Information Systems and Innovation Management

Every organisation requires a well-structured information system (IS) that enhances business operations. Business operations run on information, and such information is based on data from both the internal and external environment (LeBlanc 2000, p.243). This means that for the innovation generation and innovation management process to be successful, it is important to ensure that there is a seamless flow of information to guide business operations. IS entail the flow and utilisation of information from the lowest to the highest level of management. Operations management entail the daily business operations, and the lowest level of information management. At the operational management, a transaction processing system (TPS) is adopted. Such an IS is important for obtaining data from the immediate environment, which is characterised by the direct interaction between the management and consumers. This is where customer feedback plays an important source of information. At the operational management level, data is mainly comprised of the macro environment. Customer feedback mainly entails tastes and preferences, identifying market gaps, and understanding the level of market competition. At this level of management, the management derives sufficient information to guide on innovation generation and management.

            The tactical management level utilises a management information systems (MIS) that observes and derives information from the micro environment. This ensures that the strategic management level, which utilises the decision support system (DSS) obtains highly refined information regarding the internal environment. This high-level breakdown of obtaining and utilising information is a key component of guiding business operations both at the short and long-term. With such a structured IS, the innovation generation and management process becomes seamless, and part of operations management.

            IS is a key component of Business Intelligence (BI). The BI system in summary represents the collection and analysis of data to form information that is required for decision-making. An IS comprises of a BI system and data warehouses. Every organisation makes innovation decisions based on information retrieved from the micro and macro environment. This information comes in the form of raw data, which is in plenty of supply from the environment. An organisation cannot simply react to every piece of data that is available. This means that the data must be fed into the organisation’s IS whereby BI processes synthesise it to the most useful information required to make decisions. In addition, the information retrieved from BI guides operations management through the decisions made by the management. Business operations are customised according to the information received from the IS, and this is what guides the management to make informed decisions on whether to generate new or improve on the existing brands. This means that business intelligence is a prerequisite to an efficient IS, which in turn governs operations and the resulting decisions on innovation generation and management.

Benefits and Drawbacks of Innovation Management within Organisational Networks

Innovation management denotes the level of innovation owing to processes established to enhance the sustainability of business operations. Innovation is made possible by a coherent flow of information within the organisational networks. Innovation management strengthens interpersonal relationships since people get to work towards a common interest. In addition, it enhances the IS in the sense that the flow of information is seamless. Innovation management enhances knowledge sharing. This is a significant aspect of harnessing organisational networks and promoting operations management. It is through working on new brands that people from different teams interact and brainstorm to ensure that their efforts and knowledge are centred on creating a masterpiece. The IS, in this case, provides the necessary data on which such individuals focus their knowledge on and bring forth different understanding and interpretations of such information. However, innovation management may be time consuming, and placing it within organisational networks may result in increased lag time. Involving a large proportion of the network towards innovation management may stall business operations, which limits the efficiency of operations management. The IS may become inefficient in the long-term since the lag time would have a negative effect on operations management and the entire innovations process as well. Lag time may also be as a result of an increase in the level of bureaucracy owing to the need to affirm the ideas and interest of the individuals involved with the process. IS can be used to ensure that authority is maintained even when management is decentralised. Issues of red-tapism would be avoided if the IS enhances knowledge sharing while maintaining the autonomy of authority to ensure that organisational networks are not compromised. The main challenges of innovation management within organisational networks are based on the dynamisms inherent in innovation and the difficulties in striking coherent decision-making. Innovation in the business world is dynamic. Organisational networks may have to be disrupted with every evaluation or improvement of an invention. In addition, there may be difficulty achieving coherence within the networks owing to the different interpretations and understanding derived from data. Failure to achieve coherence would inhibit efficient operations management, which would delay the innovation process. However, IS has a significant role in managing the two challenges. An efficient IS ensures that the information generated to the organisational networks is relevant to the current business environment; hence, the dynamisms in innovation would not have an interference to how business operations are conducted. In addition, IS should provide information that is ready to use and does not require critical interpretations among the networks in a bid to eliminate subjectivity, which is responsible for lack of coherence.

Social Media as a Source of Innovation for Organisations

In the modern era, there is need for organisations to have an online presence. Social media has created a platform whereby the online space is more informal and unstructured to enhance the level of interaction between users. Organisations with a social media presence generate significant information that could guide innovation. Social media can be used as a platform for customer feedback (Roberts, Piller, and Lüttgens 2016, p.122). Customer feedback is a key component of information for organisations as it enables the management to understand how well the brand is performing. Such information may either be positive or negative. In the instance that it is positive, the organisation needs to focus on innovation management. For instance, customers provide reviews on a product, which create a social media database of information that would encourage other users to try out the products with positive reviews. In the instance that there is negative feedback, the organisation ought to focus on innovation generation. Such feedback is a clear indication that the brand is not meeting the needs of the consumers or attending to the market gap. Consumers utilise social media to ‘trash’ a product. This has a negative influence on the organisation. For instance, Kylie Jenner, a reality television personality, cost Snapchat over $1.3. billion in stock value after tweeting that she no longer uses the application since it is less interesting. Her tweet was a form of customer feedback indicating that the taste and preference for the product was diminishing. The company needs to be innovate and come up with new products for the application. Customer feedback entail the identification of taste and preferences, customer needs, and understanding the level of competition in the market. Such information is readily available through social media, and should guide an organisation on whether to generate new innovation or manage the existing one.

Innovation Diffusion

E.M. Rodgers coined the term innovation diffusion through the Diffusion of Innovation (DOI) theory. This is the speed in which innovation is accepted within the intended framework (Lynch 2007, p.110). Innovation that meets the needs of the intended users is accepted at a higher rate than one that does not. This means that innovation ought to be a well-thought process since it requires the utilisation of the organisation’s resources. An organisation’s innovativeness relies mainly on the interaction between the micro and macro environment. The micro and macro environments provides information based on the organisational structure and the market respectively. The interaction between the two sets of information denote the level of innovativeness owing to a stable IS. In addition, the level of technology utilised within the organisation enhances innovativeness. In the modern business environment, technology is a key component of business operations. Technology may be expensive, but with its proper utilisation, and organisation can have feasible return on investment (ROI) from being innovative.

The speed of diffusion of innovation is reliant on several factors. The IS utilised by the organisation is the determinant. If the IS involves a seamless transfer of information from the operational management level through the tactical to the strategic management level, the decision structure would be efficient; hence, the speed of diffusion (van Eck, Jager, and Leeflang 2011, p.194). On the other hand, if there is a breakdown of both the decision structure and information system, the speed of diffusion would be limited. In addition, the presence of internal controls would enhance the diffusion of innovation. Internal controls ensure that the organisation is proactive in innovation management. Being proactive means that the innovation is being monitored, and any information obtained regarding it is accounted for beforehand.

Business intelligence plays a significant role in innovation diffusion. The rate at which information is synthesised from raw data to useful information enhances knowledge sharing. It is through knowledge sharing that inventions and innovations are accepted owing to the ease of use and understanding how to operate them at optimal levels. For instance, a programmer would buy a laptop based on his or her understanding on how to utilise it to its optimum level. On the other hand, the similar laptop, which is costly owing to its capabilities, may not be accepted by individuals who do not understand its capabilities and how to utilize it to achieve the most performance. Similar to this knowledge is BI. The ease at which people obtain understanding on what the needs from the environment are and how to utilise the new product to achieve maximum performance enhances innovation diffusion.

The feasibility of innovation in relation to its return on investment (ROI) impacts on its diffusion. In the instance that a new brand has a high ROI, its acceptance is higher owing to the financial aspect of generating more revenues. On the other hand, if a new brand shows little signs of having a high ROI, the management may be reluctant to accept the product. A brand with a high ROI will enhance coherence within the management and organisational networks; hence, enhancing its acceptance.

Benefits and Drawbacks of Co-creation to Drive Innovation

Co-creation can exist in the form of business-to-business (B2B) or business-to-consumer (B2C) (Frow, Nenonen, Payne, and Storbacka 2015, p.470). Both forms of co-creation entail the integration of more than one party, which is the business, to the innovation process. Co-creation enhances the low-cost innovation. For instance, Airbnb is a B2C co-creation that enhances the availability of cheap accommodation globally. With Airbnb, the company did not have to build cheaper hotels or homes for accommodation. It utilised the existing modes of accommodation owned by consumers to create affordable hospitality, and offer a realistic substitute in the hospitality industry. Co-creation integrates the needs and demands present in the market, enhancing innovation diffusion (Martinez 2013, p.142). Such innovation is readily accepted in the market since it involved multiple stakeholders, which created a broader understanding of the market gap.

      Co-creation has its drawbacks. It creates red-tapism, whereby the decision structure is broadened. This means that more time would be spent making decisions. In addition, this would reduce the level of competition, which would mean that the level of accountability is reduced. With high competition in the marketplace, organisations have a higher responsibility for their products. However, in the event that co-creation is established, the level of responsibility and accountability would reduce owing to the diffusion of management to a broader population. This is a common occurrence in Public Private Partnership (PPP) projects. The level of management is decentralised meaning that there are red tapes inhibiting decision-making and little accountability owing to the decentralisation of authority.

Knowledge Stickiness and Implications for Innovation and Knowledge Sharing

Knowledge stickiness denotes the difficulty of sharing information within organisations (Jensen, and Szulanski 2012, p.17082). This occurs mainly due to strained relationships within the decision structure or lack of motivation. Knowledge needs to flow seamlessly, and this is what entails a successful IS. There is need for a constant flow of information to enhance innovation. In the instance that information is not transferred freely within the organisation, knowledge stickiness is bound to occur. However, innovation and knowledge sharing is not encouraged to its entirety between different organisations. Different organisations need to maintain their autonomy (Li, and Hsieh 2009, p.429). This increases the level of competition within the marketplace owing to the different brands that substitute each other. It is important for different organisations within the same industry to innovate independently rather than co-creating products to ensure that they retain accountability for their products. For instance, due to autonomy Microsoft and Apple have sustained the level of competition within the industry through the Windows and iOS operating systems respectively. Innovation and knowledge sharing is healthy within an organisation, but it would not be feasible to establish it between different organisations.

The Future of Innovation Management

In the current business world, innovation management is on a steady rise. New technology is at the core of innovation, with most companies adopting new technologies in their operations (Quattrociocchi, Calabrese, Hysa, and Wankowicz 2017, p.11). The internet present myriad of opportunities for businesses to expand and enter the global space. With organisations utilising the internet, the future of innovation management is set to be a going concern (Caniëls and Rietzschel 2013, p.101). For instance, Uber has made the transport industry sustainable through innovation management. Airbnb is a concept founded on the internet, and the company is set to achieve sustainability. It is important to note that new technology and the internet are not making businesses obsolete, but they create a platform for those businesses to become sustainable.

Social media has a positive impact on the future of innovation management. A majority of trends in tastes and preferences are attributable to social media. The platform plays a major role in an organisation’s macro environment. It provides data for IS regarding the needs of the target market, which in turn enhances innovation management. In addition, the need for global expansion is a significant element to innovation management. Organisations are in a constant need to expand globally to both the developed and emerging economies. Such expansion fosters innovation. This means that with the need to expand globally, innovation management will continue in the foreseeable future. Innovation is highly in demand. Its sustainability is on the rise owing to the dynamism in the business world. Organisations need to continually improve systems and replace those that are obsolete. That in itself is innovation management, and it is at the core of the going concern of organisations.

References

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Frow, P., Nenonen, S., Payne, A. and Storbacka, K. (2015). Managing Co-Creation Design: A Strategic Approach to Innovation. British Journal of Management, 26(3), pp.463-483.

Jensen, R. and Szulanski, G. (2012). Stickiness and the Sequencing of Investments in Knowledge Coordination Capabilities. Academy of Management Proceedings, 2012(1), p.17082.

LeBlanc, L. (2000). The impact of information systems technology on operations management. International Journal of Technology Management, 20(3/4), p.243.

Li, C. and Hsieh, C. (2009). The impact of knowledge stickiness on knowledge transfer implementation, internalization, and satisfaction for multinational corporations. International Journal of Information Management, 29(6), pp.425-435.

Lynch, L. (2007). The Adoption and Diffusion of Organizational Innovation. Cambridge, Mass: National Bureau of Economic Research.

Martinez, M. (2013). Co-creation of Value by Open Innovation: Unlocking New Sources of Competitive Advantage. Agribusiness, 30(2), pp.132-147.

Quattrociocchi, B., Calabrese, M., Hysa, X. and Wankowicz, E. (2017). Technology and Innovation for Networks. Journal of Organisational Transformation & Social Change, 14(1), pp.4-20.

Roberts, D., Piller, F. and Lüttgens, D. (2016). Mapping the Impact of Social Media for Innovation: The Role of Social Media in Explaining Innovation Performance in the PDMA Comparative Performance Assessment Study. Journal of Product Innovation Management, 33, pp.117-135.

van Eck, P., Jager, W. and Leeflang, P. (2011). Opinion Leaders’ Role in Innovation Diffusion: A Simulation Study. Journal of Product Innovation Management, 28(2), pp.187-203.