Barriers to Innovation – Comparing the Barriers in Microsoft and Research in Motion

1.0 Introduction

1.10 Background

Innovation is a core determinant of success in modern day business environment. For instance, in a survey by the American Management Association, 90 per cent of respondents for instance considered innovation to be a core determinant for long-term survival (Jamrog 2006 cited in Fortuin & Omta 2009, p. 839). Whereas creativity involves generating ideas through means such as brainstorming sessions, innovation entails “the sifting, refining and … implementation of those ideas” (Gurteen 1998, p. 5). Accordingly, although creativity is important in such processes as opportunity identification, innovation is what provides an entity with a tool for competition by bringing the identified ideas into action. Drucker (1985), defining innovation, therefore noted it to be “the specific tool of entrepreneurs” (cited in McAdam, McConvery & Armstrong 2004, p. 206). In an environment where increasing globalisation, decreasing product lifecycles and changing customer preferences are the norm, an organisation’s capacity to innovate becomes a core determinant of success (McAdam, McConvery & Armstrong 2004).

In respect to types of innovation, innovation could involve radical change or incremental change (Kaplan & Warren 2009, p. 41). Incremental innovation involves improvements made on a continuous basis on the existing products or services or on the processes used to deliver such products (Kaplan & Warren 2009, p. 41). Radical innovation entails major changes that result into an entirely new mode of satisfying customer needs or creating a new need for the customer (Kaplan & Warren 2009, p. 41).  An example of radical change at the product level would be product revolution whereas incremental changes at the product level include modifications to existing products, for instance, based on customer reviews. At a strategic level, radical changes involve such strategic transformations as moving from a cost-leadership strategy to a differentiation strategy, whereas incremental changes would entail strategic development to align business activities to any of cost leadership, differentiation or focus strategies.

1.20 Defining the Issue

Although many business leaders recognize innovation as a core driver of success (e.g. in a survey cited in Fortuin & Omta 2009, p. 839), effective innovation for most entities only occurs by chance. For instance, an article published in Strategic Direction journal indicates that only a “few [companies] have managed [to] overcome the barriers and create pervasive and sustainable innovation processes” (‘Barriers to innovation’ 2007, p. 33). According to Kuczmarski (1996), although most business leaders claim to be committed to innovation, the action to prove such commitment is rare due to an existing belief that innovation is a risky and costly endeavour whose returns are uncertain. Such reluctance in adopting innovation as a competitive tool arises even though other sources of competitive advantage such as cost efficiencies become eroded as players in the industry move to adopt identical technologies (Fortuin & Omta 2009).

In business world, trends over the years have indicated that innovation is important for survival and success in a dynamic environment. Entities such as Yahoo and Research in Motion (RIM) have relinquished their market leadership to more innovative competitors by failing to innovate and come up with products that meet the changing consumer needs. Yahoo for instance was a market leader in search engine and ads-revenue industries before Google’s innovative approach made Yahoo a distant follower in the market (Carr 2007). In RIM’s case, its Blackberry phones had made it the market leader in the smartphone market but the entry of Apple and Android smartphones that feature various innovative applications have made the Blackberry maker to become a follower in the market (Chris 2011). Such examples provide evidence that innovation is core to survival in current business environment. However, the continued failure by entities to build innovation capacity indicates a necessity to consider the barriers that prevent establishment of such capacity.

1.30 Importance of the Issue

The existence of multiple barriers to innovation could explain why many organizations fail to create the capacity to innovate despite innovation being important for their success. For instance, one perspective is that failure to create innovative capacity arises from a frame of mind that blocks new ideas and eliminates initiatives that seem to challenge the existing way of doing things (‘Barriers to innovation’, 2007; Kuczmarski 1996). Such a frame of mind envisages innovation to be a risky affair whose returns are uncertain, thus leading to comfort in the current ways of doing business that have previously shown success. Other barriers to innovation include the short-term focus of innovation interventions, lack of time and resources to build innovation infrastructure, expecting rapid payoffs from implementing innovative approaches and lack of incentives to reward innovation (Loewe & Dominiquini 2006; Sarri, Bakouros & Petridou 2010).

Although most of such reasons for failure to innovate could affect start-up and small and medium enterprises (SMEs), the failure to innovate for initially successful firms are explained more by the concept of Icarus paradox than lack of resources. The concept of Icarus paradox describes a situation where successful entities, relying on the values and processes they have established during their success, get a sense of false security (Amason & Mooney 2008). When the external environment of such entities begins to change more frequently, the entities’ established ways of doing things become their most pronounced liability. Sull (1999) for instance identifies various entities, such as Firestone, which, by insisting on doing only what was favourable to them in the past, lost considerable business to upstarts that redefined what was on offer to the customer. Creating innovative capacity that ensures organizations begin a new phase of growth before the last phase fizzles could help entities to avoid such success-induced failures. Considering barriers to innovation is thus important in understanding potential reasons for failure of initially successful entities, hence help in proposing solutions that avoid such organizational failures.

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