The Online Journal on Computer Science and Information Technology (OJCSIT)
Vol. (3) – No. (4)
Business Excellence and Innovation: Are the Two Competing or
Overlapping Cultures?
To be presented at the
The 2012 World Congress on Computer Science and Information Technology,
WCSIT'12 - 23-27 December 2012, Cairo, Egypt
Fawzy Soliman
UTS Business School
University of Technology, Sydney
Australia
[email protected]
Abstract:
The current legitimate debate about business excellence and innovation is that both
share similar objectives. For example, business excellence aimsare to ultimately improve
the financial standing and performance of the firm. This is usually being achieved by
implementation of quality improvement programs that would ultimately result in
increase in sales volumes and of course revenue.
On the other hand innovation overall objective is also to improve the performance of the
innovative firm and improve its financial position by creating new products or services or
even new innovative strategies and or policies and procedures that will ultimately result
in increasing sale and of course revenues.
Although there are many overlapping issues between the two cultures, business
excellence and innovation differ significantly in many aspects. This paper will examine
the business excellence and innovation cultures and will present a model for
differentiation between the various aspects of the two cultures.
The paper will also examine the key issues for innovation that could lead to growth
opportunities in shrinking markets. The relationship between the four key strategy
perspectives namely, industry based, resources based, institution based and innovation
based perspectives will also be examined.
The paper will present a set of overlapping cultural factors between business excellence
and innovation that could play key role in value creation in turbulent globalized
environments.
Key words: Innovation management, Business excellence, overlapping cultural factors.
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Introduction:
Globalization has become a central factor that many businesses have to take into
account when carrying out their business. However, businesses are faced with the
challenge of how to respond to the ever changing competitive business environment.
Accordingly, many companies are forced to look beyond their traditional measures of
performance such as company’s core capabilities and the structure of the industry in
which the company competes. The success in the current global business environment is
significantly affected by the external factors and the management of the companies or
business enterprises is forced to gain a deeper understanding of the external forces and
trends that affect the business operations.
That is why many companies operating in this global sphere are now faced with the
option of adapting or potentially losing any competitive advantage. This has forced many
businesses to look through technological innovations, international transport and
globalisation. Accordingly, organisations in the 21 st century arguably have a wide range of
opportunities and challenges based on our rapidly evolving market. In the last decade,
there have been advancements in technology which enable most companies to move
into the global sector in areas such as retail sales and advertising. Social media sites and
the internet have markedly affected many industries with advancements in the area of
online shopping and word of mouth advertising. Furthermore, customers have a higher
influence over buyer interest through blogs, YouTube and online forums (Winer and
Dhar, 2011). Many companies are now aware of the need to adapt to these changes in the
market, or face the threat of going under.
Most business scholars, practitioners and organizational managers sense that there are
major differences between the two concepts; namely Business Excellence and Business
Innovation. Both concepts require similar resources in similar but different organisational
units and departments in order to implement and monitor particular programs for
improving organizational performance. For instance, business excellence is usually
defined in management literatures as, a systematic approach that integrates the
organization leadership and management system in order to improve the firm overall
performance (Dahlgaard and Park, 1999) and (Garvare and Isaksson, 2001). In addition
business excellence had been also been described in various literatures as a quality
management tool to be used by organizations in order to enhance their performance by
focusing on incremental or radical improvements in traditional areas such as customers’
needs and satisfaction, stakeholders value and management process (Prabir, 2011).
Furthermore, the literature on business excellence has been mainly concerned with the
effectiveness of the concept on internal improvements by using tools such as balanced
scorecards and six-sigma, which mainly focus on improving the internal performance of
the firm. However, the area that has not been adequately considered is addressing the
business issues in relation to external environments.
On the other hand, the literature defines two different concepts on innovation; namely,
business innovation and business invention. The business innovation concept is widely
defined in the business management literatures as a tool that create more value to the
organization via continually working on meeting customers’ demands by innovative
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solutions that meet future customers’ needs or solutions meets old customers’ demands
in new ways (Panuwatwanich et al, 2008). It has been noted that the use of business
innovation in the organizational context would usually result in positive changes in the
firm’s level of quality, productivity and competitiveness (Johannessen and Olsen, 2009).
Therefore it could be argued that the two concepts business invention and business
innovation are two different concepts but are usually sharing one and similar objective
which is the creation of new ideas.
The above stated difference between the two definitions within the business
management community clearly explains the reason behind the distinctive differences, in
the mind of business scholars and organizational managers, between the two concepts
i.e. business excellence and business innovation. Innovation is the introduction of a new
product, service or process through a certain business model into the marketplace, either
by utilization or by commercialization (Gamal, 2011).
Superficially the two concepts appear to be similar but in reality they are not even
though they share the same main objective for improving the performance of the
globalized firms by increasing their competitive advantages.
Review of the literature on business excellence:
Almost all of the available literatures on business excellence in the total quality
management journal and other academic journals emphasize that the main function of
adapting business excellence in any organization is the persuasion of continuous
improvements in the organization internal processes and activities. Business excellence
importance had grown gradually in the past few decades due to the facts that many of
the large organizations share prices had dropped dramatically as a result of the
globalization movement; due to the radical increase in the number of competitors
nationally and internationally. These dramatic falls in the share prices of large
organizations such as Levies in the US had put an enormous pressure on the firm
management to increase profitability through business excellence in order to satisfy
customers, employees and shareholders simultaneously (Kanji, 1998). Many countries
around the world (including Australia) had established their own business excellence
framework (BEF) to assist organizations in their nations with measuring their
performance and compare it to an international established score (benchmarking), hence
work continually to reach the level of best practice organizations in the industry
(Saunders, et al, 2008). Although, these frame works were originally established in order
to issue awards, such as the national quality award (NQA), aimed to recognize the
achievements of the best in class organization against the framework. The true main
reason behind the establishment of the BEF is to create a competitive atmosphere within
the nation market aimed at improving the performance of the national economy. In spite
of the previously mentioned benefits of business excellence, the practice is still
considered to be very costly for the global small to medium size (SMEs) organizations to
adapt. This is because in order to achieve business excellence in the organization the
quality level of multiple dimensions of the organization must be measured and then
improved, such dimensions are leadership, customer’s satisfaction and teamwork (Kanji,
1998). Therefore, other scholars like (Boys et al, 2004) had suggested alternatives paths
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for small to medium sized organization in their journey towards achieving business
excellence for their globalized businesses. These alternative paths are firstly work on
acquiring ISO9001 then move towards acquiring ISO9004, which an industry specific
standards. These two certifications according to the authors are much cheaper than
going straight on persuading business excellence; also they will definitely guide the
globalized small to medium sized firms (SMEs) toward achieving business excellence for
their organizations in the future. Moreover, other authors like (Terziovski, 2003) had
suggested that one of the most important steps for SMEs in their journey towards
achieving business excellence is to strengthen their networking practices in order to be
able to compare themselves informally with the best in class on regular basis. In addition,
handful number of authors in the literatures on business excellence had emphasized the
importance of linking business excellence with benchmarking and quality management in
the management of globalized organizations, suggesting that these three elements have
a positive relationships, meaning that an increase in the level of one of the three
elements will result in an increase in the level of the two other components. Lastly, a
huge issue associated with the persuasion of business excellence is measuring
performance and quality in the organization, meaning that without an effective
measuring method, the organization is unlikely to achieve business excellence (Kanji,
1998 and Soliman, 2012a, 2012b), as stated in the famous quote of (lord Kelvin) “if you
can’t measure it, you can’t improve it”.
Review of the literature on business innovation
The available literatures on business innovation in journals such as the journal of business
and economic management always regarded innovation, as the main tool globalized
organization must acquire in order to improve their market competitiveness (Bakhshi
and McVittie, 2009). The globalized firms level of competitiveness also described in
(Bakhshi and McVittie, 2009) to cover a wider scope and not to be limited to the creation
of inner innovation only. The authors went one-step forward to highlight the importance
of transferring the knowledge (innovation) from the mother organization all the way
down to their supply chain partners. This is because global organizations in the modern
business context are starting to shift from one to one competition with their rivals, to
compete against each other based on the total value of their supply chains. Another
major point that was mentioned in the literatures of business innovation by several
scholars such as (Panuwatwanich et al, 2008) is the importance of the global
organizational culture in increasing the level of the firm innovation level. Those scholars
stressed out the crucial role of the organizational culture in creating an innovative
atmosphere in the firm work place. This is because inappropriate organizational cultures,
which value adherence and compliance more than dynamical and knowledge sharing
work environments are the main reason in decreasing the innovation level in any
globalized organization (Lee and Soliman, 20111, 2011b, 2012c). According to (Horibe,
2003), innovation had become very important factor in today’s business context not only
for globalized organizations but also a critical factor to fuel the prosperity of the nation’s
economy as whole. This means, globalized organizations must work on monitoring and
increasing their level of innovation on regular basis in order to sustain their competitive
advantage in the market. Scholars also stressed out the importance of avoiding the issue
of organizational arrogance once the firm become the innovation leader in the industry.
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This is important because if the firm stops innovating, sooner or later they will be
stripped off their competitive advantages like in the case of Nokia versus Apple in the
mobile phone industry (McCray et al, 2011).
Identifying the differences between the two terms
The main obvious difference between the two concepts is centric around the
terminologies used to describe them in the literatures. This means from the definitions of
both concepts, it is easily identifiable that the main difference between business
excellence and innovation is that the initial deal with improving elements in the
organization internal environment such as better management processes, enhance the
quality of the firm products and work continually on improving operational efficiency.
Whereas the former (business innovation) is described in the literatures as finding new
ways (innovative) to improve any aspects in the organization that could lead to locate
the business in a better competitive level in the market. Business innovation
improvement differ from business excellence theoretically in that, business innovation in
the literatures is always linked to the ideas that result in positive organizational changes
in term of quality, competitiveness, market share and productivity. However, the biggest
difference between the two concepts is that business excellence is strongly interrelated
and dependent on other factors such as benchmarking and quality measurements,
without these compensates together organizations are likely to fail in persuading
business excellence (Angell & Corbett, 2009). On the other hand, business innovation do
not require other components in order to be implemented in the organizational setting,
other than encouraging and providing a friendly working atmosphere where innovative
ideas are welcomed and valued by the organization management team. Another major
difference between business excellence and innovation is that organizations whom
focusing on persuading business excellence are unlikely to become the market best
practice leader, since they are always comparing and trying to reach the level of other
best in class firms. Whereas, organizations that are mainly focused on business
innovation solutions are more likely to achieve best practice in the industry, since they
always looking for undiscovered solutions to solve the industry problems (Nicholas et al,
2011).
Outlining their similarities in terms of benefits to the global organizations
Despite all the differences between business excellence and innovation that have been
outlined earlier, these two concepts are no different to each other in real life, since
almost all of the previous discussion had specifically stated that the main objective of
implementing these concepts in any organization is to improve their competitive
advantages. In addition, regardless of all the differences between the two concepts, the
two concepts are created and implemented in organization to serve one aim and that is
to enhance the effectiveness of different organizational elements such as products,
processes, productivity and quality. However, in reality business excellence is all about
comparing the firm to the best in class and then working on implementing predetermined steps in order to improve the business competitiveness. On the other hand
business innovation attempts to improve the firm’s competitiveness by introducing
solutions to enhance efficiency and effectiveness of the firm. Business excellence and
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innovation appear to be similar, but in reality they differ and they may be interrelated
and dependent on each other’s once the organization is planning to improve their soft
side of the business. It is worth noting that only few publications in the literature that
relates total quality management TQM to the potential future link between business
excellence, innovation and the possible impact of this integration on the firm competitive
advantages. In this regards (Jens & Park, 1999) argued that integrating business
excellence and innovation management in the globalized organization will become very
essential in the future in order to create a culture of innovation, creativity and learning.
They also described the integration of business excellence and innovation as the only
way that companies will be able to survive in the future by explaining the facts of the
integration of these two concepts in real life organizations.
Globalization Forces drive Productivity and Innovation:
The recent literature emphasise the role of the five forces that could shape the future of
the business; namely the productivity force, the planet sustainability, the market force,
global network force and the social forces. These five forces could have a very critical
impact for the companies that operate both at the global level and domestic level. This
means globalised firms should take these five forces into consideration in establishing
how the company can deal with these five key issues will succeed in their competitive
initiatives.
The rise of competition is accompanies by the steams of benefits such as technological
transfer and transfer of capabilities from the globalization. For instance, the domestic
firms have been able to upgrade the quality of their products and increased their
innovativeness (Gorodnichenko, et al, 2008).
The changes in the international demand for various products such as manufacturing
products affect the productivity growth of the products in a given county (Mann, 1997)
may also drive businesses to embark on globalization to increase productivity and
achieve growth. Accordingly, many multinational companies are expanding to establish
their operations in different market economies to meet the increasing demand for the
products in these markets. The expansions of the emerging markets, which provide
market of the additional products, those companies are able to produce. Meeting the
global demand has been challenge in the past. However, with the new production
technologies that have been established, companies have been able to become more
productive. Organizations that have been able to adopt the modern technologies have
been able to produce the products that meet the global demands (Easterly, 2007). The
global supply chains of many organizations have been enhanced to make the production
processes more efficient.
Many businesses may face the predicament of large changes in the market being
matched by global companies with a higher capital and subsequently being unable to
compete. Grimwade (2009, p. 212) states ‘...acquiring and sustaining a competitive
advantage can be seen as the primary strategic aim of firms in the modern world economy.’
Under these circumstances, many small businesses need to determine what factors give
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them a competitive advantage and adjust their global and corporate strategy to suite
this.
For a company considering to expand into the global arena but is not able to compete on
price or infrastructure, the firm may need to differentiate themselves with a new or
improved product or service. A number of scholars have highlighted the importance of
product innovation (Dougherty, 1992), and service innovation (Slywotzky and Wise,
2003). Product innovation could be referred to as the design or creation of new or
improved products while service innovation may refer to creating a market need, and/or
new methods for distribution to customers. Service innovation is targeted directly at the
business model and the “experience” of the customer, rather than the tangible asset
they have purchased. These are two potential areas of improvement or innovation are
discussed further below:
Product Innovation:
Over the past 20 years, there have been significant technological advancements in the
area of product innovation. From medical advancements, such as prosthetic limbs, to
flight travel which has opened up global trade; marked technological advancements have
greatly improved the standard of living in numerous countries. Furthermore, much
advancement have changed the way companies are able to market their products and
companies. As augmented by Gass (2009, p. 42), ‘The heart of the matter could be that
the pace of continuing change, resulting from innovation and globalisation, calls for creative
societies.’ As an example, Apple designed the iPhone with a large touch screen display
and no stylus or other implements were required to operate it. The design of the iPhone
ensured that other applications and add-ons were available for Apple customers, such as
the iTunes store, which would not be able to be used by customers with a different type
of phone. This devise was innovative and aggressively marketed with, thus far, millions
being sold. Through the design of a global product which creates a market need, or
awakens a desire within a market segment, companies can gain a competitive advantage.
Service Innovation:
Service organisations which focus mainly on the “experience” of the customer rather
than the sale of a product, requires improvements in service innovation to remain
competitive in the current market. Organisations such as IMAX boast impressive screen
sizes, making the movie going experience life-like. Conversely, Hoyts has chosen to offer
large reclining seats with meals and beverages served during the movie in an effort to
improve the overall experience. Bisgaard (2008, p. 33) stated that ‘More and more in
today’s business environment, successful innovations combine with innovative business
models...’ Therefore, through the development of an improved design, new product or
variation in customer service and business model, an organisation can set themselves
apart. ING banking and investment services have adjusted the widely used business
model for commercial banking through the design of a, mostly, online banking and
investment model with very few customer branches. In doing so, many fixed costs have
been eradicated making it feasible to lower interest rates for customers, thereby setting
themselves apart from the competition.
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Attributes of innovation:
In recent years, many firms have realized that managing global uncertainty is necessary
but very difficult in many perspectives, such as personal unconscious and psychology,
business firms and modern society. In addition, based on the economic theory,
uncertainty means that the distribution of future gains and losses and other economic
conditions and states are unable to ascertain. For this reason, the uncertainty impact to
the enterprise is not to be underestimated, especially in the global perspective. In detail,
it may affect the success or failure of marketing activities or collapse from companies
suffered bankruptcy. Based on some major uncertainties, such as financial, market and
human resources, many businesses cannot just do more long-term planning and
investment into their projects, or they will become senseless and reckless gamble to
make any decisions. Due to the long term influence of global financial crisis, economic
uncertainty is becoming a major sustainable development issue in the whole of world.
There are at least three main areas of uncertainties that could impact on business
excellence and business innovation; namely Economic uncertainty, Market uncertainty,
Talent management uncertainty. However, a large body of the literature (Rogers 1995);
agree on the following six innovation attributes that could shape global business and in
particular with the diffusion and adoption of innovation by both private users and
business:
1.
Relative advantage management as attribute of innovation:
Relative advantage is the degree to which an innovation is perceived as better than the
idea it supersedes. The underlying principle is that the greater the perceived relative
advantage of an innovation, the more rapid its rate of adoption (Rogers, 1995). Rogers
argued that the driver for people to choose a particular technology is the benefits arising
from that choice. Benefits should include increased performance, cheaper costs,
increased social standing, or even a wow factor.
Arguably, the greatest impetus to the diffusion and adoption of innovation has been the
advent of the computers Chun-Wang Tsou (2012). It is accepted that the sustained
upgrade of information systems provides most users with more comprehensive
functions that make an individual’s everyday tasks simpler and easier. Chun-Wang (2012)
argues that relative advantage was defined as the extent to which the innovations were
perceived by a potential adopter to offer an advantage over previous ways of performing
the same task.
It can be therefore concluded that the increased adoption of innovation is largely due to
the relative advantage of successive releases over previous releases and with particular
emphasis on increased performance. Costs have not become cheaper, however the
increased functionality and performance of each successive release provide added value.
It should also be noted that where the perceived relative advantage does not bear fruit,
then there can be a negative impact on business and on future perceptions of relative
advantage with respect to future innovative projects.
2. Talent management as attribute of innovation:
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The uncertainty of the critical areas in innovation and business excellence remain to be
the lack and shortage of skills and talents (Baker, 2010). Recruitment and selection is one
of important challenges among the global labour markets and human resources
department of each company (Soliman, 2011c, 2011d and 2011e). Due to the increase in
demand for innovators and business excellence, mangers and practitioners look at global
work force for engaging staffs and employees who are more focused on creativity and
innovation (Sobel, 2012). However, cultural difference is the common issue who reflects
on the global challenges of recruitment and selection. Regarding Wild and his partners’
opinion (Wild, et al, 2007, p. 549), they believe that living is another kind of culture to
stress on the experiences. In general, many foreigners cannot deal with a new culture to
influence on their life, such as diet and languages. And then, their psychological reaction
process can also directly result in their daily life. Besides, French (2007, p.168) states that
the different cultural background can emphasize different human resource management
attributes. To aim this point, Schneider and Barsoux (2003 cited by French 2007, p.168169) seemly do a similar view. In brief, when the HR manager is recruiting new staff from
overseas, the other local employees will be holding on a higher level of competition in
variable ways. But in the collective society as China, French has more realized that
nepotism is the enterprise culture in a certain logics and interdependent results. When an
employer needs to establish some personal changes of the hidden moral commitment,
he can take care of that scope of these employees in which greatly exceed the general
staff of job securities. Accordingly, talent management has become a key innovation
attribute.
3. Compatibility management as attribute of innovation:
Compatibility is the degree to which an innovation is perceived as being consistent with
the existing values, past experiences, and needs of potential adopters (Rogers, 1995).
Rogers also stated that innovation should be compatible with the user’s life and
practices. An adopted technology will be integrated into one’s life and therefore must
mesh well. Many authors support Rogers (1995) argument by stating that a new
operating system reconfigures the traditional system to be compatible with existing
values and beliefs, previously introduced ideas and potential adopters’ needs. Thus
compatibility will have a positive effect on attitude towards use. Clearly, compatibility
management could be regarded as one of the critical innovation attributers.
4. Complexity management as attribute of innovation:
Complexity is the degree to which an innovation is perceived as being difficult to
understand and use (Rogers 1995). Chun-Wang Sou (2012) added that the inherent
difficulty of using a new technology is a major concern when deciding to adopt that
technology. The sense of difficulty that the user has in using and understanding a
technology and the learning curve associated with learning how to use that technology,
are concerns that must be considered.
The argument here is not the complexity of the underlying software but rather the
complexity of the use of that software. There is little doubt that the lack of complexity in
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using software devices has driven the sales of these products and subsequently led to
resurgence in technology global businesses.
The complexity of Information Technology also impacts software developers and
administrators, which in turn impacts the development of applications on a particular
platform and therefore the global business of both the technology platform and the
applications. However, by far the biggest impact of complexity on the global business of
information technology operating systems and applications is the level of complexity as
perceived by the end users of the technology. Therefore, complexity management is one
key innovation attribute.
5. Trialability management as attribute of innovation:
Trialability is the degree to which an innovation may be experimented with on a limited
basis. If an innovation is trialable, it results in less uncertainty for adoption (Rogers,
1995). Chun-Wang Sou (2012) argued that the opportunity for a potential user to
experience using the innovation was significant factor in the adoption of that innovation.
The user gets the chance to try the technology without having to fully commit to
purchasing or adopting it. Trials prevent forming inaccurate assumptions about the
technology. Innovators will be able to use the feature to encourage people to try their
apps for a set period of time before being charged. This offer refers to in-app
subscriptions and would give consumers a chance to test apps before paying for their
subscription. This will differ from the current model whereby developers have to
encourage consumers to pay up-front for in-app subscriptions. This has led to consumer
uncertainty in purchasing apps.
Matzner (2011) described “Freemium” as the concept of giving away a free version of a
product or service while charging for a more advanced, or premium, version with
increased functionality. The idea is that users will love the free version so much that
they’ll be willing to pay for a better version. Mantzner (2011) also reported that when the
free version of the “Instapaper” app was removed the sales of the premium, and paid,
version actually increased. This was thought to be due to an “image problem” created by
the limited functionality of the free, or trial, version. It can therefore be concluded that
trialability drives both competition, by creating a competitive advantage and also drives
sales in the global software business. Therefore, it possible to argue that trialability is an
innovation attribute.
6. Observability management as attribute of innovation:
Observability is the degree to which the results of an innovation are visible to others. The
easier it is for individuals to see the results of an innovation, the more likely they are to
adopt that innovation (Rogers, 1995). Chun-Wang Sou (2012) observed that for a person
to adopt a technology, seeing, hearing about, or otherwise knowing that other
individuals are using that technology dramatically encourages adoption. He also added
that observing a technology stimulates awareness of the innovation and conversations
among one’s peers. Chun-Wang Sou (2012) referred to a study conducted by Rogers
where he found evidence for the power of observability when he plotted the number of
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adoptions over time. However, Dunford (2010) stated that peer influence plays a big part
in adoption, even for early adopters.
In a recent study of adoption of B2B eCommerce in Bangladesh, Azam and Quaddus
(2010) concluded that observability is another predictor to explain the adoption of ecommerce by the SMEs in Bangladesh. It supports the idea that demonstration in various
beneficial operations of e-commerce may influence SMEs’ decisions to adopt the
technology. Observability, along with the other innovation attributes, plays a pivotal part
in the adoption of an innovation, and in the case of this article the adoption of
technology. Observability therefore drives global technology business by breaking down
barriers to adoption. Therefore, it possible to argue that one of the innovation’s
attributes is Observability.
Generating the Innovative Environments:
Occasionally, companies attempt to take a single business model which has been
developed and successfully implemented in a large multi-national corporation and apply
it directly to their company. As outlined prior, the resources which are available to large
multi-national corporations are not prevalent in smaller companies. Additionally, as
stated by Ahmed (2003, p. 5) ‘...while quality, benchmarking, knowledge management,
have become part of common business parlance, it is also becoming clear that one of the
most difficult things is to be able to “copy” excellence.’ While large corporations may have
successful business models which have been developed and supported by their networks
and capacity for backing their research and development with large quantities of capital,
small companies may possess other untapped resources. Although some products
require funding and equipment to research and test them, for example pharmaceutical
drugs, many industries have made remarkable developments with limited resources. By
way of example, the development of Facebook was undertaken by University students
who possessed limited capital or resources, and is now a multi-million dollar company.
Often the required items for a technological or product innovation already exist within a
company.
Many organisations are aware of the necessity to innovate but may overlook their largest
resource in doing so, their personnel. ‘Innovation is not just about new devices; it is also
about ideas and fast thinking...’ (Gillespie and Leflaive, 2007, p39). Often the speed in
which a company can adapt to changes in the market determines whether they will be a
market follower or be left behind completely. Furthermore, the development of the
internet has meant that many companies are operating in a global context without
necessarily owning offices or infrastructure overseas. Therefore, technological product
or service innovation and the speed in which a company adapts to changes in the global
market are imperative to maintaining an advantage in a global context. This fact is
reinforced by Choy (2007, p.16), ‘A major consideration for managers is the wide scope of
behaviours, attitudes and values of the drivers staff across socio-cultural and national
boundaries, which are bound to affect organisational processes.’ Companies who are
constantly looking to improve their business model and processes, and are attentive to
potential market changes, have a higher chance of success.
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Drivers for business improvements in global organizations:
In recent years, the majority of people have realized that managing global uncertainty is
necessary but very difficult in many perspectives, such as personal unconscious and
psychology, business firms and modern society. In addition, based on the economic
theory, uncertainty means that the distribution of future gains and losses and other
economic conditions and states are unable to ascertain. For this reason, the uncertainty
impact to the enterprise is not to be underestimated, especially in the global perspective.
In detail, it may affect the success or failure of marketing activities or collapse from
companies suffered bankruptcy. Based on some major uncertainties, such as financial,
market and human resources, many businesses cannot just do more long-term planning
and investment into their projects, or they will become senseless and reckless gamble to
make any decisions. Due to the long term influence of global financial crisis, economic
uncertainty is becoming a major sustainable development issue in the whole of world.
There are at least three main areas of uncertainties that could impact on business
excellence and business innovation; namely Economic uncertainty, Market uncertainty,
Talent management uncertainty.
Growth and Risk management as drivers for innovation:
Lasserre (2012) has developed a framework to better understand risk that may pertain to
a country as it breaks down the risk framework into four segments:
1. Political risk, this can be described as the likely hood of internal and external events
or regulation resulting from actions for the government or social unrest that can
have a negative impact to business operations.
2. Economic risk and this could be a slowdown in economic growth as has occurred in
recent times post GFC, the variability in demand which has overall monetary
implications to the business, the sudden increase in exchange rates as a risk to any
organisation. The use of hedging is a tool that may be used as part of a risk
management plan (Lasserre, 2012).
3. Competitive risk, in any market there is always competition, though in emerging
markets the lack of transparency in the tender process can cause associated risk, as
often corruption is common practice, though this may not be overt, it is important to
understand and put systems and process to prevent this.
4. Operational risk; that directly affects the bottom line (Lasserre, P. 2012) either
because of changes to government regulation or politicians would like to increase
taxes and nationalise the industry (Lasserre, P. 2012)
Segal-Horn et al (2010) has also identified political, regulatory and ethical risks for multinational companies often known as MNC, changes in perceived ‘ethical’ behaviour also
effect standards as to what is good or bad in managerial or organisational conduct,
therefore the level of risk has an impact on the MNC decision making process. (SegalHorn et al (2010, p. 19)
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According to Khan et al (2010), a major risk is the high turnover of employees, it is not
uncommon to have 20 to 30 % turnover in China, and generally employees have been
employed for 1 to 2 years and then leave the company, this accounts for 43% of the
turnover. This a risk for organisations as the knowledge is not being retained within the
company, if a supplier is experiencing high growth levels, the ability to retain qualified
personnel is a major risk. Soliman and Spooner (2000) added that the “leader should also
drive the knowledge management process by avoiding recruitment of staff with poor
managerial skills, inappropriate management philosophy, lack of control and low
motivation.” the difficulty with high turnover, the pressure on leaders is ever growing;
this has major impact on the organisations competitive advantage (Soliman and Spooner
2000) and therefore should be viewed within a risk management matrix.
Moreover Clark and Soliman (1997) identified that the commercial emergence of
knowledge based information technology, this indicates an excellent opportunity to
improve organisations effectiveness (Clark and Soliman, 1997). The link between
knowledge and strategy due to the works of Soliman and Spooner (2000) who
contended that make sure the alignment between knowledge and strategy is a complex
and challenging task that the knowledge leader must address. Soliman and Spooner
(2000) similarly determined that one of the essential success elements for a knowledge
management program is the collaboration between a knowledge management effort
and the organisational culture (Soliman and Spooner, 2000).
Conclusions:
Global forces that shape businesses are factors such as productivity force, planet
sustainability, market force, global network force and the social forces. These factors
have great influence on the business operations.
Organisations have changed markedly over the past few decades with the emergence of
globalisation. Any company which is looking to compete in a global context is required to
constantly adapt and reinvent themselves either through product or service innovation.
The largest asset any company has to affect any type of innovation is their personnel.
Staff within organisations come from various backgrounds and possess a wide range of
skills and knowledge. This combined experience can be harnessed through an adaptive
leadership style and an organisation which is geared to nurturing innovation. This
environment is largely influenced by the manager and their attitude toward innovation.
Through harnessing a less conservative approach to innovation, a manager can become
more receptive to new ideas and process improvements.
This paper examined the six innovation attributes (Rogers 1995); relative advantage,
talent management, compatibility, complexity, trialability and observability. These
attributes could impact on the diffusion and adoption of innovation and finally, how
these in turn shape global business and with focus on the diffusion and adoption of
innovation by both private users and business.
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Two aspects of the compatibility attribute were examined. Complexity is considered
from the technical perspective, such as software development and administration, and
from the end-user perspective in terms of ease of use.
The two examples of the impact of trialability were the use of free trial periods, or try
before you buy, and the use of “freemiums” whereby free versions of the innovative
product, with limited functionality, are made available with the aim of inducing buyers to
eventually purchase the full versions of products as the skills and needs increase.
The observability of the innovative products dramatically encouraged their adoption by
giving users the opportunity to see, hear about the use of particular technologies by their
peers.
Finally this paper provided an introduction to business excellence and business
innovation by stating their most common definitions found in the literatures of business
management. Whereas, business innovation concept is viewed to deal with wider scope
then business excellence, since it usually work on improving various elements in both the
internal and external environment of the organization. The paper also outlined the
similar objectives and benefits of the two concepts in real life business context to justify
the claim made earlier in the introduction, which is that both concepts are no different to
each other in reality regardless of the huge differences found theoretically on them.
Finally this paper presents four important segments of growths and risks facing
innovation as drivers of innovation. These four growths and risks are Political risks,
Economic risks, Competitive risks and Operational risks.
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