Understanding how to grow innovativeness

Innovation and its Importance

Innovation remains crucial to the survival of civilization in a world when resources like minerals are limited. It is a method through which employees and businesses can increase output from the same inputs, raising people’s living standards (Brynjolfsson & McAfee, 2014). Despite its significance, societies and corporations struggle to advance their innovativeness. One method for corporate executives to support the emergence of innovation is to understand how to foster it. They can accomplish this goal by capitalizing on chances for innovation, understanding the key elements that encourage it, and understanding the contribution of states to its development. An in-depth examination of these issues can help managers find ways to grow the level of innovation in their firms that translates to better standards of living for societies.

Leveraging on Opportunities

Exploiting an opportunity depends primarily on the ability of an individual or firm to identify the prospect. In this regard, leveraging on opportunities for innovation depends mainly on the ability of managers and workers to recognize them. Changes among individuals are some of the arenas for businesses to nurture their innovativeness. For instance, rising income levels and shifts in consumer tastes and preferences are some areas that can benefit firms. Increasing incomes present opportunities for business since they result in higher demand for products and services. On their part, changing tastes and preferences among consumers require new products and services to fulfill the needs of consumers. Knowledge of such occurrences can benefit innovativeness in firms as they present new avenues for businesses to grow. Therefore, constant examination of markets to gather information on trends is vital to the ability of firms to leverage on the opportunities.

The Impact of Globalization

Although incomes can present businesses with opportunities for innovativeness, they can affect their responsiveness when managers disregard the importance of globalization. The 2009 financial crisis offers a good example of how this can happen. In the crisis, the demand for SUVs in the mature markets of North America and Europe decreased significantly due to falling incomes occasioned by job losses (Dicken, 2011). Vehicle manufacturers had problems selling their SUVs within the two markets due to the reducing incomes. Thus, enterprises encountered problems with increasing their revenues as sales reduced. Globalization presented an opportunity for the companies to exercise their innovativeness. New markets in regions that had robust economies, for instance, Asia presented channels for promoting innovation. Companies were able to lower the tough economic situation by leveraging on opportunities in these markets. Consequently, the globalization process that has lowered market accessibility presented businesses with ways to leverage on the opportunities thereby growing their innovation.

Internal Business Problems as Opportunities

Apart from external influences, internal business problems in firms can also create opportunities for companies to exploit. Moore’s law asserts that transistors used in microprocessor chips double after two years or so. Moore’s prediction portrays the way internal factors can contribute to the growth of innovation in companies. Microprocessors have remained largely the same since their invention with the exception of their performance. Achieving greater performance has meant cutting down on aspects of their circuit to pack additional circuits in a single chip. The problem has resulted in businesses and industries creating their own techniques to deal with them. For instance, technology firms enhanced the performance of chips through innovation. Instead of the usual single chip that people were used to having on their computers, the companies have innovated to create chips with two and four cores inside a single processor. Thus, companies have realized a greater performance of their internal systems.

Factors Affecting Innovation

Therefore, leveraging on opportunities for innovation depends on the ability to recognize their existence. In most cases, companies exploit them because of difficulties in their operations. Changing market situations, for instance, shifts in people’s incomes, changes tastes and preferences, and problems with the internal operations of a company force business executives and workers to think of new ways of doing business. Such elements can contribute to the innovativeness of firms. However, the ability to exploit the opportunities depends on the ability of the firms to rethink their approach to business and implement the appropriate actions needed to see their success. Several factors contribute to this ability. The most important factors include finance and human resources. Availability of the two increases the responsiveness of business while shortage hinders progress. The next section discusses the two factors in greater detail.

The Role of Finance

Finance acts the lifeblood of any business making it vital to enterprise creation and development. Financing is necessary for establishing an enterprise, acquiring assets, creating products, conducting research, and performing marketing initiatives. Successful innovation also hinges on the availability of funds. As indicated, innovation arises from opportunities and recognizing the existence of the opportunities comes from recognizing their existence. One of the ways companies are able to achieve the goal is through research. Availability of financing determines the level of research that firms can undertake. Companies with significant financing have a greater capacity to research compared to those that have problems raising money. In most cases, the lack of adequate financing can affect innovativeness. On the other hand, this problem can advance innovation as businesses seek alternative ways of raising the capital they need. Bonds, options, and shares in the financial markets are examples of innovations that have arisen over the years to address the financing problems of businesses.

The Importance of Human Resources

Another important factor required to boost the level of innovation in a business is its human resources. People play a critical role in advancing innovation because they provide the intelligence and skills required for innovation. Workers undertake the research that leads to recognition of opportunities for innovation. In addition, they make decisions on actions needed to innovate and implement the chosen course of action. Consequently, the availability of innovative personnel in a business affects the rate of innovation. Counter-arguments exist that point to the capacity of technology, for instance, information systems to improve innovation. They can help to collect information, analyze it, and detect areas for innovation. Although technology can enhance innovation in these ways, it is important to note that they still require the input of human beings to interpret the information. Without the contribution of workers, much of the information in the systems would be a collection of words and numbers. People give meaning to the data that results in the identification of opportunities. Therefore, human resources are a crucial aspect of the innovativeness of firms.

The Role of States in Innovation

The role of states in the progression of innovation is unmistakable due to their control of the two factors that foster innovation: money and people. According to Mazzucato (2015), the state’s role is mobilizing resources to allow the diffusion of innovation and knowledge across various economic sectors. Through regulations, countries determine the influence of globalization and capital movement. Strict regulations in countries that seek to restrict capital outflows can hinder innovativeness in firms. They can result in a shortage of financing for companies. For example, a business that encounters high taxation in one country faces limitations in the amount of capital that it can transfer to another market where an opportunity for innovation exists. Similarly, the company may face difficulties with innovation in places where there are strict controls on the movement of people since it affects the ability to transfer human resources. On the other hand, arguments on such restrictions exist. The limitations can foster innovativeness by forcing companies to work harder to discover opportunities in the specific market where the restrictions exist as a way to overcome the high taxes. Similarly, constraints that hinder people’s movement can spur innovation by driving enterprises to consider ways to transfer knowledge to other places. For instance, businesses are forced to employ technology that could lead to improved business operations. Thus, nations through laws play an essential role in determining innovation in companies.

Conclusion

As businesses continue to consider ways to foster their level of innovation, they must consider all elements involved in its success. Leveraging opportunities is the initial step towards further innovativeness. Knowing where and when innovation is needed can help enterprises reach greater levels of advancement. Recognizing these opportunities, however, demands the availability of certain factors that push it. Finance and human resources are the most influential components that firms should consider. Without their consideration, businesses are at risk of missing the knowledge and capacity to exploit prevailing opportunities for innovation. Nations through laws control the two elements. Therefore, enterprises must recall this influence to determine ways to handle the challenges they present. Business executives must rethink their approach to the matters including the incorporation of innovation in their management to effectively exploit their potential and drive business growth.

References

Brynjolfsson, E. & McAfee, A. (2014). The second machine age: Work, progress, and prosperity in a time of brilliant technologies. New York, NY: W. W. Norton & Company, Inc.

Dicken, P. (2011). Global Shift: Mapping the changing contours of the world economy. New York, NY: The Guilford Press.

Mazzucato, M. (2015). The entrepreneurial state: Debunking public vs. private sector myths. New York, NY: Public Affairs.