The Impact of Innovation on a Companys Performance - Paper Example

2021-08-25 22:48:46
6 pages
1385 words
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Harvey Mudd College
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Essay
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I would first like to thank my thesis advisor. She was always available when I had questions about my research or writing. She provided me with a significant amount of documentation, articles, and books to help me build my expertise. She consistently allowed this paper to be my work but steered me in the right the direction whenever she thought I needed it.

I would also like to thank my Procurement peers who were involved in the validation of the framework developed in this paper. Without their passionate participation and input, the validation could not have been successfully conducted.

I would also like to acknowledge the contribution of all the teachers of who helped me shaped my thinking.

Finally, I must express my gratitude to my spouse and children for providing me with unfailing support and continuous encouragement throughout my year of study and through the process of researching and writing this thesis. This accomplishment would not have been possible without them.

Thank you,Executive SummarySo many companies who were once leaders in their industries have disappeared. The average lifespan of a successful S&P 500 company today is 15 years. The largest company in the world today and acquired or bankrupt in 15 years from now What's the difference in between the one who failed and the one who survived? There is no single success factor. However, long-standing companies have in common their ability to adapt to an ever-changing world. They can drive innovation, to develop a new business model and keep reinventing themselves.

Innovation is not an invention: successful companies looked at the potential market and developed a customer center model to innovate in an area where they could build a competitive advantage. They understand as well the importance to look for innovation externally and developed strong models for capturing it. One group of important players in all those companies ecosystem are suppliers.

When we talk about suppliers comes to mind the Procurement department. Procurement people are talking to suppliers every day, they know the market, they negotiate on prices, mitigate risks, ensure availability but could they do more and drive supplier innovation? Could they be a catalyst for sourcing the best ideas? What Procurement would need to be able to efficiently play that role and impact more than the bottom line?

In the next pages, we will look at all those questions starting by focusing on the broad spectrum of innovation, narrowing it mindfully to suppliers' change and how Procurement can play an active role into this space. Based on research and literature, I will suggest a conceptual framework under which Procurement can operate. Once built, I will confront it to the real world taking it to some of my peers in Procurement in all industries to refine it. The last stage will be to define an action plan to enhance Thomson Reuters approach to supplier innovation.

Hopefully, you will be able to understand from my research and during the narrative the importance of this and how I came up with this framework.

Introduction

Nowadays, innovation has progressively become the main topic of discussion globally. Economic analysts and policymakers have been interested in understanding the impact of innovation on a company's performance. There seems to be a compelling reason to claim that innovation is the surest way through which a company can improve its competitiveness and performance in both local and overseas markets. A firm can bank on its innovative activities when it comes to the production of innovative ideas and higher productivity. Apparently, firms are grappling with the challenge of harnessing innovation potentials of procurement with the aim of enhancing productivity. The size and type of innovation are the primary determinants of an organization's performance in any industry. Therefore, an innovation process is considered successful if it leads to increased productivity, profitability, and growth of a company. There is a need for companies to have a perfect knowledge of and understand various domains of innovation.

We have a problem. The company needs to increase the growth of organic revenue. Just playing with our current products and investing in sales forces will not be enough. Principally, looking at our development capabilities, ideas in the pipeline, and how fast our competitors are putting new products and services on the market, we started to understand the problem. We were not able to innovate quickly enough.

But before starting to double the size of our investment in R&D, lets first look at what innovation is and why we need to innovate .2. Innovation2.1 Why Companies Need To Innovate?Without getting into particular and lengthy examples, if we look at recent history and talking about firms we all know like Nokia, Kodak, Grundig, Commodore, Polaroid, etc. They all missed critical innovations. Most of all had Research & Development teams but failed to identify innovations in their industries which would drastically change their business models. Once prosperous and today disappeared or marginalized CITATION Oli14 \l 4108 (Gassmann 2014).

Innovation is critical. Some companies have been a great example of that. 3M and Apple, at a point close to failure, re-invented themselves to become very successful companies. According to Forbes, the average lifespan of a successful S&P 500 company today is 15 years. Businesses need to innovate to improve this number CITATION Ira13 \l 4108 (Kalb 2013). In a webinar in August 2017, Thomson Reuters Global Head of Innovation said very clearly: "Every organization needs to innovateThe company will not survive without innovating" CITATION Ama17 \l 4108 (West 2017).

Innovation has become a branding tool in the current competitive market as it is considered critical to a company's success. Companies that act on the possibilities of innovation are not only successful but compete successfully in the emerging business economy. On logical grounds, companies that have faced a downward spiral understand the centrality of innovation in making their products and processes competitive in the market. According to Pisano (2015), innovation stiffens global competition whereby credit is given to the expansion of the internet. In other words, customers are in a better position to browse for better client services, quicker production, and good prices for the amenities they require. In any case, a company is not innovative; they stand a more significant chance of losing their customers to competitors.

Additionally, innovation gives room for better ideas in a company. For instance, when a group allows its devoted clients to provide brilliant ideas concerning their business, they stand a better chance of improving the business based on the new ideas that they get. Client feedback is the driving force of superior brand development and customer loyalty for an established organization. Additionally, innovation aids companies to learn on what more they should do to satisfy their customers' needs. The underlying argument in favor of this significance is that once an innovation has been made, the business will be able to easily learn upcoming ways of adapting to and anticipate for the client's future needs. Giants in the computer and internet software such as Microsoft, Apple, and Google spend heavily on salaries of engineers because they have a testimony to the importance of innovation( Pisano 2015).

Moreover, when a company embraces innovation, it tends to attract a lot of job-seekers who look for companies that offer support and encouragement to their contributions and talents. This will lead to brand innovations that brings multiple benefits to the workplace, the team, and most importantly gratification of the consumers. Arguably, attracting and maintaining a group of innovation enthusiasts is the most significant issue confronting many companies today. Technology companies have embraced innovation with all their muscles because it is emerged to be the steering wheel of growth in the global economy that has become increasing digitalized. This digitalization has reduced the world to a global village where lifestyles and culture blend. In effect, customer's needs and expectation are growing homogenous. A customer's satisfaction has a positive impact on repurchase intentions thus a company should work round the clock to be more innovative all the time ( Pisano 2015).

Whats Innovation?Innovation could be defined in some ways. If you look at Wikipedia, you will find the following definition: "Innovation can be defined simply as a new idea, device or method." But from a business perspective, it is hardly enough. "Innovation needs to turn into a tangible outcome to generate revenue and profits" The social aspect, and the impact of...

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