Innovation and Technology Introduction Technology is recognized as one of the most critical factors driving business and organizations. The extensive use of technology in turn has highlighted the need to develop criteria and standards for outcomes in its application. According to Zabel (2004) the impact of technology is not as straightforward as it seems and cautions against assumptions that technology always has positive impacts to organization.
In a similar manner, Morris (2006) points out that adaptation of technology should be sensitive to the contexts of its application, implying the dependence of technology pplication outcomes to the competencies and attributes of both organization and individuals. The objective of this paper is to determine whether technology significantly impacts the core strategies and organization of companies to the extent that it should be considered as the primary means of initiating innovation or development.
For the purpose of this study, the validity of the statement will consider in both public as well private enterprises from small to large scale. In the course of the discussion, the research will also determine effective applications of technology, how t is changing markets and industries and the developing challenges for companies with its utilization. Background Technology and Productivity The application of technology necessitates a study of the relationship of productivity and technology.
The debate on whether productivity paradoxes really do exist has become an issue for analysts and managers once more with the shift towards digitization. Consider the implications of the productivity paradox or the Solow computer paradox that Robert Solow theorized in response to the mechanization of clerical work. According to Solow that, “You can see the computer ge everywhere but in the productivity statistics,” (Greenan et al, 2002, p. 42). The productivity paradox implies that as technology is introduced to a system, in particular information technology, work productivity decreases (McGovern, 2001).
If the paradox is to be accepted as true, then technology contravenes productive strategies. However, Dusharme (2001) points out that these impacts are part of the process of adaptation, similar to competency development learning curves. Furthermore, Suter (2007) points out that many companies have considered alternatives to techno-based strategies because of the cost of implementation as well s discrepancies in information literacy in international markets.
In Tubbs and Schulz (2006) study, he concluded that lags in productivity in technology-related initiatives can be attributed to the lack of channels where the technology can be learned or used. Explanations for the decline in productivity pointed out the need for technology to De prevalent DeTore It Impacts proauctlvlty slgnlTlcantly. I nus, later aaaptatlon to technology creates less vulnerability to productivity paradoxes: the implication is that later access to emerging technologies, with the assumption that there has bee rowth in software and applications available, is a more viable choice to ensure productivity.
Technology and Business Operations According to there should be a realization that the technology is a tool and the degree of its impact is dependent on other strategies (Womack et al, 1991). The bulk of technology adaptations and strategies have focused on information and communications technologies. Among the benefits that have been seen is the increase in communication and networking capacity technology provides (Insinga & Werle, 2000).
For example, the utilization of VOIP (voice over internet protocol) perations has become critical in the management or trafficking PSTN calls locally and internationally as well as mobile communications; IP Multimedia Subsystems (‘MS) are providing platforms for the incorporation of internet technologies with business operations; as well facilitated the actual interface of VOIP infrastructure with PSTN; and the rise of network societies, referring to online communities and feedback systems, has developed into a direct communication systems with clients or markets Oohansson, 2001).
Cost effectiveness is the primary constraint for the technology-related strategies. The rate of change in technology applications limits the benefits on a short-term scale. Though the price of services has gone down due to steep competition in the industry, total outlays remain exorbitant and require long-term if not continuing commitment (De Kare-Silver, 2000). Furthermore, security and fidelity issues are also a common concern, illustrated by the slower rate of adaptation for example in financial and banking industries for third party or international services contrary to the industrys early migration to information and database systems.
Impact to Strategies and Organizational Structures Methods of Technology Applications Current developments and innovations via technology have enhanced production, yield, transportation and safety. One strategy that has been greatly associated with technology applications is lean production. One of the strategies to stay competitive is lean production which tries to eliminate waste in transportation, inventory, movements, time, over-production, wastage, and the processing as a whole.
One method of utilizing technology for this objective is the mechanization of operations, such as robotics or computerized data management, to prevent or minimize human rrors. The objective of the strategy is to bring down costs to either increase profit margins or afford more flexibility in offering competitive pricing. In the case presented by Berman and his associates(2006), in the application public information services, technology impacts the mode and significance of information: database information systems in shared networks are used as reference and verification of information collectively versus by institution.
In large business organizations such as Tesco, the UK’s leading retailer, information management. Recent vertical and orlzontal expanslon 0T tne company nave now Incluaea In Its portTollo agriculture, packing, merchandising and information technology (Leahy, 2006). Similarly, based on Siemens Enterprise Communications’ (2006) enterprise model system illustrated in Figure 3 in reference to VOIP communications developed from their own experience, they see security strategies or layered security architectures as one of the requirements of technology and innovation.
Thus, technology is applied both as a choice and as a corollary to strategy whether or not technological advancement is the ocus of efforts (Niebel & Freivalds, 2002). Influence on Objectives and Strategies According to Jablonski and Bussler (1996), technology is a factor of efficiency since it allows detail-oriented and labor-intensive operations to be processed automatically and accessed on demand. Thus, work designs have reserved manual and operational tasks for computers and reserves discretionary or decision-based tasks to personnel (Niebel & Freivalds, 2002).
Initial initiatives in the adaptation of technology focused on automation, the opinion was that computers have greater efficiency and require less aintenance. Thus, many businesses in the 1990’s allocated technology spending for the development of user-customer interfaces. In contrast to the mechanization of the 1970’s, computerization and digitization was focused on resource streamlining instead of operations. This raised efficiency thresholds and changed organizational structures for information, communications and operations.
With the increase of productive capacity, many firms were given more opportunity, ironically, to focus on relationship building (Bolstorff, 2002). At the same time, Heim and Sinha (2001) point out that efinitions and standards of customer value have also shifted: the rise of network communications increased the significance of clients’ opinion and responses on a public scale versus traditional business models were interaction is limited between business and clients. Essentially, product and corporate strategies have remained the same but technology has change requirements, methods and target outcomes (Tchaicha & Davis, 2005).
Technology has become essential to respond to the changes in production, delivery, supply channels or services attached to the product, articularly in high information-literate markets. Transformation of Markets and Industries According to one study developed in 2004 estimating the impact of technology, “In the context of emerging markets, IT is seen as one of the most significant forces of modernization, yet researchers have not provided consistent results about the relationship between IT and organizational effectiveness even in developed countries (Zhang et al, 2004, Para. ). This implies that the impact of technology is difficult to quantify particularly at times when strategies implemented are general. For example, Suter (2007) points out that corporate restructuring are supposed to enhance market performance, increasing or developing competencies to support market requirements. In this illustration, the process of restructuring is credited to changes in market objectives or strategies though technology is used to leverage the enhancement of brand and market equity (Besanko, 2005).
The effects of restructurlng In mature or cycllcal markets In particular affect tne Drano Tlrst DeTore the actual product and will still need initiatives so that whatever increased equity is increased in a brand is translated to the product itself. Thus the change in the organization is in response to changes in brand or market rather than actual application of technology. In a similar manner, if the restructuring is caused by market expansion or increases in competition then the application of technology will interpreted as an effort to increase and support productivity (Greenan et al, 2002).
In either case, the implementation of technology initiatives is corollary to other reactions that prompt organizational restructuring. Assessment Based on the previous discussion, there is currently no quantifiable evidence on he actual impact of technology in corporate or organizational structures or long term goals and orientations (Womack et al, 1991). However, there should be a distinction that this limitation is reserved for organizational structures and not on business processes. The lack of evidence is not to imply that technology has no influence but rather that it is difficult to attribute to it changes in an organization.
However, there is no denying the impact of technology on competencies and it is likely that future methods to determine its impact will be developed and will likely indicate a positive result. Furthermore, as the application of technology intensifies in industries, its contribution to productivity will increase in potential since the increase in applications and networking will exponentially increase the utilization of data and processes (De Kare-Silver, 2000). However, on a macro scale, the impact of technology highlights discrepancies in economies of scale and is prompting shifts in aggregate labor and services (Schiller, 2005).
This is apparent in the business process outsourcing (BPO), e-commerce and IP-based technologies. Situational Insights Management Perspectives: Six Sigma and Lean Production Developed by Bill Smith for Motorola in 1986 to reduce error margins in production, Six Sigma practices have been adopted by industries and professionals as a standard of excellence (Morris, 2006). Though the primary motivation for adopting Six Sigma is in the improving the efficiency of processes and cost reduction, Heuring (2004) points out that it can significantly improve the professional and technical effectiveness in an organization.
On the other hand, the idea of lean production is enforced by limiting operational costs and increasing cost effectiveness (Greenan et al, 2002). Morris (2006) points out that competitiveness using lean roduction techniques can be achieved either by increasing efficiency and overall competitiveness in terms of all factors of manufacturing including its workforce or by focusing on profit (Morris, 2006).
These two management perspectives have been associated with technology adaptations because of their emphasis increasing efficiency and productive capacity. Dusharme (2001) however points out that since the outcomes are Judged based on cost, then impact to management structure or organization is attributed to operations though the use of technology is the reason why production costs or time are reduced.
For Six Sigma, the low tolerance for error that becomes the basis for decisions rather than the adaptation of error monitoring or standards (Zhang et al, ) Slmllarly In lean proauctlon, tne cnange In processes or manpower distribution with the acquisition of robots or change in work designs is the basis for restructuring (Bolstorff, 2002) Industrial: Business Process Outsourcing According to the study conducted by Heikkila and Cordon (2002), companies opt to outsource operations to compensate for capital scarcity, to access expertise, to efficiency of non-core competencies, to speed and time markets, for asset utilization nd sparing capacity to develop advantage of economy of scale. The methodology of the strategy involves the establishment of support services in less expensive labor markets and transfer of technology to facilitate transnational or remote operations. This has become possible with the increase in fidelity and efficiency of IP communications and the enhancement of network infrastructure technologies. Outsourcing was initiated through the establishment of local support services but offshore outsourcing has become more prevalent taking advantage of technology and discrepancies in labor cost.
Leaw (2004) attributes the trend to advances in information technology and communications which is allowing for real time delivery of services and operations. Jiang and Qureshi (2006) in turn concluded that majority of outsourcing activities have focused on business processes, particularly client support services; human resource information management; public information services; and business and creative solutions. Thus, the prevalence of application is in operations which in turn have prompted the change in organizational structure to accommodate transnational operations. Considering this, outsourcing can be best developed by first concentrating on support services. This will not require significant changes in business structure and operations.
Furthermore, Heim and Sinha (2001) believe that outsourcing gained its significance in business strategic management as a means to increase productivity and technology versus the latter affecting strategic management objectives. Going Concerns: Tesco The primary goal of becoming online is to be able to establish presences, gain access or exposure to markets and to survey or gather information regarding prospective markets. Some companies also opt to go online because their competitors do so. Tesco, is a global leader in retailing that is based in Britain. Recent vertical and horizontal expansion of the company have now included in its portfolio agriculture, packing, merchandising and information technology (Tesco, 2006).
Tesco’s international expansion programs are not limited by its consumer businesses, they are aiming to launch extensive services and related markets into new markets because of two major motivations: establishing their leadership in these developing markets and maximizing existing capacities. Tesco launched it’s the first home chopping catalogue in 2006 as part of Tesco Direct. Its recent expansion into software has also prompted it to launch its own software packages that are aimed to utilize pricing as its main competitive edge. Software includes security systems, office suites and other software products. In particular, the expansion to services has prompted the company take accommodate new ITC infrastructures to support the companys expanslon Into e-commerce ana served Dotn as support ana as an actual product. However, one of the biggest innovations that was the introduction of online retail services.
The launch of its online stores did not Just increase market channels for the company but is one of the benchmarks for future online products and services. However, despite these developments, the organizational structure of the company remains the same. It should also be recognized that it has established departments and operations in responses to the technology adaptations. According to the Tesco, the primary motivation for the restructuring of the company is for market adaptation. The company considers tech-related developments as an investment in competency development and the new organizational infrastructures ollow the similar operational requirements in traditional stores and channels (pp. 59-62).
Technology initiatives for the company are considered long-term in nature but are considered mainly as tools rather than an instigation of restructuring. Going Concerns: Avon E-Business Similar to Tesco, Avon’s expansion to online retailing is motivated by developments in its markets and the development of technology to support online traditional business operations. Online business efforts of the company initially focused on retail operations but more recent efforts have intensified recruitment and operations (Avon, 2007). Intensive campaign have been launch to attract sales representative applications online and the company has also made available online processing of orders as well sales and performance monitoring.
According to Neil (2006), one of the recent challenges for the company is to go beyond the traditional image of its sales force, as personified by “Avon ladies” and improve its strategic competencies with new entrants. Considered as a separate enterprise similar to independent sales offices, Avon believes that the cost of maintaining online operations is a fraction of what it costs to maintain physical operations would. Thus, the company is planning to expand its online operations in all of the countries where Avon is already operating. At the same time, it is affording the company access and competencies in managing and developing insight from information gathered from databases.
However, there are also significant risks and limitations to operating online and these directly depend on Avon’s ability to merge it traditional operations with virtual markets. A review of Avon’s E-Business shows that the structure and operation of the business is cost-based. Though Avon E-Business is distinct from he traditional usiness operations of Avon and required a specific infrastructure, the level of influence of technology is limited to online stores and does not affect Avon as a whole. Since the structural changes are contained within the setting of the online stores and changes in sales programs are not consequence of technology but compliance to requirements of the online retailing, the faculty of technology to bring about organizational changes is not conclusive.
Going Concerns: EBay The online auction business is one of the cores of e-commerce ventures. Cohen (2003) believes that online auctions are a good example of the objectives of looallzatlon ano tne Internet. I ne most popular weDslte oTTerlng online auction services is undoubtedly EBay. It is not Just a pioneer of the market but it can also be considered as a model of e-business. Together with the payment system Paypal, it has revolutionized commerce and has paved the way for other business, particularly retail and trading. The nature of merchandise and payment made available to the public over the internet has a lot to do as to why Micropayments and Small Payments have not taken off well with the public.
Considering the fees attached to online ayments by various services, they are disproportionate with the cost of the merchandise from a customer’s point of view (Schneider, 2004). In contrast to earlier e-commerce infrastructures in which technology defined requirements, current e-commerce models, particularly those that rely in networks or communities have become client-focused (De Kare-Silver, 2000). Evidence that developments in the company are not technology driven can be seen in its current efforts to expand the site’s format to accommodate the interaction of users. Thus, the changes in the site’s platform are due to the demands of system users.
Other examples of the response to client and markets that have prompted changes in the structure and utility of eBay include alternative bidding formats utilizing the Dutch auction systems to enhance multiple sale of items, mobile eBay services, investment options are also now structures in classiNeed as well as Rent. com to cater to online housing and apartment rentals. Thus, EBay, a technology intensive enterprise that hosts small scale sellers also illustrate that technology is a tool to respond to markets instead of markets responding to technology developments (Cohen, 2003). Conclusion There is no doubt that technology is changing business landscapes. However, the idea of technology as an active force in organizational structures needs further study and evidence.
The utilization of technology in commerce and business may be dependent on the level of information literacy, but traditional models of organizations and business remain the same though they have utilized technology significantly. Furthermore, it is more likely that a company would restructure itself to adapt a technology as a response to competitors’ respective adaptation of it rather than when a technology is simply made available to them. As highlighted in the discussion of productivity, adaptations of technology follow a curve of development: companies choose to adapt technology not their organization when there have been sufficient application developed. Thus, the technology is developed for markets and organizations rather than organizations develop competencies to utilize them.
However in the event that marginal cost to using a technology is Justified by the savings or revenues it brings, it can be expected that companies will initiate the assimilation of the technology inter operations. As seen in the trends, outsourcing in articular, the competitive advantage in migrating support services brought about the industrys astronomical growth in recent year. Even in such a case though, it can still be argued that technology was consequent of cost-cutting or competition. To be able to state that technology is driving organizational or structural changes, the effect should be direct, the effect can not be attributed to any other factor or strategy in operation and most important, the effect should be measurable.
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