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Consequences of Innovation

Consequences of Innovation

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11/21/2012

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Consequences of Innovation What are the consequences of innovation?

Consequences are defined as the changes that occur to an individual, organization or social system as a result of the adoption or rejection of an innovation. Consequences can be: i) desirable or undesirable,

Whether a consequence is desirable or undesirable depends on whether the effects of an innovation are functional or dysfunctional from the point of reference of the organization. In making this distinction, the assumption is that usually, the desirable and undesirable effects of an innovation cannot be managed separately.

ii)

direct or indirect,

Whether a consequence is direct or indirect depends on whether the changes in response to the innovation are first-order or second order. D irect consequences are changes to an organization that occur in immediate response to an innovation. Indirect consequences may take years to develop. iii) anticipated or unanticipated.

Whether a consequence is anticipated or unanticipated depends on whether th e changes are recognized by members of an organization as the intended consequences of the innovation. Unanticipated consequences are by definition unknown to the innovator until after the innovation is widespread .

Effects of an innovation are functional or dysfunctional from the point of reference of the organization. In making this distinction, the assumption is that usually, the desirable and undesirable effects of an innovation cannot be managed separately. POSITIVE CONSEQUENCES OF INNOVATION 1. Increased production, efficiency and effectiveness. A good example of this is how mechanization has affected most industries. It has increased production by greatly increasing the speed of production. It has also increased efficiency in some areas e.g. use of conveyor belts in factories to reduce the amount of time spent transporting materials and finished goods. 2. Most studies found a positive relationship between product innovations and employment. This is because new products tend to occupy a niche in the market that was

previously unoccupied and lead to a need for more people to handle the supply of the new product: production, storage, distribution, sales, marketing and customer service. 2. Higher income This effect is usually seen in the early adopters of innovations. This is because in an effort for new products/processes to penetrate the market they tend to be well priced, especially in those industries that do not have a very capital intensi ve innovations process. Also, those that adopt the innovations early have a virgin market and are able to skim the market before it becomes flooded with the product. 3. Impetus for more innovation Successful innovation often tends to encourage companies to allocate more finances towards innovation, and also motivates employees to look for both radical and incremental innovations. 4. Increasing customer value and satisfaction When corporate executives accept that experimentation and a fair amount of failur e are an important part of innovation, they begin to understand that it delivers best when different business functions and external partners come together. Then they can develop products, services, solutions, and processes that meet the needs of users and customers. 6. Increased consumption of other services A good example of this is how M -Pesa has led to an increased consumption of banking services due to linkage between the two.

NEGATIVE CONSEQUENCES OF INNOVATION 1. Changing the status quo While some executives are open to change, most seem to prefer to keep things just as they are. A risk of disturbing the status quo is inherent in the open innovation process and should be recast as opportunity. The winners will be the companies and executives that are best at handling this. 2. Greater Expense Innovation is a resource demanding activity, and may not always produce immediate results. Also, the success of innovations is not guaranteed and this is a challenge for most firms.

3. Innovation is a source of increa sing productivity, but it is also a source of stress. Psychological research shows that moderate stress increases the productivity of an actor, but above a certain level, additional stress decreases productivity. Stress is reduced by coping behaviour of th e individual, and in addition it is buffered by social relations. However, high levels of stress negatively affect social relations, causing social erosion in the end, affecting productivity. 4. Less equitable distribution of income, land, or other resources. This is usually an unintended consequence of innovations with the wealth being with those who are able to constantly innovate. 5. While innovation may increase technical efficiency ( doing things right ), it is possible that they reduce allocative efficiency ( doing the right things ). This situation arises because i) early adopters of an innovation tend to be those already well placed to exploit and pay for the higher-cost innovation while the late adopters tend not to be; ii) innovators tend to concentrate on persuading early adopters in the hopes that they will be opinion leaders and diffuse the innovation further; iii)early adopters of an innovation earn windfall or supernormal profits 6. innovations which have gone on to be used for purposes ot her than those envisioned by the creators e.g. the airplane being used as a tool for war, atomic theory being used to create bombs 7. some innovations which have rendered people unemployed e.g. mechanization of the assembly line 8. creation of waste by products that have been obsolesced by innovations. Obsolence can be of three types: i) Obsolescence of quality: a product breaks down in a pre-determined time frame. An alternate description is a weakness designed into the product so as to compel a purchaser to buy a new unit sooner than they otherwise might have had to. ii) Obsolescence of desirability: a product becomes worn out in the mind of the consumer, encouraging them to buy a new one. This form of obsolescence is created by introducing new styles of the product and has been linked to the traditional role of the industrial designer. iii) Obsolescence of function: the consumer wishes to replace their version of a product with a product which is able to perform the function better. This is usually due to technological advancement. The rate of technological change is brin ging new products to market at a faster and faster rate, leading to a constant stream of new, and improved products (listed as innovations in most cases). The problem becomes the back end of this situation the older products left behind.

9. The effect of process innovations l eads to different results, with an overwhelming majority of process innovations having a negative effect on employment.

References 1. Rothaermel, Frank T., Hess Andrew M., Innovation Strategies Combined , Spring 2010, Volume 51, Number 3, pages 13-15 2. Burgelman, R.A., Christensen, M.C., Wheelwright, S.C., Strategic Management of Technology and Innovation , 4th Edition. McGraw Hill-Irwin, New York.

PS: My name and number NANCY WANJIRU NJUGUNA, HD333 -0171-2008 G9t. See you kesho.

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