Introduction

Nowadays, innovation is a vital concern for businesses because it defines a competitive edge, generates profitability and sustains competitiveness in the long term. However, although numerous organisations acknowledge methodologies like design thinking for problem-solving and product development, it is not enough for innovation to thrive. So then, this essay presents innovation theories, concepts, and tools and discusses how businesses should approach them to benefit. Additionally, this essay discusses why businesses fail by linking its reasons to culture and methodology. Finally, this paper analyses the failure of the Boing 737 MAX to demonstrate that missing innovation principles contribute to product failure.

1. The impact of concepts, theories and innovation tools in businesses.

Nowadays, innovation surrounds people in many ways by offering creative solutions to make life easier. For example, buying online (Amazon’s product recommendation), messaging friends (WhatsApp), watching a movie, listening to music (Netflix/Spotify) or commuting, whereas finding the fast way (WASE) home or calling a ride (Uber). Innovation is essential to organisations because it enables a competitive edge, enhances earnings and supports operation in the long term.

From the perspective of business success, innovation historically plays a central role. For example, in early 1900, there was a massive industry disruption when Ford Motors innovated the assembling process to deliver affordable quality cars in scale to every family in the US. Recently, Tesla Motors disrupted the industry by offering fully electric vehicles with autonomous driving capability. Therefore, although there is a timeframe gap of about a century from Ford to Tesla disruption, the innovation concept equally applies. Then, accordingly to Reed Hastings from Netflix (Hastings & Meyer, 2020), innovation streamlines processes, challenge the status quo, embraces uncertainty, and requires leadership to change people’s culture.

1.1 Concepts

What is innovation? It is a creative and helpful practice that promotes social change for problem-solving (Carr et al., 2016). Hence, in the context of organisations, innovation promotes business’ change, which invariably implicates social change. For example, Spotify changed the music industry and how people enjoy music.

Although overlapping, innovation and creativity are different because creativity comprehends generating ideas without clear boundaries, while innovation has a clear goal of enabling profitability for enterprises. However, creativity is vital in the innovation development process to generate ideas (Rose et al., 2020).

· Business Transformation

Nowadays, business innovation and digital transformation are closely related (Drechsler et al., 2020). So then, organisations rely on innovation to transform their businesses and thrive, implicating incorporating the latest technologies into the operation to streamline processes while designing the business model with a digital strategy. Hence, organisations are currently digitalising their business models to succeed – like Apple, Google, Amazon, Netflix, Spotify, Facebook, Samsung and Microsoft by implementing a culture of innovation into their strategy (Marion & Fixson, 2021). As a result, the massive adherence of customers to digital services established these organisations among the most profitable ones. Moreover, these companies defined new value-proposition, value-creation and value-capture standards through innovation (Schneckenberg et al., 2021).

· Culture

The challenge surrounding innovation is finding a balance between designing a digital-based business model, optimising the operation by incorporating digital capabilities in the firm’s processes and implementing an organisational culture that encourages innovation at the organisation’s core. Hence, that is necessary to embed innovation in the organisational culture to thrive in the digital era, bearing in mind that culture will blend technology capabilities, people and strategy to yield innovation. Accordingly to recent research (Ober, 2020), efficient organisational cultures foster collaboration and open communication in the ICT industry by providing a supportive environment for employees to generate innovation. For example, recognising individual achievements and sharing the co-ownership of creations with the workforce is vital to scale people’s enthusiasm and let innovation flourish while encouraging people to embrace risk and fail as part of the development process. Otherwise, restricting collaboration and creativity prevents the workforce from innovating.

1.2 Types & strategies

As soon as an organisation understands the benefits of incorporating innovation into its core, it is vital that the business approaches which innovation type better suits its strategy. Accordingly to recent theories, radical, semi-radical, and incremental innovation types support product development differently while supporting business strategy (Drejer, 2004; Hong & Miyazaki, 2013). Additionally, any innovation can happen by approaching processes, business models, or markets (Tavassoli & Bengtsson, 2018). Exemplifying, Blockchain enhances security and allows businesses to adopt smart contracts – new organisation processes; Dell skips retailers and deals directly to consumers – new business models; Netflix distributes movies by offering subscription services to digital-based customers – new markets;

  • Radical innovation: involves products that significantly disrupt business because it changes processes in-depth while defining new standards for competition. For example, cloud computing facilitates hardware maintenance, minimises costs, enhances data security and allows budget flexibility with pay-per-use billing (Schneckenberg et al., 2021). Therefore, nowadays, businesses are adopting a cloud-first strategy to stay competitive (Accenture, 2020).
  • Semi-radical innovation is also disruptive but usually embeds new technologies with a fresh perspective into new products (Hong & Miyazaki, 2013). For example, Apple incorporated an enhanced internet connection, a browser for navigation and a touch screen to build the iPhone. Then, although it was not inventing a new technology, the product disrupted the mobile phone market while guaranteeing a significant market share to Apple from its launch until today.
  • Incremental innovation: does not disrupt business and processes like radical and semi-radical innovation. In contrast, it enhances products by adding new features, which contributes to maintaining the sustainable profitability of the product (Hong & Miyazaki, 2013). For example, nowadays, mobile phones improve their connectivity with 5G and superior photo & video quality with multiple cameras.

While innovation types relate to the product life cycle because it embraces product creation and reinvention to generate and sustain profitability, innovation strategies relate to accessing innovation to enhance business innovation capability.

Accordingly, open innovation is a dimension of the innovation strategy, in which organisations offer (inside-out) or acquire (outside-in) innovation according to their business strategy (Gianiodis et al., 2014). 

  • Inside-out innovation – for example, Amazon-AWS is a cloud computing provider that offers technology for companies that need to perform streaming, processing and storage services, like Netflix and Spotify. Then, Amazon-AWS sell cloud computing technology for those who need it. 
  • On the other hand, Outside-in innovation happens when companies like Spotify and Netflix need external technology suppliers to support their businesses’ innovation strategy because they do not develop specific technologies. So, they buy cloud computing services from Amazon-AWS, an external supplier, to perform their streaming, processing and data storage.

Additionally, there is collaborative innovation. It works by approaching the community to contribute to product development because it spares business efforts in development while straightening the relationship with the community (Grama-Vigouroux & Royer, 2022). For example, Netflix promoted competition in the IT community to develop their recommendation algorithm because they did not have enough development capabilities. As a result, the winning company fulfilled all requirements for the algorithm, and Netflix had access to innovation and scaled its business (Maddodi & K, 2019).

1.3 Tools

Additionally to concepts, types and strategies, innovation tools are an essential dimension of innovation because they streamline processes by providing a structured development method according to best practices. Therefore, this is a valuable asset by providing specific guidance to organisations toward their strategic innovation goals. Therefore, this paper presents three actual methods.

Design thinking is an innovation method widely adopted by the industry by its capacity to spark creativity in problem-solving situations, whereas it is a business strategy or product development (Reine, 2017). It is an iterative framework that comprises five steps operate (Interaction Design Foundation, 2021), which are:

  • Empathise: understand customer needs and values.
  • Define: clarify the problem profile and what prevents it from succeeding.
  • Ideate: use collected data to build a series of innovative ideas before selecting the ones more likely to thrive.
  • Prototype: develop low-fidelity mock-ups to evaluate the idea’s effectiveness and enhance iteratively until a fully functional product is available.
  • Test: launch the product for production and get feedback for enhancement.

Brainstorming is another framework widely used for innovation because it fosters creativity and has simples rules for implementation (Gidel et al., 2020). Moreover, although the method can support the ideation phase of the design thinking (Foster, 2021) process, it comprises its own rules:

  • Multidisciplinary groups enhance the discussion.
  • Go for quantity, and no idea should be discouraged.
  • A moderator is necessary, so participants follow the rules.
  • Wild ideas are encouraged, and quantity is good.
  • Combine good ideas to have a better one.
  • Be visual.
  • Focus on the topic.

Bleisure is a method that joins business and leisure to unleash creativity in the working environment and let people innovate. The concept provides a less formal and more comfortable environment that encourages people’s interaction to facilitate communication and collaboration (Adhiatma et al., 2019) and reveals enterprises incorporating innovation in their organisational culture. An example of its successful adoption is Google, and the following items feature in their working environment.

  • It comprehends entertainment like games, music and sports.
  • Food and beverages are available.
  • There are quiet places for concentration and relaxation.
  • Employees can wear casual outfits and arrange flexible working hours
  • Employees should organise their working isle accordingly to team-mates participating on the same project.
  • Combining these innovation methods provides solid ground for innovation development. Additionally, choosing a proper type & strategy that meets the business goals links the development process to what (radical/incremental) and how (open innovation) to innovate, which is also critical for success.

 

2. Why does innovation fail?

Recent studies unveil a few reasons why innovations fail. In the UK, an author demonstrates that 50% to 90% of innovations fail due to businesses lacking leadership skills or consumers’ acceptance (Heidenreich & Spieth, 2013). However, different studies might clarify what surrounds an innovation failure. Therefore, another author from the UK (Sisaye & Birnberg, 2012) determines that organisational culture, communication and business processes might significantly contribute to frustrating enhanced profitability expectations. Organisational culture facilitates collaboration, incentives learning and accepts employees’ mistakes as part of an iterative process. Communication with users is critical because it brings awareness about product benefits and ultimately should spark consumption desire. Finally, processes are critical because lacking a development framework damages the outcome. A study demonstrates that lacking these three items or especially not recognising a business model’s weaknesses damages the innovation’s performance (Friedrich von den Eichen et al., 2015). Notwithstanding, this paper suggests that lacking management skills might be related to organisational culture and enterprise innovation processes, while ineffective communication might also link to risk in product and consumer analysis, which also relate to processes. Then, the company must be aware of innovation legitimisation and how to tackle that matter to mitigate this issue (Biloslavo et al., 2020).

Therefore, while organisational culture incorporates innovation from tacit elements, an enterprise innovation system implements clear rules for making innovation thrive. In comparison, while design thinking focuses on problem-solving for product development, it guides a framework design for innovation at the enterprise level. Finally, an enterprise innovation system shall enhance five critical factors: efficiency, communication, coordination, learning and alignment. A recent conference (Lendel et al., 2015) suggests that successful enterprises can minimise friction by enhancing management capabilities to improve the planning in the management process. It comprehends leading people, and planning techniques align with organising and controlling activities, whereas communication is a vital skill. On the other hand, lacking transparency and integrating people and processes leads enterprise innovation to fail.

Finally, enterprises fail when organisations do not follow concepts and best practices in innovation. For example, the article (Shelton et al., 2005) shows seven innovation rules that might prevent organisations from failing, a valuable guide to success.

  1.  Apply influential leadership in the innovation strategy and product development.
  2.  Embed innovation into the core business and mindset.
  3.  Align the innovation type and its amount with the business strategy (play to win or play not to lose).
  4.  Balance tension between creativity and value capture.
  5.  Embrace flexibility and change to avoid organisational antibodies.
  6.  Innovation is a network of people and knowledge inside and outside the company.
  7.  Create the right metrics and rewards for innovation. 

 

          2.1 An innovation failure

Boing is a leading and well-known American aircraft manufacturer that builds the Boeing 737 MAX, which started performing commercial flights in May 2017 with more than 4000 orders unfulfilled. However, two crashes happened in Indonesia and Ethiopia from October 2018 to May 2019. The short time frame since the 737 MAX started operating of two years is alarming for having these disasters. As a result, more than three hundred people lost their lives, and all the 387 Boeing 737 MAX in operation were grounded globally while an investigation took place to identify the cause of the accident. The grounding lasted for about 20 months which caused financial damage to numerous airlines, while Boing had enormous reputation damage. Moreover, it compromised the production of about 50 planes monthly (Palmer, 2020).

The investigations demonstrate that, differently from the usual hardware system, there was a software issue at this time (Kuczynski et al., 2021). The incident consisted of an automated flight control system that drove the plane’s nose down based on flawed information. The system’s name is MCAS, and it identifies if the plane’s nose moves at a dangerous angle, then the automation forces the plane back down to a safe position. However, the automation could not correctly identify the right angle and vertically pointed the plane straight toward the ground causing the crash.

Then, the study identifies the issues in Boing’s processes leading the company to commercialise the faulty product.

  1. Leadership: a centralised leadership was missing, which allowed conflicts to happen, and safety decisions came from ill-prepared people.
  2. Priority: organisation’s goal for profitability surprises commitment to safety.
  3. Capability: costs cut reduce Boing’s people related to safety decisions.
  4. Test, validation and learning: the company forced software approval acknowledging that further tests were necessary.

Further research also identifies that Boing’s obsession with streamlining costs and launching a product super-efficient in fuel consumption and technological-enhanced quickly compromised the organisation’s processes (Palmer, 2020). Then, the top management disrupted the operation process, compromising the aircraft’s safety to anticipate revenue.

Additionally, the investigation identified messages from pilots regarding system flaws that Boing has ignored and avoided a more comprehensive training program for pilots addressing new MAX’s system features to anticipate the product delivery. Not training pilots on new system features lack commitment to the community and impacts the innovation rules (Shelton et al., 2005). Moreover, it lacks communication transparency, which is vital to success in organisational culture to generate innovation (Lam et al., 2021).

Unfortunately, testing & pro throughout Boing’s development process was faulty, and It represents the latest phases of the design thinking methodology (Interaction Design Foundation, 2021). Frequently, organisations know about product problems but work on improvements after release by having customer feedback while the product starts generating revenue. However, in this case, no defective feature should figure a product in case it risks people’s lives.

Summing up, Boing’s innovation failed because the organisation neglected numerous concepts of the innovation process, including methodology, leadership and culture.

 

Conclusion

Innovation capability is a vital asset for business because they enable a competitive edge for business to succeed in the long term. Then, acknowledging concepts, theories and methods provide solid ground for innovation development. However, innovation will not thrive without culture and processes at the enterprise level. These are crucial enablers of innovation due to processes matching culture, parallel to people having methodologies to transform ideas into valuable products. Otherwise, innovation will fail when one or more elements are missing. The Boing 737 MAX case study illustrates that lacking processes, organisational culture problems, and methodology misuse as the root cause of aerial disasters.

 

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