FACULTY OF BUSINESS, FINANCE, INFORMATION TECHNOLOGY &

HOSPITALITY
BACHELOR OF BUSINESS ADMINISTRATION
ASSIGNMENT BRIEF
SEMESTER: AUG 2022

Organizational
Course Name Course Code MGT2143 Credits 3
Development

Type of
Course Leader Farha Zafira bt Agos Assignment Group Assignment
Lokman

BBAF22056072 SHALINI JUDE

BBAF22056077 SYAHRAIN HAFIY
Student ID RAHA OSAMA HASSAN
BBAF22056398 Name
MUHAMMAD HAFIZ BIN
BBAF22056399
KHAMIS
BBAF22056397 IMAN ZABIHI

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THE RELATION BETWEEN ORGANIZATIONAL
INNOVATION TOWARDS ORGANIZATION
DEVELOPMENT

SHALINI JUDE BBAF22056072

SYAHRAIN HAFIY BBAF22056077
RAHA OSAMA HASSAN BBAF22056398
MUHAMMAD HAFIZ BIN KHAMIS BBAF22056399
IMAN ZABIHI BBAF22056397

FACULTY OF BUSINESS, FINANCE, INFORMATION TECHNOLOGY AND

HOSPITALITY

MAHSA UNIVERSITY
Contents
1.0 Introduction ........................................................................................................................... 4
2.0 Organizational Innovation ..................................................................................................... 4
2.1 The need of Organizational Innovation ................................................................................. 6
2.2 Dimension of Organisational Innovation .............................................................................. 8
I. Internal Context .................................................................................................................... 8
II. External Context ................................................................................................................ 8
2.3 Organizational Innovation ................................................................................................. 9
2.4 What is Organizational Development? ............................................................................... 12
2.4.1 The importance of organizational development ................................................................ 13
2.4.2 The Model of Organisation Development: ........................................................................ 15
3.0 Organisation Development and Organisation Innovation: ................................................. 15
References ...................................................................................................................................... 17
 1.0 Introduction

The term "OD," or organisational development, is a general one that refers to a variety of
activities. However, at its core, organisational development may be understood as deliberate
activity intended to transform and enhance a company so that it becomes more effective at what
it does. This work mostly focuses on the human variables that are at play in an organisation.
Organizations are, after all, intricate systems of interconnected activities and workstreams. And
people are at their very essence.

The social systems, organisational structures, cultural norms, communication channels,

interpersonal interactions, human knowledge, and behaviours within organisations frequently
affect their level of effectiveness and competitiveness. Additionally, they determine what it's
like to work for such organisations and how gratifying and rewarding those who work there
perceive their jobs to be.

The underlying tenet of organisational development, which has its origins in organisational
psychology, sociology, and change management, is that by planning and implementing
"interventions" that alter the social systems, working practises, and organisational cultures, it
is possible to increase organisations' competitiveness while also making them more desirable
places for employees to work.

2.0 Organizational Innovation

What is Organizational Innovation?

Innovation is the use of fresh or wholly original concepts to provide value for customers
and, as a result, to advance organizational development. Innovations are thought to give
businesses a competitive advantage and can improve their operational efficiency.(Jaiswal &
Dhar, 2015) It might take the shape of a top-down, vision-based managerial strategy, or it can
take the form of a bottom-up, process-based approach that is motivated by organizational
culture and should allow for innovative thinking and tolerance of risk (Deschamps, 2005).
(Borins, 2002) explains how technical staff members who want to enhance current goods and
processes or launch new ones will come up with unique ideas in a bottom-up method. For
instance, innovation in the public sector is typically started by middle managers and frontline
staff in reaction to internal issues associated with external circumstances, such as the advent of
new technology. One of the most significant predictors of innovation is leadership style, which
is influenced by a number of contextual elements including the organizational climate and
personality traits like motivation and drive. (Zacher & Rosing, 2015) The innovation process
is the method through which a company oversees and carries out the actions that foster
innovation and hence raise the perceived value of its products to customers. Concept generation
comes first, then idea selection, then idea development, and idea diffusion comes last.
Performance in innovation is tracked by several factors. These include internal aspects of an
organization's ability to innovate both now and in the past, technical aspects of its ability to
turn concepts into physical products, commercial aspects of its ability to sell those products,
social aspects of its corporate social responsibilities, and economic aspects of its financial
performance. (Fontana et al., 2017)
The support and resources that a creative and dynamic organizational climate offers
make the introduction and adoption of innovation considerably simpler. (Khalili & Ashkan,
2016) The perception that employees have of the organization's rules and procedures is referred
to as the organizational climate. It reflects the feelings, actions, attitudes, and other work habits
of the employees. The organizational climate can be viewed as a psychological climate that
expresses how each employee interprets and values the characteristics of their workplace that
together signal organizational innovation. Another perspective on organizational climate holds
that behavior is influenced by the sociological backdrop of the organization as it relates to both
formal and informal interpersonal activities. Organizational practices that encourage employees
to take the initiative, be proactive, and be self-reliant are referred to as an organizational climate
for initiation. Employees can engage freely and trust one another in a psychologically safe
environment without feeling threatened or concerned about being misunderstood or dismissed.
It encourages the learning behavior that results in high levels of team performance and
strengthens the behaviors associated with innovation. (Baer & Frese, 2003)
Organizational innovation is the capacity to create and implement novel concepts or
behaviors, and it is essential to boosting productivity and enhancing business success.(Jia et al.,
2018) A new product launch, a new organizational structure, a new managerial technique, or a
shift in organizational culture can all contribute to organizational innovation. (Kwon et al.,
2016) From the perspective of organizational structure, components of organizational
innovation can be viewed as being related to the level of centralization and formalization that
influences the flow of creative ideas and how the business treats them from genesis to
execution, how it assigns duties to its employees, and how it makes choices. It can also be
viewed from a process viewpoint as a way to create and apply fresh concepts and address issues
with organizational procedures like its capacity for learning. Organizational innovation can also
be viewed from the perspective of organizational transformation as the procedures it uses to
 handle market changes and get through change opposition. (Prasad et al., 2016) Various
interpersonal, organizational, and environmental factors can have an impact on organizational
innovation. The primary predictors of innovation are organizational factors; however, the
breadth of the invention and the type of organization effectively mitigate this link.
(Damounpour,1991)
As a result, leadership style affects organizational innovation since it has the power to
create a setting that encourages innovation and supports the process of innovation. (Jia et al.,
2018) Organizational innovation involves effective leadership, which calls for leaders to
possess key organizational-related hard and soft skills as well as the ability to actively listen to
all members of the organization in order to manage disagreements and analyze data. By
evaluating all options, considering all available feedback, and fostering a learning culture,
leaders should be able to continuously enhance the quality of their judgements. Leaders should
concentrate on inspiring individuals, providing incentives for improved performance, and
ensuring that everyone is working toward the same goals. Another key factor leading to
organizational innovation is organizational learning, and leaders play a critical role in the
learning process by giving the necessary encouragement and fostering a collaborative
environment. (Hou et al., 2019)

2.1 The need of Organizational Innovation

Initially, innovation serves an important purpose for the economy, according to this. So, the
significance of innovation resides in the fact that it might appear in a variety of forms. For
instance, innovation is crucial when a new or improved product or service is introduced or
commercialised in place of the ones that already exist. This justifies the fact that organisational
innovation is essential since it helps new goods and services reach the market. In a similar vein,
innovation helps to enhance the current services and goods.
Second, organisational innovation can be used to develop an alternative production process or
even enhance the existing business process in both the most fundamental and sophisticated
ways. Inventing a new method of production, or rather
 Authors Types of innovations
Schumpeter new markets, new supply chains, new
goods, and a new way to organise
commercial operations.
Knight Innovation in the work environment, among
personnel, in processes, products, and
services.
Deward and Button Both radical and incremental innovation
Tidd and Bessant Product, process, position, and paradigm
innovation are all examples of innovation.
Daft advances in administration and technology.
Schmidt and Rammer Marketing and organisational innovation are
examples of technology innovation (process
and product).
Summary of different types of innovation
Thirdly, organizational innovation is crucial since it can open doors for a new market. This can
be perceived as the marketing dimension, and it pertains efforts to ensure that there is smooth
marketing of the products. Under this, innovation on the part of the employees, and
management alike will translate to better marketing options and yield better sales. Fourthly,
organizational innovation can result in the development of alternative supply sources like
materials, equipment, and various other inputs. Last but not least, organizational innovation
results in fundamental transformations in industrial structures and organizational structure
among others. It paves the way for the promotion of employees who are innovative (Johann
FÜLLER, n.d.)
Moreover, (Tavassoli & Karlsson, 2016) demonstrated how organisational innovation has a
favourable impact on other types of innovation, particularly when it comes to enhancing an
organization's capacity to adopt new technology and creative processes. Furthermore, (Haned
et al., 2014) made it clear that organisational innovation has a big impact on firm innovation
and competitive advantages since it provides input for firm innovation processes and capacities.
Managers all across the world support organisational innovation because of the benefits it can
bring to their organisations. Employee innovation has been shown to boost productivity
because it leads to the use of fresh procedures (Alharbi et al., 2019). This boosts an
organization's competitive edge by producing the crucial differentiator. Organizations that
 value organisational innovation may, in general, respond more quickly and effectively to
capture and risk opportunities.

2.2 Dimension of Organisational Innovation

I. Internal Context

The elements that affect an organization's innovation strategy and execution are referred to as
its internal context. These elements include the organization's culture, structure, and procedures
(Tidd, Bessant, & Pavitt, 2005). Fostering an inventive atmosphere requires a company with a
strong, encouraging culture that values taking risks and promotes experimenting (Chesbrough,
2003). An environment that encourages experimentation, open dialogue, and collaboration is
beneficial to creativity (Tidd, Bessant, & Pavitt, 2005) (Tidd, 2005).

The organisational structure has an impact on how the organisation approaches innovation. A
flat, cross-functional structure can stimulate collaboration and make it easier to create and
implement new ideas, whereas a hierarchical one might restrict the flow of ideas and stifle
creativity (Tidd, Bessant, & Pavitt, 2005) (Tidd, 2005). In a flat organisation, ideas can freely
flow between various functional areas and departments, resulting in more innovative solutions
and a higher chance of successful innovation (Chesbrough, 2003).

The organization's systems and processes can also influence how it approaches innovation. For
instance, businesses that have established procedures for developing and implementing ideas
are more likely to be successful in commercialising their discoveries (Tidd, Bessant, & Pavitt,
2005) (Tidd, 2005). Regular brainstorming sessions, idea submission platforms, and project
management software are some examples of these procedures that promote productive
collaboration and communication inside the firm (Chesbrough, 2003).

II. External Context

The external context of an organisation is a confusing web of elements that exist outside of its
boundaries but have a significant impact on its capacity for innovation and growth. These can
take the form of shifting consumer preferences, intensifying rivalry, more stringent regulations,
or breakneck technological progress. For firms to successfully navigate these external
influences and take advantage of the opportunities they present, a solid understanding of them
is essential.

Organizations must maintain a careful eye on market trends and competition while adjusting to
the constantly shifting demands and wishes of their clients. The businesses best positioned for
long-term success are those that can quickly adapt to changes in the market and differentiate
themselves from their rivals by providing cutting-edge products and services (Hayes & Pisano,
2006).

For firms that have to abide with regulations, they can be a double-edged sword. On the one
hand, they can open up fresh avenues for innovation by pressuring companies to produce goods
and services that adhere to new norms (Porter, 1980). However, they can also restrict the range
of an organization's capacity for innovation. It's critical for businesses to be abreast of
regulatory changes so they can modify their offers as necessary (Porter & Kramer, 2006).

Technology development is becoming a key factor in determining the innovation landscape

(Drucker, 1985). Companies with a higher chance of retaining their position at the forefront of
their sector are those that can take advantage of these breakthroughs, incorporate new
technology into their operations, and create cutting-edge goods and services based on these
advancements (Tidd & Bessant, 2009).

2.3 Organizational Innovation

Organizational innovation is the process of introducing new and creative ideas into a business
organisation that lead to better processes, products, or services. This can help businesses stay
competitive in a business world that is always changing and to keep getting better and adapting
to the changing market. It is important to have a clear and structured framework or model in
order to understand and manage organisational innovation well.

I. Creation of Innovation

Several studies have been done on organisational changes in the past (Birkinshaw J, 2006)
(Birkinshaw J, 2008) say that the creation of organisational innovations is affected by four
things: the environment, the organisation, change agents from the outside, and change agents
from the inside. The environmental context is made up of the things outside of the organisation
that affect the priorities and actions of outside change agents (Birkinshaw J, 2008). The
organisational context includes the administrative and social tools that management can use to
shape the behaviour of actors within the organisation. This affects the ability of internal change
agents to pursue management innovation (Birkinshaw J, 2008). Change agents from the outside,
like management intellectuals, idea entrepreneurs, and academics, help get people interested in
and approve of new management practises (Birkinshaw J, 2008). Internal change agents, on the
other hand, are employees who make management innovations more interesting, try them out,
and see if they work (Birkinshaw J, 2008).

Ganter and Hecker (Ganter A, 2013) compared their findings on the causes of organisational
innovation to the model proposed by (Birkinshaw J, 2008) and emphasised the importance of
the organisational context and knowledge-based relationships. But they also suggested adding
to the (Birkinshaw J, 2008) model factors that describe the competitive environment of the
firm, such as how much competition there is, how fast technology changes, and how long a
product's life cycle is.

The (Birkinshaw J, 2008) model has four steps: getting motivated, coming up with an idea,
putting it into action, and theorising and labelling. The motivation step is about giving people
in the organisation reasons to change, while the invention step is about trying out and testing
new ideas. The implementation step includes everything that needs to be done until the
innovation is fully working. The theorising and labelling step is meant to build a case for
adoption and share it both inside and outside the company. Kimberley found in 1979 that the
first release of a new idea limits what can be done with it later. This makes the innovation path-
dependent. Lounsbury and Crumley (Lounsbury M, 2007), on the other hand, argue for a more
thorough way to make practises that includes activities and processes that happen before
theorization efforts.

An earlier study (Alänge S, 1998) found that the creation and spread of organisational
innovations were linked ideas that were hard to study separately. (Birkinshaw J, 2008) looked
at how management innovations are made without taking diffusion into account. They called
these innovations "new to the state of the art" instead of "new to the firm." But when the Alange
et al. (Alänge S, 1998) framework was tested in the real world, it turned out that some of the
theoretical assumptions were wrong, and new findings were found (Alänge S, 2011). It was
found that the fact that organisational innovations aren't always obvious is important, and that
two things affect the innovation itself. First, the importance of network relationships in the
creation of innovations was emphasised. Second, the role of an organization's internal culture
in making it easier or harder for innovations to be adopted and spread was emphasised.

I. Diffusion of Innovations Model

The term "diffusion of innovations" was introduced by Everett Rogers in 1962 (Rogers, 1962),
and it offers insight on how organisations and people embrace new concepts. The term was first
proposed by Rogers. According to this concept, the process of adopting a new invention
proceeds through a series of stages, beginning with awareness and continuing on through
persuasion, decision-making, implementation, and finally evaluation.
This model outlines five essential features of an innovation's perceived benefit that have an
impact on its diffusion: compatibility, complexity, trialability, and observability (Rogers,
1962). By understanding and addressing these issues, organisations can increase the likelihood
that they will successfully implement new ideas and enhance their odds of doing so.
The Diffusion of Innovations Model offers a comprehensive analysis of the adoption process
(Rogers, 1962). By taking into account the many stages of adoption and the factors that
influence them, organisations may ensure that their efforts to innovate are in accordance with
the requirements and points of view of a wide variety of stakeholders (Rogers, 1962).

III. Lean Startup Model

The concept of the Lean Startup technique was initially presented to the public by Eric Ries in
the year 2011. (Ries, 2011). It is a strategy with the goal of successfully introducing brand-new
products to the market as rapidly as possible. This idea brings to light the importance of always
expanding one's horizons and enhancing one's education. The core idea behind the Lean Startup
methodology is that all companies, irrespective of their size or field of operation, stand to
benefit from systematically integrating input from customers into the various stages of the
product and process development phases (Ries, 2011).
The Lean Startup Methodology (Ries, 2011) outlines a series of phases that can be reused, some
of which are discovering consumers, receiving feedback from existing consumers, and gaining
new consumers. These techniques give businesses the ability to test the assumptions they've
made about their product and market, as well as identify areas that need improvement (Ries,
2011). If a company places an emphasis on the development of minimal viable products and
solicits feedback from customers, it can bring innovative ideas to market more quickly while
simultaneously increasing the likelihood of those ideas' becoming successful (Ries, 2011)
The Lean Startup process offers a number of benefits, including decreased risk and decreased
waste (Ries, 2011). Organizations can improve their decision-making and the effective and
efficient introduction of creative ideas to the market by iteratively learning from customer input
rather than committing major resources to unproven concepts. This can lead to improved
decision-making and a more effective and efficient introduction of creative ideas to the market
(Ries, 2011).

2.4 What is Organizational Development?

An approach to system changes within an organization that is focused on objectives is called
organization development. The ability to create and maintain a new intended condition for the
entire organization is provided by organizational development.

Organizational development can be accomplished through digital solutions or a change

communication method. Organizational development specialists will be able to monitor and
analyze circumstances and consider changes that may subsequently be implemented to
accomplish effective organizational transformation thanks to employee behavioural
patterns.(STET SCHOOL OF MANAGEMENT, n.d.)

The culture of the organization has a significant role in its success. Executives, managers, and
workers are all included in this. An evaluation method is necessary to comprehend
organizational culture and assess the advantages and disadvantages of the workplace. This can
involve staff evaluations, 360-degree feedback, and training assessments to determine whether
the given training is accomplishing the necessary goals.(Organization Development
Definitions, n.d.)

Organizational culture may be altered, and by comprehending the norms and expectations
inside the organization, a plan can be made to achieve the organization's goals. A successful
organization must be able to adapt to change in accordance with the external environment in
order to compete in a global market.(STET SCHOOL OF MANAGEMENT, n.d.)

The first step is employee engagement, which entails figuring out how to actively involve
important stakeholders in the change process itself.
 In order for employees to perceive the change as having a beneficial, tangible impact,
organizational incentives must also be aligned. (Organization Development Definitions, n.d.)
2.4.1 The importance of organizational development

The academic field of organisational development is distinct for a reason. Organizational

development (OD) encompasses a broad range of topics. It aims to investigate organisational
performance and change. If you are in charge of an organisation, you understand why it is said that
this field of study has a broad and diverse reach.

It's interesting to note that the field of organisational development was born out of the study of
human interactions. Although organisational development's main areas of concentration are
transformation and performance, it has recently broadened its scope. These days, it also includes
knowledge management and organisational culture. have a bigger role in the development of the
organisation.

I. OPTIMIZATION OF OPERATION

Seeks to identify operations that require a trade inside an entity. This system enables the selection-
makers provide you with a control plan. A plan to examine person desires and the consequences
that the changes will yield. This plan additionally analyses the results of the modifications at the
staff and the quality way of rolling out the adjustments to the entire company.

Increased profitability is one of the outcomes of organizational improvement. Optimising

operations increases productivity and efficiency as an entire. And it additionally fosters innovation
giving rise to increased profitability. Underlying concept of this optimisation is to help within the
formulation of feasible answers to the troubles that an entity faces.

II. IMPROVE EFFICIENCY

Through organisational growth, a business can continuously enhance its operations and products.
OD contributes to increased efficiency by assisting in strategic decision-making across all of the
organization's activities. With the same or less input, this typically results in superior outcomes.
III. IMPROVEMENT OF OPERATION QUALITY

Errors are found and corrected through the ongoing improvement of operations through OD. Error-
free procedures that provide top-notch goods and services are the end result. Innovation is one of
the results of OD as well. An organisation is able to improve its goods and services by recognising
achievement and enhancing the motivation and morale of its staff through innovation. The
employees' sense of empowerment and value motivates them to produce their best job.

IV. COST REDUCTION

Satisfaction among employees is a result of OD. The method aids in lowering absenteeism and staff
turnover, which lowers the costs associated with hiring and keeping personnel. The result shows a
culture change that emphasises continual improvement and leads to higher productivity with lower
operating expenses. Enhancing Process Integration
After implementing OD, an entity is able to analyse work processes. The action aids in evaluating
the procedures' need, correctness, and efficacy. The assessors can look for process overlap and
determine whether integrating procedures would increase efficiency.

v. IMPROVE EFFICIENCY

It involves more than just greater effectiveness. Effective execution of such tasks is equally crucial.
One of the effects of OD is increased communication, interaction, and feedback. This frequently
leads to complex solutions that the business need. The procedure makes sure that all of the
possibilities are thoroughly investigated, and the best one is chosen after carefully weighing its
implications. As a result, there is always a strong likelihood that the option selected will achieve
its goals.
2.4.2 The Model of Organisation Development:

Diagram 1.0

3.0 Organisation Development and Organisation Innovation:

Innovations are, by definition, a mechanical change inside the association. An innovation will
constantly make another arrangement of choices, better approaches to achieve one or other of
the organization's exercises. These new ways must, notwithstanding, be better than whatever we
have known up to this point - if not we can't discuss innovation in the genuine feeling of the
word. (Hage, 1999)

All in all, it is an improvement according to the current approaches to executing the assignments
of the association. Likewise, a typical element of innovations is that they emerge when the
association faces a particular sort of vulnerability, if a circumstance where previous experience
no longer offers adequate answers for take care of current issues. Innovation suggests, in this
sense, the rise of old schedules and the quest for new choices for activity. (Razavi &
Attarnezhad, 2013)

In numerous organizations, innovation happens through articulations intended to impact the

world, yet finishes in deserting. To stay with the serious available, advancing an authoritative
culture in view of innovation is the way to guaranteeing a good outcome.(Hage, 1999)
Diagram 2.0
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