Managing Change & Innovation

Innovational management is an interconnected set of actions aimed at achieving or maintaining the required level of viability and competitiveness of an enterprise using mechanisms for managing innovation processes. Why is innovation important? Because economic and competitive environments frequently change and organizations should set a long-term plan and develop contingency plans.

The objects of innovation management are innovation and innovation change processes. One of the most difficult management challenges today is managing change because change requires cooperation and understanding of a need for change.

Innovation is the end result of innovative activity, intended for commercial implementation in the form of:

• a process aimed at creating and implementing fundamentally new or improved ideas, techniques, methods in any area of activity;
• objects – fundamentally new or improved products, technologies, services or activities that have a completed type of product, used for the first time and ready for use and distribution on the market.

The period of time between the emergence of innovation and its implementation is called the innovation lag.

Studies conducted on the basis of studying the experience of applying methods of involving personnel in innovative activities, such as quality groups, initiative creative groups and project groups, have shown that a characteristic feature of a successful innovative approach is a change in the orientation of management efforts from a consumer to a “non-consumer” or “ future consumer ”. Focusing on future consumers will help direct the efforts of managers and employees to find highly effective innovations, the result of which should be an expansion of the range of consumers and the creation of a basis for dominating the markets.

1. Orientation of innovation management to future consumers.

The focus and results of the change process in companies are diverse. These are products and services improved thanks to the initiative and creativity of the staff, and introduced technological and technical innovation changes, and implemented organizational changes in the form of existing or changed procedures and standards, etc. The activities of initiative creative groups do not always end effectively, and this was also seen during the examination. But in general, there is always a tangible presence of the results of their activities.

For the successful activity of creative groups, the company must have innovative management, which can be based on the principle of orientation towards “non-consumer”, the principle of orientation towards future consumers in addition to the fundamental principle of orientation towards the consumer, adopted in regular management. Innovation control, built on the principles of focusing on future consumers, should offer them (future consumers) something fundamentally new than just the list of products and services available in the company.

There are many examples of products that at one time became innovative while offering the automation of some kind of manual operation. Many of these products have a very narrow scope, but at the same time, they confidently take their share of the budget of interested buyers. For example, not everyone needs such devices as a paper shredder or bill counter. And before they appeared, the same problem was solved differently. But for a truly target audience, their value is beyond doubt – and they willingly pay for it.

This approach can be used as the basis for the formation of innovative management, which does not conflict with the regular and strategic management of the company but complements them in a fundamental way. Thus, the solution to the problem of creating an environment for permanent existence and development of initiative creative groups is transferred to the plane of creating an environment for innovative management focused on the future consumer. The border “consumer – non-consumer” or “consumer – future consumer” should be used in this case as a transparent border of the areas of application of regular and innovative management of the company.

2. Principles of innovation management

The application of the principle of focusing on future consumers makes it possible to determine the other principles of managing changes, which will create conditions for the formation of new relationships with the company’s initiative employees, with important and necessary partners, and will attract investors.

The difference between the principles of innovative management built on the basis of focusing on future consumers and principles of regular management is shown in Table 1.

Table 1.

Obviously, the already mentioned principle of focusing on future consumers can become the first principle of innovation management. This principle means that the future revenues of the organization depend on the trend of distribution of disposable income of future consumers and the company’s efforts to include products and services in the sphere of interests of future consumers. Applying the principle of focusing on future consumers will allow the company to actively shape the future needs of consumers, to become an active company that forms new markets and consumer products.

The next principle of innovation management can be the principle of leadership in innovation. This principle means that the leaders of an innovative company must be able to determine the future purpose of the company, develop an innovation strategy, and achieve the implementation of innovative creative plans for the company’s development.

The third principle of innovative management can be the principle of involving employees in innovative processes. It can be argued that innovative employees have their own means of production, which are their knowledge, experience and skills to realize their abilities, and therefore they are much more independent from the company than their colleagues who do not take part in innovative activities. Accordingly, it is necessary to transform the principle of employee involvement into the principle of partnership with employees. This means that all employees of the company are given the right to think outside the box and take non-standard actions, so that employees become equal partners of the company, maximize and realize their own abilities.

The next fourth principle of innovation management can be the principle of approach as a project, in the development of the principle of approach as a process adopted in quality management. Future consumers are not yet the company’s customers, so they cannot be interested in existing processes aimed at customer satisfaction, but they can count on the completion of innovative projects, which, if successful, give them (future consumers) the opportunity to become existing consumers of the company’s products and services. Project management is the most acceptable type of management to achieve the end result of innovative activities, to ensure the concentration of the necessary resources for this, to ensure the effective achievement of the set end results.

The fifth principle of innovation management remains the principle of a systems approach to management, which, in accordance with the analogous principle of quality management, means that the definition, understanding and management of a system of interrelated processes and projects in accordance with the established goal contributes to the continuous development of the organization. A systematic approach to management creates the foundations for the formation of trust of future consumers and their involvement in the circle of real consumers.

The sixth principle of innovation management can be the principle of continuous innovation, in addition to the corresponding principle of continuous improvement applied in quality management. Future consumers are not yet a client of the company, so they are not interested in continuous product, service and process improvements that are not currently targeted at them. At the same time, they cannot remain indifferent to continuous innovations, since successfully implemented projects can make them loyal customers of the company.

The penultimate seventh principle of innovation management can be the principle of searching for unrealized opportunities, in addition to the principle of decision-making based on facts. The conquest of future consumers cannot be based on facts alone. In innovative activities, it is necessary to rely on forecasts, assumptions, hypotheses and other sometimes unreliable data. Innovative companies are more likely to create a new reality and corresponding new facts of the emergence of fundamentally new products and services that were previously not in demand by anyone, rather than using only existing reliable verified data and facts. Innovative companies are active “hunters” for unrealized opportunities. At the same time, it should be noted that the reliability of forecasts, assumptions and other data should not be overridden; the more reliable the assumptions, the more accurately the product or service is formed for future consumers.

Finally, the last eighth principle of innovation management can be the principle of strategic partnership, in expanding the principle of mutually beneficial relationships with suppliers used in quality management. Strategic partnership broader interprets relationships, and not only with suppliers but also with counterparties, with other partners and other companies and non-profit organizations interested in the final results of innovation. Capturing future consumers is a very ambitious task for one, even a very developed innovative company. This type of activity requires alliances, strategic alliances, associations, partners in standardization and certification, etc. New products and services can take their rightful place among the existing variety of goods only on the basis of joint activities of companies from various industries and sectors service.

Application of the proposed principles of innovation management will allow creating a management system focused on future consumers. In turn, this will lead to significantly better business results since the involvement of future consumers ensures the growth of the company’s income, the rise of its potential, the development of the approaches used, a change for the better in the resource allocation system, the growth of personnel motivation and other strengths.

3. Ensuring a balance of regular and innovative management.

The company cannot apply only innovative approaches and innovative principles of its activities. For a sustainable existence, a company must serve its existing customers using a regular management approach. Accordingly, a balance must be struck be-tween innovative and regular management. Earlier it was shown how the priority development of regular management leads to a halt or slowdown of innovative projects in companies. At the same time, it is possible to demonstrate the opposite effect, when an excessive enthusiasm for innovations leads to dissatisfaction with existing consumers, which can end up for the company with their loss and all the resulting problems.

Strategic management can ensure the necessary balance of regular processes and innovative projects in a company, which allows developing strategies and corresponding goals and objectives, both to ensure the growth of satisfaction of real consumers and to attract future consumers. For this, it is useful to divide the company’s development strategy into two parts. The first part is an improvement strategy aimed at increasing the satisfaction of existing customers. Growing customer satisfaction allows you to attract future customers by increasing the loyalty of existing customers, which contributes to the formation of their desire to recommend the company’s products and services to other customers. The second part of the strategy is an innovation strategy aimed at identifying innovative projects and determining ways to implement them, which ultimately leads to attracting future consumers by offering them fundamentally new products and services. (Innovation should be pulled by strategy from the lowest levels of the organization, and not cut through the asphalt).

Improvement strategies and innovation strategies allow you to find answers to various questions about the future of the company and the future of its products and services, and their examples are given in Table 2. An improvement strategy is a strategy to improve what exists at the moment. At the same time, there may be an executable innovation strategy to better engage future consumers — a strategy to create something that does not yet exist.

A balanced improvement strategy and an innovation strategy will allow the company to properly allocate resources to maintain the loyalty of existing customers and attract future customers. In addition, the strategies should be related to each other, they should provide for serving future customers by means of evolving regular management after their involvement in the circle of customers. Thus, the innovation strategy should also include organizational changes regarding the development of regular management. Then the involved future consumers will remain loyal customers of the innovative company for a long time or forever.

Table 2.

Conclusion

A company that has chosen the path of innovative development always thinks about the direction in which it should develop, which future consumers should be attracted, where and how to look for new directions of development that will expand the business, make it more attractive for all stakeholders… Here it is impossible to offer unambiguous solutions since the strategy and tactics of innovation provide for movement towards something that does not yet exist. However, this does not mean that it is impossible to determine possible directions using well-known methods of invention and methods of intuitive thinking, scenario planning technologies, and other similar methods. The key is that people who plan and implement innovations have an unwavering commitment to making a difference in people’s lives. An innovative company must have a project management mechanism. An innovative company must be able to form strategic alliances with partners, including using mechanisms such as standardization, membership in associations and other voluntary associations, as well as using voluntary certification mechanisms. In any case, an innovative company should not adhere to the practice of isolationism. And finally, an innovative company must learn to boldly face the future, which is perhaps the most difficult step in the proposed scheme for developing and implementing an innovation strategy.