Category: Management Notes

Performance appraisal is a process that needs to be undertaken meticulously if obtaining desirable results is anything to go by. Many managers conduct this kind of evaluation on their employees from time to time majorly because it is an organizational tradition or requirement but not necessarily because of its impact on the future.

However, there are those who do it for a purpose but in some instances tend to face a myriad of challenges along the process. There are various problems with performance appraisal that managers often face. These problems include;

Some of the Problems with Performance Appraisal

1. Compare/contrast error

When appraising employees, it is important never to compare their abilities and using it to make a judgment.

Each employee is gifted in their unique way and thus has different strengths and weaknesses. When you try to compare or contrast their abilities, it means that you will not get a fair review because high performers will certainly make relatively low performers for particular tasks to look below average, which on some occasions is never the case.

Of essence is to ensure that you appraise every worker by their performance against established standards and criteria, individually.

2. Similarity error

In every organization, some employees have a resemblance of different aspects with the manager. Now some managers usually find it easy to reward such employees highly compared to those who portray contrasting behaviour or opinion.

As a manager, it would be significant to ensure that you perform your employee appraisal objectively and considering that diversity should be respected, try to carry out the appraisal process based on performance and results that they provide and not primarily by similarity/dissimilarity that you have.

3. Bias

Bias is also one of the problems with performance appraisal managers often encounter. As a matter of fact, everyone has some biases towards someone or something irrespective of how we portray them. However, as a manager, it is imperative not to let the biases hinder the manner in which you approach performance evaluation process.

Your biases can manipulate the objectivity of appraisal hence it is important to ensure that you keep it off as much as possible to make sure that you do not compromise the results of your findings. Biases may also lead to inconsistencies among different employees bearing in mind that the key element for attaining best results from appraisal is consistency.

If you do not like someone it will not be right to use that feeling in making review judgment, it is unprofessional.

4. Stereotyping

Stereotyping is closely related to biases only that in this case, you tend to make your judgment by your predetermined mindset towards a particular employee’s race, gender, political affiliation, religious background, culture and other characteristics.

Stereotyping is problematic when assessing employees’ performance because it implies that you will only be able to provide judgment based on what you label the group similar to one that the particular employee belongs to.

What you need to know is that stereotyping can also be positive or negative and thus can significantly influence your judgment respectively. It is only ideal to look beyond the labels and evaluate the employee by set standards and performance.

5. The Halo effect

This is also known as the horns effect. It is a situation where you let your positive or negative feelings towards an employee to influence your evaluation easily. It is necessary to judge each criterion independently without compromising what you feel for the employee.

You should also be careful when doing appraisal evaluations so that in the event you realize that most criterions are coming out with similar appraisals, you should halt and check yourself for the halo effect. It is a fact that each employee will always portray certain areas as their weakness and others as their strengths.  What you need to do is to ensure that you do not colour the entire evaluation with a particular impression

6. Recency effect

This is majorly about carrying out an appraisal for a short period before it takes place. As stated earlier, an appraisal is an activity that takes place continuously, which means that the focus should not only be for the short period before it happens but rather the entire time of the year.

In many organizations, problems with performance appraisal usually arise when a manager decides to determine results by basing their evaluation on what an employee has achieved just before the assessment. In this case, it sounds unfair to employees who have been outstanding throughout but later faulted few days to assessment and vice versa because the appraisal will not be able to reveal the actual reality.

7. Attribution error

This is one of the trickiest problems with performance appraisal. It involves making your independent belief on possible causes of some behaviours or outcome and letting that influence your judgment.

It is never a good idea to develop an assumption of what transpired or made the employee behave in the manner that he or she did and later use it as a basis for reviewing the appraisal process. It is only essential if you stick by the stipulated standards and criterion and how the performance of each employee compares to such standards. It only becomes a fair when the employee is judged on their performance in line with the set standards rather than preconceived notion.

8. Leniency and Severity tendencies

These mistakes usually arise as a result of distribution errors, which imply that the overall dissemination of appraisal does not stand firm to the classic bell. This means that some managers are too lenient and will end up appraising all employees above average, others will give average whereas others would provide below average.

In the typical occasion, the results need to reflect the classic bell curve where some employees are graded as high performers; others average while other poor performers. But in the unlikely event that all appraisal results come out as similar, you need to ensure that entire performance measures are given sufficient consideration. It helps in a great way of making sure that fair appraisal has been carried out.

Definition: Key result areas or KRAs refer to the general metrics or parameters which the organization has fixed for a specific role.

Key Result Area can be understood as the fundamental areas of the outcome, for which a department is accountable. It is the strategic factor, implicit or explicit to the firm, from where favourable outcomes can be attained, to reach the final goal and take a step ahead towards the organization’s vision.

In human resource management, KRA implies the metrics set by the organization for a specific role. Therefore, it highlights the scope of the job profile. It helps the employees in understanding the role and responsibilities, in a better way. So, it needed to be clearly determined and quantified, so that the employee can line up their role with that of the aim of the firm.

Description: Key result areas (KRAs) broadly define the job profile for the employee and enable them to have better clarity of their role. KRAs should be well-defined, quantifiable, and easy to measure. It also helps employees to align their role with that of the organization.

KRAs are broad categories or topics on which the employee has to concentrate during the year. For example, an employee who is working at a managerial level in a manufacturing company would have a different KRA than somebody who is in a technology firm.

A manager who is working in a manufacturing firm would have to focus on maintaining the budget of the department, safety of the employees, coordination with different departments, training, reporting as well as introducing new technologies to improve productivity.

The next step is to define objectives and standards for each KRA which should be easily quantifiable. The employee should have a clear understanding of his/her KRAs to perform his/her tasks efficiently.

Key result areas are those areas in which you have to take complete ownership. The first step is to list out daily activities which could be part of the KRAs. In some organization even a team meeting everyday is part of a manager’s KRA.

So, KRAs could be vary from organization to organization and from one work profile to another. There are no set rules to define KRAs, but broadly they sum up the job profile as well as the key impact areas on which the employee is expected to deliver.

Definition of KPI

Key Performance Indicator, as the name signifies, is the financial and non-financial metric used by the firms to gauge and fortify the success, towards the goals of the organization. After the ascertainment of the organization’s mission, identification of stakeholders and determination of goals, the progress towards the goal is evaluated through key performance indicator.

The key performance indicator is used at different levels by an enterprise to track the progress of the firm in the realization of targets. It plays the role of a compass that helps in understanding whether the company has chosen the right way to reach the final aim or not.

Different types of organization have different performance indicators, such as the KPI of a business entity can be income percent. Likewise, the pass out rates of the students is the key performance indicator of a school. Therefore, it can be anything like profit, cost, turnover, consumer satisfaction, customer base, customer attrition, employee turnover ratio, employee satisfaction and so forth.

Key Differences  between KPI and KRA

The points given below are substantial, so far as the difference between KPI and KRA is concerned:

1. Key Result Area can be described as the essential areas of business that requires excellent performance to obtain the favourable result, to survive and grow in the industry. On the other hand, Key Performance Indicator, or otherwise called as KPI is a performance metric, used by the organization to ascertain how effectively the firm is performing.
2. Key result area is a strategic business unit, wherein great efforts are needed to achieve success. As against, the key performance indicator is a metric that gauges the level to which business goals are achieved.
3. KPI is a quantifiable measure, meaning that it gauges the performance of a product, service or the business unit in the market, in quantitative terms. On the contrary, KRA is qualitative in nature, in the sense that it determines the areas that can help in attaining high value for the organization.
4. The key result area is used to find out the scope of a particular product or unit. In contrast, key performance indicator measures the success of the organization towards goals at various levels.

By and large, the business entities work continuously for the achievement its mission. However, it is difficult to ascertain that how far the business has worked towards the realization of goals. Key Performance Indicator acts as a tool to determine the achievement of an objective, while KRAs are those areas that require a high level of performance to gain a competitive position in the market.

In a perfect world, employees would arrive at work each day with bright smiles on their faces, eager to be productive and engaged with their colleagues. But, the sad truth is that a vast number of employees are either disengaged or on their way out of the organization. According to Gallup Poll, nearly 66 percent of all employees are disengaged, leaving only about one-third of the workforce actively participating in their jobs at full production. This averages out to hundreds of billions of dollars a year in lost production.

Employees Become Disengaged

The reasons for employee disengagement vary from one workplace to another, but most of the time it stems from:

• Poor working conditions or jobs that place too much strain on employees’ physical and mental well-being
• Low salaries and limited employee benefit programs that don’t offer much in terms of compensation
• The inability to provide meaningful tasks, rewarding projects or upward mobility in careers
• Long-term problems with poor management practices and other negative corporate culture norms

Incentives and Benefits for Engagement

Fortunately, employers can use targeted incentives and benefits to vastly improve employee happiness and engagement in most workplaces. Along with programs to reduce tension and poor management practices, incentives and benefits can be used to boost employee morale and engagement at work. A Towers and Watson report advises that companies should place their focus on sustainable engagement in order to see the best results over the long term. The three critical elements of sustainable engagement include:

• Engagement: Determining how committed employees are to the company and creating measures to increase the intensity levels of individuals to see the connection between their actions and the company objectives.
• Enablement: Creating the opportunity for employees to work up to their full capacity while experiencing the appreciation of management, even if there are limits on budgets and human resources.
• Energy: Developing a corporate culture where employee well-being is promoted and practiced on a regular basis. Building programs for reducing stress and improving work-life balance.

Therefore, when a company wants to develop more employee engagement, they must first start by examining the above elements and making positive changes at the operations management level. Only then can incentives and benefits alter employee performance and happiness.

Some examples of employee benefits and incentives that can positively impact the organization, and employee engagement, include the following:

Paid and Unpaid Time Off

Everyone can benefit from taking a little time off once in a while. Organizations that want to support a happier workforce understand this, therefore they provide flexible time off policies that add to the overall work-life balance. Want to take it up a notch? Provide travel discounts, working vacations and group day outings to allow employees to blow off steam.

Company Ownership and Profit Sharing

When employees can experience the rewards of business profitability, this can be a powerful incentive for them to hustle at work. Therefore, adding a company stock ownership or profit sharing program can be a big benefit.

Retirement Savings Plans

With thousands of Baby Boomers leaving the workforce daily, the need for strong retirement savings plans is high on the list of priorities for many employees. This is also true for those who are in their 30s and 40s, as they will be busy earning as much money as possible to boost retirement plans. Companies can set up an automatic retirement savings plan and match 50 cents on every dollar that employees contribute to help boost retirement savings.

Training and Development

The learning and professional development market has exploded since the evolution of online and remote classes. In addition, there are still many working adults who are reinventing themselves as a result of the recession which took away many jobs. Having a program that provides on-the-job training at no cost to employees can be a major boost to employee engagement and productivity. Make sure that there are many ways for employees to learn both on and off the job, such as support for college tuition, industry certifications and community events.

Flexible Scheduling, Remote Work Arrangements

There are millions of adults working from home at least a few days a week. Even those who work full time on business campuses are less likely to sit at desks all day because of the use of mobile technology. A workplace that creates mobile-friendly work options, such as telecommuting, holding meetings offsite and offering flexible work hours can be a great way to improve employee productivity and happiness.

Mentorship and Advanced Skill Building

A company that wants to inspire its workforce understands the need to transfer skills and knowledge from one generation to the next. Create a legacy learning and coaching program that matches seasoned leaders up with mid-level employees who will be ready to take that next step in their careers. Mentors can boost morale and they can also give the business an edge by deepening the core values that the company has developed. Set up mentorship meet-and-greet programs often.

Wellness Benefits and Programs

Employers are continually recognizing how critical the wellness and mind connection is for employees. When employees are healthy, they are happier and can work up to their full abilities. Wellness programs can be rolled out for a small investment and can include simple programs such as on-site nutritional support, walking programs and health fairs.

Improved Working Environment

Today’s employees are looking for the entire package when it comes to their work experience. They are no longer willing to work in stifling cubicle farms with no windows or anything pleasant to look at. Companies that take the time to improve the work environment with soft seating arrangements, collaborative workstations, pleasant artwork, lighting and live plants are going to find that this translates to happier employees. Making some changes in the workplace can help a company see an almost immediate boost in employee mood.

Financial Wellness Benefits

An overwhelming amount of debt stemming from credit cards, student loans, housing costs and more weigh on many employees. Many people just don’t know how to manage the money they earn. A company that invests in the financial education and well-being of its workforce can help employees to experience the freedom of getting out of debt and living within their means.

Company Celebrations and Events

Along with being connected to the profitability and success of a business, employees often look forward to celebrations. And why not celebrate their hard work and contributions? Have at least an annual celebration that includes all employees, including those that are family friendly. For example, there could be a week-long celebration with a fun theme, so employees can dress up for a costume contest, decorate their workspaces or participate in a chili cook-off.

Employee Surveys and Brainstorming Sessions

The greatest perk you can give your employees is the chance to have a voice. Employee engagement surveys, pulse surveys, and brainstorming sessions allow employees to speak up in an environment where they can feel safe and validated. Use a third party employee survey firm to handle the details and keep things confidential. Hold brief staff meetings with participants asking them to come up with workplace improvement ideas.

Special Spotlight Projects and Community Causes

Many employees enjoy the chance to gain professional and personal recognition for a project of their choosing. These can be community-based projects or initiatives that are industry related and promote the company in a positive light. Find out what causes employees are participating in and how the company can get behind them. Introduce the concept of employee social journalism into the day to day activities of the company to create culture and engagement.

The above perks and benefits can be excellent incentives to get employees excited about their work again. Set up bonus and recognition programs to foster employee well-being even more. A little can go a long way, with the right effort from the company.

The proper way to analyze and discuss careers is to look at them as made up of stages. We can identify five career stages that most people will go through during their adult years, regardless of the type of work they do. These stages are exploration, establishment, mid-career, late career and decline.

1. Exploration

Many of the critical choices individuals make about their careers are made prior to entering the workforce on a paid basis. Very early in our lives, our parents and teachers begin to narrow our alternatives and lead us in certain directions.

The careers of our parents, their aspirations for their children and their financial sources are crucial factors in determining our perception of what careers are open to us.

The exploration period ends for most of us in our mid-twenties as we make the transition from college to work. From an organizational standpoint this stage has little relevance since it occurs prior to employment.

However, this period is not irrelevant because it is a time when a number of expectations about one’s career are developed, many of which are unrealistic. Such expectations may lie dormant for years and then pop up later to frustrate both the employee and the employer.

2. Establishment

The establishment period begins with the search for work and includes our First job, being accepted by our peers, learning the job and gaining the first tangible evidence of success or failure in the real world. It is a time which begins with uncertainties, anxieties and risks.

It is also marked by making mistakes and learning from these mistakes and the gradual assumption of increased responsibilities. However, the individual in this stage has yet to reach his peak productivity and rarely gets the job that carries great power or high status.

3. Mid-career

Most people do not face their first severe dilemmas until they reach their mid-career stage. This is a time when individuals may continue their prior improvements in performance or begin to deteriorate. At this point in a career, one is expected to have moved beyond apprenticeship to worker-status.

Those who make a successful transition assume greater responsibilities and get rewards. For others, it may be a time for reassessment, job changes, adjustment of priorities or the pursuit of alternative lifestyles.

4. Late career

For those who continue to grow through the mid- career stage, the late career usually is a pleasant time when one is allowed the luxury to relax a bit. It is the time when one can enjoy the respect given to him by younger employees. During the late career, individuals are no longer learning, they teach others on the basis of the knowledge they have gained.

To those who have stagnated during the previous stage, the late career brings the reality that they cannot change the world as they had once thought.

It is a time when individuals have decreased work mobility and may be locked into their current job. One starts looking forward to retirement and the opportunities of doing something different.

5. Decline

The final stage in one’s career is difficult for everyone but it is hardest for those who have had continued successes in the earlier stages. After several decades of continuous achievements and high levels of performance, the time has come for retirement.

Managers should be more concerned with the match for new employees and those just beginning their employment careers. Successful placement at this stage should provide significant advantages to both the organization and the individual.

Many employees lack proper information about career options. As managers identify career-paths that successful employees follow within the organization, they should publish this information. To provide information to all employees about job openings, managers can use job posting.

Job posting provides a channel by which the organization lets employees know what jobs are available and what requirements they will have to fulfill to achieve the promotions to which they may aspire.

One of the most logical parts of a career development programme is career counseling. This can be made part of an individual’s annual performance review. The career counseling process should contain the following elements:-

• The employee’s goals, aspirations and expectations with regard to his own career for the next five or six years;
• The manager’s view of the opportunities available and the degree to which the employee’s aspirations are realistic and match with the opportunities available;
• Identification of what the employee would have to do in the way of further self-development to qualify for new opportunities;
• New job assignments that would prepare the employee for further career growth.

Training and educational development activities reduce the possibilities that employees will find themselves with obsolete skills. When these development activities are properly aligned with an individual’s aspirations and organizational needs, they become an essential element in an employee’s career growth.

In addition to encouraging employees to continue their education and training so as to prevent obsolescence and stimulate career growth, managers should be aware that periodic job changes can achieve similar ends.

Job changes can take the form of vertical promotions, lateral transfers or assignments organized around new tasks.

Available evidence suggests that employees who receive challenging job assignments early in their careers do better on their jobs. The degree of stimulation and challenge in a person’s initial job assignment tends to be significantly related to later career success and retention in the organization.

Initial challenges, if they are successfully met, stimulate a person to perform well in later years. There are definite benefits for managers who correctly fill positions with individuals who have the ability and interest to satisfy the job’s demands.

Innovation in its modern meaning is “a new idea, creative thoughts, new imaginations in form of device or method”. Innovation is often also viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. Such innovation takes place through the provision of more-effective products, processes, services, technologies, or business models that are made available to markets, governments and society. An innovation is something original and more effective and, as a consequence, new, that “breaks into” the market or society. Innovation is related to, but not the same as, invention, as innovation is more apt to involve the practical implementation of an invention (ie new / improved ability) to make a meaningful impact in the market or society, and not all innovations require an invention. Innovation often manifests itself via the engineering process, when the problem being solved is of a technical or scientific nature. The opposite of innovation is exnovation.

While a novel device is often described as an innovation, in economics, management science, and other fields of practice and analysis, innovation is generally considered to be the result of a process that brings together various novel ideas in such a way that they affect society. In industrial economics, innovations are created and found empirically from services to meet growing consumer demand.

Innovation also has an older historical meaning which is quite different. From the 1400s through the 1600s, prior to early American settlement, the concept of “innovation” was pejorative. It was an early modern synonym for rebellion, revolt and heresy.

Features of Innovation

1. Unique and Relevant Strategy

Arguably, the most defining characteristic of a truly innovative company is having a unique and relevant strategy. We all know what companies like Apple, Facebook and Google do. That’s because they make their strategies clear and relentless follow them. An innovative smaller player may not be recognised globally, but its leaders, employees, business partners and customers all will have a clear idea of the company’s strategy. If a business does not have definable, unique strategy, it will not be innovative. Bland strategies, such as “to be the best”, do not provide a path to innovation in the same way clearer strategies, such as “to be on the cutting edge of mobile communications technology,” “to build the world’s safest cars”or “to deliver anything anywhere” do. If your strategy is vague or fails to differentiate your company from the competition, you should change this situation as quickly as possible!

2. Innovation Is a Means to Achieve Strategic Goals

Highly innovative companies do not see innovation as an end, but rather as a means to achieving strategic goals. Just as a good camera is an essential tool that enables the photographer to take professional images and the saw is an essential tool for the carpenter, innovation is an essential tool for visionary companies intent on achieving their strategic goals. Indeed, if you look at the web sites of the world’s most innovative companies, they tend not to trumpet innovation, but rather corporate vision.

3. Innovators Are Leaders

The one thing innovation provides more than anything else is market leadership. When companies use innovation to achieve strategic goals, they inevitably take the lead in their markets. Unfortunately, this does not always translate to being the most successful or profitable. Amazon has been an innovator from the beginning, setting many of the standards for e-commerce. Nevertheless, it took some years for the company to become profitable. Cord was one of the world’s most innovative car companies, launching cutting edge innovations such as front wheel drive and pop-up headlights in the 1920s and 30s. However the company was never very successful financially and went out of business in 1938. On the other hand, innovators like Apple and Google have been financially successful as a result of their innovation. In short, innovators are leaders, but not always profitable leaders!

4. Innovators Implement

Most businesses have a lot of creative employees with a lot of ideas. Some of those ideas are even relevant to companies’ needs. However, one thing that differentiates innovators from wannabe innovators is that innovators implement ideas. Less innovative companies talk more about ideas than implementing them!

5. Failure Is an Option

I would argue the the most critical element of business culture, for an innovative company, is giving employees freedom and encouragement to fail. If employees know that they can fail without endangering their careers, they are more willing to take on risky, innovative projects that offer huge potential rewards to their companies. On the other hand, if employees believe that being part of a failed project will have professional consequences, they will avoid risk – and hence innovation – like the plague. More importantly, if senior managers reward early failure, employees are far more likely to evaluate projects regularly and kill those projects that are failing before that failure becomes too expensive. This frees up resources and budget for new innovative endeavours. However, in businesses where failure is not an option, employees will often stick with failing projects, investing ever more resources in hopes that the project will eventually succeed. When it does not, losses are greater and reputations are ruined. As a result, companies that reward failure often fail less than those that discourage it.

6. Environment of Trust

The Innovative company provides its employees with an environment of trust. There is a lot of risk involved in innovation. Highly creative ideas often initially sound stupid. If employees fear ridicule for sharing outrageous ideas, they will not share such ideas. Likewise, if employees fear reprimand for participating in unsuccessful projects, they will not participate (see item 5 above). If employees do not trust each other, they will be watching their backs all the time. If they fear managers will steal their ideas and claim them as their own, employees will not share ideas. On the other hand, if employees know they can take reasonable risks without fear, if they know outrageous ideas are welcome, if they know that their managers will champion their ideas and credit them for those ideas, these employees can be creative, implement ideas and drive the company’s innovation. In short, creativity and innovation thrive when people in an organization trust each other and their organization.

7. Autonomy

Along with trust, individual and team autonomy is a key component of innovation. If you give individuals and teams clear goals together with the freedom to find their own paths for achieving those goals, you create fertile ground for innovation. But, if managers watch over their subordinates’ shoulders, micro-managing their every move, you stifle the creativity and individual thought that is necessary for innovation. Of course giving employees autonomy means they may make mistakes. They may choose inefficient routes to achieving goals. But at worst, they will learn from their mistakes and inefficiencies. At best, they will discover new and better ways of accomplishing objectives. Most importantly, if you hire intelligent, capable, creative people and give them the freedom to solve problems, they will do so. And, in so doing, they well help innovation to thrive throughout the company.

Measures of Innovation

Measuring innovation is inherently difficult as it implies commensurability so that comparisons can be made in quantitative terms. Innovation, however, is by definition novelty. Comparisons are thus often meaningless across products or service. Nevertheless, Edison et al. in their review of literature on innovation management found 232 innovation metrics. They categorized these measures along five dimensions; ie. inputs to the innovation process, output from the innovation process, effect of the innovation output, measures to access the activities in an innovation process and availability of factors that facilitate such a process.

There are two different types of measures for innovation: the organizational level and the political level.

1. Organizational level

The measure of innovation at the organizational level relates to individuals, team-level assessments, and private companies from the smallest to the largest company. Measure of innovation for organizations can be conducted by surveys, workshops, consultants, or internal benchmarking. There is today no established general way to measure organizational innovation. Corporate measurements are generally structured around balanced scorecards which cover several aspects of innovation such as business measures related to finances, innovation process efficiency, employees’ contribution and motivation, as well benefits for customers. Measured values will vary widely between businesses, covering for example new product revenue, spending in R&D, time to market, customer and employee perception & satisfaction, number of patents, additional sales resulting from past innovations.

2. Political Level

For the political level, measures of innovation are more focused on a country or region competitive advantage through innovation. In this context, organizational capabilities can be evaluated through various evaluation frameworks, such as those of the European Foundation for Quality Management. The OECD Oslo Manual (1992) suggests standard guidelines on measuring technological product and process innovation. Some people consider the Oslo Manual complementary to the Frascati Manual from 1963. The new Oslo Manual from 2018 takes a wider perspective to innovation, and includes marketing and organizational innovation. These standards are used for example in the European Community Innovation Surveys.

Other ways of measuring innovation have traditionally been expenditure, for example, investment in R&D (Research and Development) as percentage of GNP (Gross National Product). Whether this is a good measurement of innovation has been widely discussed and the Oslo Manual has incorporated some of the critique against earlier methods of measuring. The traditional methods of measuring still inform many policy decisions. The EU Lisbon Strategy has set as a goal that their average expenditure on R&D should be 3% of GDP.

It is remarkable how many people are under the false assumption that companies are either innovative or not.  This is a very polarizing and simplistic perspective that does not take into account the different types of innovations that companies can and do pursue.

For this post, let’s break down innovation into two dimensions:  Technology and Market, which gives us the following 4 types of innovation:

1. Incremental Innovation

Incremental Innovation is the most common form of innovation. It utilizes your existing technology and increases value to the customer (features, design changes, etc.) within your existing market. Almost all companies engage in incremental innovation in one form or another.

Examples include adding new features to existing products or services or even removing features (value through simplification). Even small updates to user experience can add value, for example below is an older version of Constant Contact’s email schedule page.

2. Disruptive Innovation

Disruptive innovation, also known as stealth innovation, involves applying new technology or processes to your company’s current market. It is stealthy in nature since newer tech will often be inferior to existing market technology.   This newer technology is often more expensive, has fewer features, is harder to use, and is not as aesthetically pleasing. It is only after a few iterations that the newer tech surpasses the old and disrupts all existing companies. By then, it might be too late for the established companies to quickly compete with the newer technology.

There are quite a few examples of disruptive innovation, one of the more prominent being Apple’s iPhone disruption of the mobile phone market. Prior to the iPhone, most popular phones relied on buttons, keypads or scroll wheels for user input. The iPhone was the result of a technological movement that was years in making, mostly iterated by Palm Treo phones and personal digital assistants (PDAs). Frequently you will find that it is not the first mover who ends up disrupting the existing market.  In order to disrupt the mobile phone market, Apple had to cobble together an amazing touch screen that had a simple to use interface, and provide users access to a large assortment of built-in and third-party mobile applications.

3. Architectural Innovation

Architectural innovation is simply taking the lessons, skills and overall technology and applying them within a different market. This innovation is amazing at increasing new customers as long as the new market is receptive. Most of the time, the risk involved in architectural innovation is low due to the reliance and reintroduction of proven technology.   Though most of the time it requires tweaking to match the requirements of the new market.

In 1966, NASA’s Ames Research Center attempted to improve the safety of aircraft cushions. They succeeded by creating a new type of foam, which reacts to the pressure applied to it, yet magically forms back to its original shape.    Originally it was commercially marketed as medical equipment table pads and sports equipment, before having larger success as use in mattresses. This “slow spring back foam” technology falls under architectural innovation. It is commonly known as memory foam.

4. Radical Innovation

Radical innovation is what we think of mostly when considering innovation. It gives birth to new industries (or swallows existing ones) and involves creating revolutionary technology. The airplane, for example, was not the first mode of transportation, but it is revolutionary as it allowed commercialized air travel to develop and prosper.

The four different types of innovation mentioned here – Incremental, Disruptive, Architectural and Radical – help illustrate the various ways that companies can innovate. There are more ways to innovate than these four. The important thing is to find the type(s) that suit your company and turn those into success.

Innovation Strategies

1. Proactive

Companies with proactive innovation strategies tend to have strong research orientation and first-mover advantage, and be a technology market leader. They access knowledge from a broad range of sources and take big bets/high risks. Examples include: Dupont, Apple and Singapore Airlines.

The types of technological innovation used in a proactive innovation strategy are:

• Radical: Breakthroughs that change the nature of products and services
• Incremental: The constant technological or process changes that lead to improved performance of products and services.

2. Active

Active innovation strategies involve defending existing technologies and markets while being prepared to respond quickly once markets and technologies are proven. Companies using this approach also have broad sources of knowledge and medium-to-low risk exposure; they tend to hedge their bets. Examples include Microsoft, Dell and British Airways.

These companies use mainly incremental innovation with in-house applied research and development.

3. Reactive

The reactive innovation strategy is used by companies:

• Which are followers
• Have a focus on operations
• Take a wait-and-see approach
• Look for low-risk opportunities.

They copy proven innovation and use entirely incremental innovators. An example is Ryanair, a budget airline which has successfully copied the no-frills service model of Southwest Airlines.

4. Passive

Companies with passive innovation strategies wait until their customers demand a change in their products or services. Examples include automotive supply companies as they wait for their customers to demand changes to specification before implementing these.

Strive to maintain an innovative edge if they want to stay ahead in the game. One of the best ways of improving a service, a product or even a business’s overall efficiency is to source ideas directly from employees, vendors and clients. These groups, especially employees, experience the daily hustle and bustle and can offer innovative solutions to current problems or new ideas to propel the company forward. Too often, great ideas are left unsaid or not followed through.

Innovation management software is key if you want to ensure these ideas are registered, tracked and evaluated properly. From there, they can become the catalyst for new insights and solutions, carried through from the initial design stage through to project definition, execution and completion. By letting you collect, develop, prioritise and implement innovative ideas, idea management software enables you to digitally manage your company’s innovation strategy and processes.

If you’re considering an investment in innovation management software, there are several key functionalities you should look out for. Discover the following 6 essential features for innovation management software platform that can be leveraged to transform great ideas into tangible results.

1. Self-Driving Innovation

Idea management tools can be configured to your workflow and according to your needs. Thanks to AI technology and powerful context-based search, AI-driven idea management tools auto-discover information from all public and private data sources you have access to and easily automate routine tasks. Not only will this save you a lot of time, but will help you focus your limited tie on your innovation strategy and idea development instead of manually searching for, mining and identifying relevant or potentially actionable information.

2. Crowdsourcing

A collaborative idea management platform that supports a range of different innovation activities is another important feature of innovation management software. Crowdsourcing allows you to easily tap into the wisdom and expertise of your employees, customers, partners and your community to collect and develop creative ideas and find new solutions by planning and running various types of innovation activities.

Your software should let you plan and run any number of different innovation activities such as jam sessions, challenges, innovation days, shark tanks, and internal idea competitions. This will empower your team members and foster an innovation culture within your company, continuously driving it forward.

3. Adaptive Interface and Business Rule Engine

If you want to work efficiently, any software you consider should have a user-friendly, intuitive, and adaptive interface that lets you design idea submission and evaluation forms and work processes. You should be able to search for and look at ideas in different ways such as list, tile and tree views, and drive actions based on your requirements and business rules with zero customization.

4. Gamified Collaboration

One of the best ways to improve a service, a process or a product is to source ideas directly from your employees, customers and business partners. If you want to ensure they are committed to innovation, you must create a sense of engagement. This is why innovation management software offer a gamified collaboration as an essential feature. Gamified collaboration means engaged and happy participants who are excited to get involved in and contribute to innovation. For example, Planbox offers such a platform where participants earn points and badges for every action they take so you can measure, recognize and reward their contributions.

5. Agile Concept Development and Experiments

Agile concept development is another important feature of innovation management software. This feature will allow you to use a quick evaluation approach as a first pass filtering method where many ideas can be screened and evaluated quickly by designated reviewers and subject matter experts. In addition, Agile experimentation features will allow you to experiment on and develop the best ideas into actionable solutions.

6. Actionable Analytics

If you want to optimize your investment in ideation software, ensure you are making smart decisions with the help of actionable analytics. Choose software that offers configurable dashboards, flexible role-based ad-hoc reporting and the technology that will enable you to identify the most promising ideas and act upon them. As such, you will be able to quickly track and report on all the metrics and trends that are important to you.

In conclusion, if you’re looking for the right software to help you implement innovation within your company, there are several key factors to look for. Ensure your innovation management software has proven AI technology that will automate routine tasks and save you time. Your platform must also offer a crowdsourced innovation activity design and execution feature. It has been shown that running a range of different crowdsourced innovation activities is one of the most effective approaches, yielding impressive return on innovation investments.

An adaptive interface that allows you to easily design processes and identify the best ideas so you can pursue them is also a must have. A gamification option will also create engagement among all participants and ignite a culture of innovation within the company and its community of partners and customers. Agile concept development and experimentation features is also highly beneficial so you can quickly run agile proof of concept experiments, along with actionable analytics that will allow you to track and report on the metrics that matter most.

Innovation refers to creating more effective processes, products, and ideas. For a business, it could mean implementing new ideas, improving services or creating dynamic products. It can act as a catalyst that can make your business grow and can help you adapt in the marketplace.

By innovation, we mean changing your business model and making changes in the existing environment to deliver better products or services. Successful innovation should be a part of your business strategy, where you can create a culture of innovation and make a way for creative thinking. It can also increase the likelihood of your business succeeding and can create more efficient processes that can result in better productivity and performance.

For that, business owners need innovation and creativity to find new things. Try adopting and creating new ideas that will help you grow beyond your competition.

1. Solve Problems Easily

You need to come up with creative answers to solve certain problems in your business. Many times you’ll face problems that don’t seem to go away. You need to think outside the box to find an answer you’ve never come up with. This way you can make your product, store your inventory and find a creative solution to make your business better.

2. Increase Your Productivity

If you ever feel that you are bogged down with work and struggle to get everything done, it’s time that you should become more productive. To do this, start finding a new process.

In order to work smarter, think creatively. Focus on what things you should streamline and what things you need to cut out. Also, focus on the programs and workflows that you can use to increase productivity.

For example, You can use a homegrown project tracker system to assign, monitor and prioritize tasks. You may use other methods to do this, but building one to meet your specific demands is recommended. As your needs changes, you can update the software anytime to remain productive.

In businesses, it is always preferred to test new ideas. You will be surprised by the combination of ideas that work together to make productivity plans that work for your company.

3. Market Your Business

You can use various creative ideas and innovation to make your business stand out from the crowd. Here, small business marketing comes in. In order to make people remember your business, you need innovative ideas. You can create a new brand, develop a quirky business or can work with any non- profit organization.

Once you develop a unique character in your business, you should market it. Just innovate a marketing plan that suits your business’ personality. Stand out from all other businesses and this will help you make a unique identity among customers.

4. Beat Your Competitors

When you think innovatively, it becomes very easy to beat out your competition. You just need to put in a little creativity and you can easily come up with better ways to design products and connect with customers. Along with this, creativity will help you figure out the right marketing techniques that will help your business grow.

Now that you have read about some various advantages of innovation, you need to add it to your business. It is not a one-time deal. It must be non-stop so that you have a continuous stream of ways to improve your business.

5. Innovation Keeps Organizations Relevant

The world around us is constantly changing, and in order for your business to remain relevant and profitable, it will eventually need to adapt in order to meet these new realities.

Technology continually proves to be a driving factor in the need for change. To quantify the recent impact, look at the facts:

• 90 percent of the world’s data has been created in the last couple of years.
• More than 570 new websites are created every minute.
• 8 billion devices will be connected to the Internet by 2020.

These changes have led to a new age of innovation across business models and industries, allowing new businesses to enter the market and disrupt incumbents in serious ways. In fact, executives today believe 40 percent of Fortune 500 companies will be wiped out in the coming decade due to this level of digital disruption. Just as a start-up often innovates in order to break into an industry, established organizations need to innovate in order to fend off competition and remain relevant in this changing environment.

6. Innovation Helps Organizations Differentiate Themselves

At the core, innovation is about doing something differently from everyone else operating in your space. If your organization is using innovation on its products, for example, then the goal is to develop or update the products until there is nothing else on the market like it. If your organization is using innovation on its processes, it’s because doing so will save you time, money, or other resources, and give you a competitive advantage over other companies stuck in their systems. In either scenario, your organization is taking the time to try something new because sticking to the status quo simply isn’t working.

While the natural success that this brings can be reward enough for many companies, it would be a mistake to overlook another key advantage: innovation helps an organization differentiate itself and its products from the competition, which can be particularly powerful in an oversaturated industry or market.

While delivering value to your customers should always be a company’s main focus, doing so in a way that is memorable and different from everyone else can become a standout element of your brand identity and business strategy, as well.

How to Embrace Innovation?

In order to drive business growth, stay relevant in changing times, and differentiate from the competition, business leaders must be able to think creatively and embrace innovation into their business models. This doesn’t mean that a willingness to innovate is the only ingredient for success, however: leaders must also have a solid understanding of how to go about bringing that innovation to life.

One way to do this is by gaining experience working on exciting, challenging, and innovative projects, as doing so will expose you to the skills needed to become an innovation driver within your organization. A master’s degree in innovation is designed to not only help you hone these specific skill sets, but also provide you with real-world, hands-on experiences that will make you an effective innovator.

1. Product vs Process Innovation

In my opinion, this is the highest level break-out of the painfully broad term “Innovation”. Product innovation is developing a new product (iPhone). Process innovation is improving the processes employed to produce or deliver the product, and to make it more efficient or productive (eg. Robot welders on the factory floor at GM). Process innovation often falls under names like (Six Sigma or Operational Excellence). Generally product innovation is concerned with increasing revenue and process innovation with reducing costs. It’s very difficult to do both at the same time, for a given product, and the emergence of a “dominant design” is what triggers the shift of effort from product to process innovation.

2. Scale of Innovation

While it may seem obvious, innovation happens at different scales. Broad-based adoption of Personal Computers in the 80s represented a “big” innovation and by contrast the mute button on your remote control is small. Scale is determined by: size of investment, time to ROI, change in user behavior, risk of success, risk of adoption, etc. and is a relative measure. While many terms are used, I prefer: Incremental, Sustaining & Disruptive (for small, medium and large). The non-obvious part is that it is important to always keep in mind when thinking about innovation, because the rules are totally different if you are working on a incremental process improvement vs a disruptive new product.

3. Technology Adoption Curve

Adoption is the risk for any innovation. New tools and practices are not adopted overnight. Like a bottle of perfume opened in the corner that slowly spreads throughout the room, innovations slowly diffuse through society. Understanding this process is critical, as new ideas are embraced first by “early adopters” all the way through to “skeptics”. This is articulated in Marketing High Technology and more recently Crossing the Chasm.

4. The Innovators Dilemma

What if your new low cost model cannibalizes the revenue and profit from the old way of doing it? What if you have an Executive VP of Back Office Operations and your new electronic trading system requires no people to operate it? What if your new roll-out requires 10,000 people to be retrained. Most organizations have a natural immune system to change. In many areas this is a good thing you wouldn’t want to change the location of headquarters every month. But with innovation these anti-bodies can block or kill the very initiatives they could have saved a firm when it’s industry is being transformed.

5. Skunkworks

It is often useful to separate a innovative business unit logically and physically from the rigors (standards, reporting, ROI) of the parent company. The term ‘Skunkworks’ derives from a Lockheed Martin group that was separated from the corporate parent and was very successful in developing many new airplanes. This technique was also employed at Apple by the Mac Group that took up separate offices and flew a pirate flag above their building. If you can’t have a separate building, at least create a “War Room” by permanently taking over a conference room and posting all relevant project information on the walls. It’s important for innovative groups to have their own identity so they can defend themselves from forces that might undo their best efforts.

6. Prototype & Iterate

Some flaws are just not that obvious until you try to use the product. On the first typewriters you couldn’t see what you were typing until the page came out of the machine 15-20 lines later! Visible type was considered an innovation in typewriters! Later someone invented the “Shift” key so that keyboards didn’t need separate keys for capital and lowercase letters! This is also why it is important to eat your own dog food so you feel what the user is feeling.

7. Solutions not Technologies

There is a major difference between a technology and a solution. A technology sounds like this: “a networks of orbitals, that constantly send and receive geospatial data streams with synchronized clocks that triangulate position on spherical surface.” A solution sounds like this: “with this GPS, I will never get lost again, anywhere in the world”. There is much work to be done between a new technology and something that solves a problem, and not all technologies make it there. Ask yourself what specific job are you trying to make easier? What problem am I trying to solve? What is the one thing your user trying to do, and how can you help with it. Clarify those questions as precisely as you can, then focus all your energies on designing a solution for just that one task.

8. Economic Value

Despite your grand vision to change the world, the world will ask you to measure your innovation by much humbler means such as: How are you making something Cheaper/Faster/Better? Can we lay-off people if we buy your product? What are the trade-off costs? The switching costs? The trial costs? Why is it better than doing nothing at all? What is the payback? How long till we break even? Is the risk worth the reward? Understanding the nitty gritty of economic value (aka what people are willing to pay for, and why?) will help you sell your idea to the world.

9. Individuals Required

As you probably guessed by now, true innovation isn’t easy. Social pressures, set backs, bean counters… Along the way you will need to rock the boat a bit and probably even just outright break the rules. We’ve all heard the line “Ask for forgiveness not permission” now you’ll have to live it. I have also heard it said “the defining trait of an entrepreneur is that they don’t need to ask anyone for permission.”

10. Quality

The ancient Greeks had a concept called arête which meant quality or goodness. It’s hard to pin down the exact meaning, but it’s the type of thing ‘you know it when you see it’. Take one look at the iPhone and you can feel the Quality. Go to a typical DMV, and chances are you will see a lack of quality (no offense). Quality is important because people will give your new thing a try simply because they like the experience of touching something of quality, and that drives adoption. Quality, and the passion required to pursue it, in any field, is admirable and that gives you your shot.