debt and equity in the other hand will hinder growth according to the entrepreneur's vision. The insert entitled "External Financing and the Bell Telephone Company" illustrates this point perfectly. Alexander Graham Bell invented the telephone and founded the company, yet when faced with the decision of selling equity to grow the company more quickly, he relinquished too much control and eventually was left out of the making decision processes of a company he created. In short, Bell, like many greedy entrepreneurs, failed to balance debt, equity and control.
The entrepreneur’s social capital is one of the most important competencies that are required during a start-up. There is need for an entrepreneur to posses a huge amount of personal traits that would add to his/her advantages while looking for private equity capital sources. However, Roberts & Stevenson (1992) opine that although individual finances during a start-up are better suited for an entrepreneur, these same individual financers may create more problems in the business such as interventions, even so withholding to offer more funds in case of any business stumble.
Smith and Smith (2000) relate the launching of a venture to the launching of a rocket in the sense that the key difference of required fuel: from take off, a rocket has enough fuel to carry through all its stages. The venture however needs to be fueled by the previous steps to reach the next step. The following notion hence is tantamount to saying that launching a venture should be evaluated as a chain or a multi-step process, which clearly explains Smith and Smith (2000) milestone approach. According to the authors, there are milestones found in each of the five stages of development common to all new ventures: development of business concept, start-up, early growth, rapid growth and exit. The number of milestones in each phase varies depending on the field of business and the nature of the firm, which has its own fundamentally different features that guide the entrepreneur to employ different options to finance the subsequent steps. This approach is highly logical where by using the milestones approach in a business plan may help persuade the investors to finance the entrepreneur’s business idea. Mapping out a plan with the different steps the firm will take shows a potential investor the entrepreneur's confidence in developing the business.
Related to the above, Roberts & Stevenson (1992) are of the view that the business plan should be adopted for different audiences such as wealthy individuals, venture capitalists, and banks. Different financiers should be presented by different business plans. For the sake of a wealthy individual for example, the business plan should be concise, without detailed business texts/ language. The above steps are meant to protect the entrepreneur against his/ her ideas being hijacked or stolen.
References:
Smith, J. K. & Smith, R. L. (2000). Entrepreneurial Finance (pp. 22-54). New York, NY: John Wiley and sons.
Robertson, M.J & H.H.Stevenson (1992): Alternative Sources of Financing. In W.A. Sahlman, & H.H Stevenson (Eds), The Entrepreneurial Venture (171-179). Boston, MA: Harvard Business School Press.
All that being said, understanding both the needs of the business and the needs of the financier will assist entrepreneurs in sorting through the maze of potential financing options, which are; equity capital, private investors, venture capital, public equity markets, debt capital, asset-based financing, internally generated financing, etc.
According to Roberts and Stevenson (1992), it is basically true to say that during any start up, entrepreneurs should secure financing at the lowest possible cost. As depicted by the authors, start-ups are quite risky in the sense that entrepreneurs should more so look for investors who view the business as a less risky venture. Otherwise if venture financiers view the business in a risky way, they would demand a higher return on their invested finances.
The only best way for an entrepreneur to have a good start and gain good ground with his/her business is by having some equity capital in the form of buildings or equipment. Similarly, an entrepreneur should at least have some funds to do initial market studies, research, etc on the business that he/ she is about to invest in. This is very true in the sense that it even makes investors more secure and convinced that although the business may be risky, it is worth investing in following the positive action that may be taken by the entrepreneur. Roberts & Stevenson (1992) reiterate that for any entrepreneur that is willing to start a business with the help of an out-side source of finance, there is need to start with a less amount of money. And that if an entrepreneur may need external funding; higher start-up capital is required for survival.
In accordance to Smith & Smith (2000), the vision, determination and passion that an entrepreneur has for his or her business idea is the single most important factor in making a start-up venture successful. A good idea can be adequately funded and still fail if the entrepreneur gives up too much control of his/ her firm in exchange for funding in the early stages of the company. For these reasons, it is of vital importance that the entrepreneur maintains control of the firm, especially in the first stages of development, in order to grow the firm according to the entrepreneur’s vision. Maintaining the right balance between debt and equity throughout all stages of development is important, because it is impossible to separate equity and control. As a point to note, an entrepreneur’s attempt to hold control in one hand, and the debt and equity in the other hand will hinder growth according to the entrepreneur's vision. The insert entitled "External Financing and the Bell Telephone Company" illustrates this point perfectly. Alexander Graham Bell invented the telephone and founded the company, yet when faced with the decision of selling equity to grow the company more quickly, he relinquished too much control and eventually was left out of the making decision processes of a company he created. In short, Bell, like many greedy entrepreneurs, failed to balance debt, equity and control.
The entrepreneur’s social capital is one of the most important competencies that are required during a start-up. There is need for an entrepreneur to posses a huge amount of personal traits that would add to his/her advantages while looking for private equity capital sources. However, Roberts & Stevenson (1992) opine that although individual finances during a start-up are better suited for an entrepreneur, these same individual financers may create more problems in the business such as interventions, even so withholding to offer more funds in case of any business stumble.
Smith and Smith (2000) relate the launching of a venture to the launching of a rocket in the sense that the key difference of required fuel: from take off, a rocket has enough fuel to carry through all its stages. The venture however needs to be fueled by the previous steps to reach the next step. The following notion hence is tantamount to saying that launching a venture should be evaluated as a chain or a multi-step process, which clearly explains Smith and Smith (2000) milestone approach. According to the authors, there are milestones found in each of the five stages of development common to all new ventures: development of business concept, start-up, early growth, rapid growth and exit. The number of milestones in each phase varies depending on the field of business and the nature of the firm, which has its own fundamentally different features that guide the entrepreneur to employ different options to finance the subsequent steps. This approach is highly logical where by using the milestones approach in a business plan may help persuade the investors to finance the entrepreneur’s business idea. Mapping out a plan with the different steps the firm will take shows a potential investor the entrepreneur's confidence in developing the business.
Related to the above, Roberts & Stevenson (1992) are of the view that the business plan should be adopted for different audiences such as wealthy individuals, venture capitalists, and banks. Different financiers should be presented by different business plans. For the sake of a wealthy individual for example, the business plan should be concise, without detailed business texts/ language. The above steps are meant to protect the entrepreneur against his/ her ideas being hijacked or stolen.
References:
Smith, J. K. & Smith, R. L. (2000). Entrepreneurial Finance (pp. 22-54). New York, NY: John Wiley and sons.
Robertson, M.J & H.H.Stevenson (1992): Alternative Sources of Financing. In W.A. Sahlman, & H.H Stevenson (Eds), The Entrepreneurial Venture (171-179). Boston, MA: Harvard Business School Press.
Tuesday, September 9, 2008
Staffing my new company
An imagination of starting up my own company is a scenario that personally appeals to me in very many ways. To individuals who envisage the future in a desired entrepreneurial manner, this is something that creates a huge amount of interest.
Staffing my own would-be company is something that is so important and crucial, in order to realize success or growth through increasing creativity and effectiveness. Personally, I believe that the following criterion would be would serve me best.
Employing a diversified work force;
This is tantamount to suggesting upon employing people from a wide range of backgrounds, ages, and life experiences. Having people of diversity in my company would first of all make it very competitive by helping to solve recruitment problems. The impact of not treating people fairly has not only far reaching impact on those directly affected but also damages the wider workplace culture. Where inequalities occur there is a risk to the reputation of an organisation within the business community and beyond. Likewise, the exclusion of individuals or groups has an equally devastating impact on those affected, as well as denying an organisation of the skills that a diverse employee base can bring. According to the study done by Katrina Jordan (1999), having a diversified work force would lead to an increase in staff sensitivity as well as an increase in executive commitment. Diversity staffing would also empower people by helping them to understand others and develop a world view beyond their own. As a result they know how to respond to and resolve differences that might otherwise interfere with their work. I therefore believe that having staff with such views would increase creativity and effectiveness.
Employing the best;
I believed that one of the best ways to increase creativity and effectiveness at work is by employing the smartest and best people. People who have had a proven track record in doing things at the work place will be desired first, before all the rest are considered. Any employee that has tested success in another company will always have the skills, abilities, and determination/ drive to succeed. That being said, such an individual will be employed in my new company with the hope of increasing creativity and effectiveness.
Networking;
Similar to the above, I would employ the people who have technical advantages within the area of technology. In this sense, I would be leaning towards the possibility of networking in my company. Networking would be very advantageous in a way that it would be very possible to share data files across the network by creating a share on the hard drive and allowing other people access to that information. It would also be possible for employees to access their work from any workstation connected to the network, easily exchange work with colleagues, and co-operate on tasks. All the above scenarios would lead to an increase in team work within the company, hence increasing the chances of being creative, innovative, and effective.
Risk takers;
In the article by Stevenson & Gumpert (1985), I am struck by the fact that the authors describe the ideal entrepreneur as an outlaw who pursues every opportunity he encounters without thinking about the consequences. The authors compare the ideal entrepreneur with a person who is egocentric and pursues an opportunity aggressively without thinking through the decision hence taking high risks. As a proponent of such views, I would also follow the lead and look for individuals who are as ready to take risks as I am. And I believe that having people that are ready and motivated to change certain situations would increase the creativity and effectiveness of my company.
Trustworthiness;
It is a common belief that trust should be highly abundant in an individual if at all there would ever be effective communication. While starting up my new company, I would see to it that I employ trustworthy people. According to Schneider, Gunnarson and Niles (1996), management participation is another way of how management can be active in earning employee trust, thereby receiving commitment in return. In that sense, employees who are highly committed to the cause will always be fired up and they will hence show willingness to be creative, innovative and effective. The authors further highlight that the employer-employee relationship is a reciprocal/ two-way relationship.
Expertise;
While trying to staff my company, I would take some lines from Amabile (1998) , who indicates that, in each individual, creativity is composed of three elements: expertise; creative, imaginative thinking skills and motivation that managers can influence. Expertise can be considered as the technical competence of a person, intellectual and bureaucratic knowledge acquired by an individual for instance while at school through formal education, at work through practical experience and by means of multiple interactions with different kinds of professionals. As a person starting up my own company, I believe that expertise is a very good quality to possess and by all means, individuals who have such competencies will be creative and effective within their field of competence.
Shared Vision;
I also have a belief that in order to be successful in my start-up company, there is need for me to employ people with whom I share a vision. The high enthusiasm that exists in me while starting up the company should be carried on for as long as it can get. I have a belief that if there is a shared vision with my staff, then communication and cooperation will be in abundance. It is certainly not very easy to quickly find the people who have the same belief and visionary attitude but it is also true that good qualities in people do not hide for a long time. I would therefore look for communication qualities in any person that I would employ in my company because even when some people may not be perfect and very smart, at least their personality and attitude would be easily adaptive towards the sense of sharing a vision that would drive the company forward. All the above qualities are therefore indicators of would-be creative and effective individuals.
References
Amabile, T. M. (1998), “How to Kill Creativity”, Harvard Business Review, September-October, 77-87.
Katrina Jordan (1999), Diversity Training: “What Works, What Doesn't, and Why” Civil Rights Journal, Vol. 4.
Stevenson, H.H., & Gumpert, D.E; (1985); “The heart of entrepreneurship”, Harvard Business Review (March-April) 85-94
Schneider, B, Gunnarson, K.S and Niles-Jolly, K. “Creating the climate and culture of success.” Organisational dynamics 23 (1994):17-29
Staffing my own would-be company is something that is so important and crucial, in order to realize success or growth through increasing creativity and effectiveness. Personally, I believe that the following criterion would be would serve me best.
Employing a diversified work force;
This is tantamount to suggesting upon employing people from a wide range of backgrounds, ages, and life experiences. Having people of diversity in my company would first of all make it very competitive by helping to solve recruitment problems. The impact of not treating people fairly has not only far reaching impact on those directly affected but also damages the wider workplace culture. Where inequalities occur there is a risk to the reputation of an organisation within the business community and beyond. Likewise, the exclusion of individuals or groups has an equally devastating impact on those affected, as well as denying an organisation of the skills that a diverse employee base can bring. According to the study done by Katrina Jordan (1999), having a diversified work force would lead to an increase in staff sensitivity as well as an increase in executive commitment. Diversity staffing would also empower people by helping them to understand others and develop a world view beyond their own. As a result they know how to respond to and resolve differences that might otherwise interfere with their work. I therefore believe that having staff with such views would increase creativity and effectiveness.
Employing the best;
I believed that one of the best ways to increase creativity and effectiveness at work is by employing the smartest and best people. People who have had a proven track record in doing things at the work place will be desired first, before all the rest are considered. Any employee that has tested success in another company will always have the skills, abilities, and determination/ drive to succeed. That being said, such an individual will be employed in my new company with the hope of increasing creativity and effectiveness.
Networking;
Similar to the above, I would employ the people who have technical advantages within the area of technology. In this sense, I would be leaning towards the possibility of networking in my company. Networking would be very advantageous in a way that it would be very possible to share data files across the network by creating a share on the hard drive and allowing other people access to that information. It would also be possible for employees to access their work from any workstation connected to the network, easily exchange work with colleagues, and co-operate on tasks. All the above scenarios would lead to an increase in team work within the company, hence increasing the chances of being creative, innovative, and effective.
Risk takers;
In the article by Stevenson & Gumpert (1985), I am struck by the fact that the authors describe the ideal entrepreneur as an outlaw who pursues every opportunity he encounters without thinking about the consequences. The authors compare the ideal entrepreneur with a person who is egocentric and pursues an opportunity aggressively without thinking through the decision hence taking high risks. As a proponent of such views, I would also follow the lead and look for individuals who are as ready to take risks as I am. And I believe that having people that are ready and motivated to change certain situations would increase the creativity and effectiveness of my company.
Trustworthiness;
It is a common belief that trust should be highly abundant in an individual if at all there would ever be effective communication. While starting up my new company, I would see to it that I employ trustworthy people. According to Schneider, Gunnarson and Niles (1996), management participation is another way of how management can be active in earning employee trust, thereby receiving commitment in return. In that sense, employees who are highly committed to the cause will always be fired up and they will hence show willingness to be creative, innovative and effective. The authors further highlight that the employer-employee relationship is a reciprocal/ two-way relationship.
Expertise;
While trying to staff my company, I would take some lines from Amabile (1998) , who indicates that, in each individual, creativity is composed of three elements: expertise; creative, imaginative thinking skills and motivation that managers can influence. Expertise can be considered as the technical competence of a person, intellectual and bureaucratic knowledge acquired by an individual for instance while at school through formal education, at work through practical experience and by means of multiple interactions with different kinds of professionals. As a person starting up my own company, I believe that expertise is a very good quality to possess and by all means, individuals who have such competencies will be creative and effective within their field of competence.
Shared Vision;
I also have a belief that in order to be successful in my start-up company, there is need for me to employ people with whom I share a vision. The high enthusiasm that exists in me while starting up the company should be carried on for as long as it can get. I have a belief that if there is a shared vision with my staff, then communication and cooperation will be in abundance. It is certainly not very easy to quickly find the people who have the same belief and visionary attitude but it is also true that good qualities in people do not hide for a long time. I would therefore look for communication qualities in any person that I would employ in my company because even when some people may not be perfect and very smart, at least their personality and attitude would be easily adaptive towards the sense of sharing a vision that would drive the company forward. All the above qualities are therefore indicators of would-be creative and effective individuals.
References
Amabile, T. M. (1998), “How to Kill Creativity”, Harvard Business Review, September-October, 77-87.
Katrina Jordan (1999), Diversity Training: “What Works, What Doesn't, and Why” Civil Rights Journal, Vol. 4.
Stevenson, H.H., & Gumpert, D.E; (1985); “The heart of entrepreneurship”, Harvard Business Review (March-April) 85-94
Schneider, B, Gunnarson, K.S and Niles-Jolly, K. “Creating the climate and culture of success.” Organisational dynamics 23 (1994):17-29
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