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Importance of Innovation as a Winning Strategy

In: Business and Management

Submitted By Arome
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In the continuously changing environment, innovation is very important for the advancement of society and making the life better and simpler. New and innovative products increase the standard of living by providing the opportunities to improve the lives.
With the advent of globalization and outsourcing, the need for innovation has increased. This is because of the increase in competition whereby all the small and big firms are operating at the same platform. According to Peter Ducker, if the company lost the ability of innovation then soon the company have to face the decline stage and the extinction in the business market (Goldhar and Berg, 2010) . In order to survive the organizations need to offer more than the good product in order to survive and this zeal to improve require the innovation in processes and management which helps in reducing the cost or improving the productivity. Innovation is the only tool with the help of which the organization can maintain its position in the competitive market and stay one step ahead of its competitors. It is the only way that creates the differentiation with the customers. Moreover, customers prefer the products which make their life simpler and this is possible with the continual improvement in product or processes. Being first in the market with the new product gives the significant advantage in building the customer base.
The term Operational Strategy is defined as, “the total pattern of decisions which shape the long term capabilities of any type of operations and their contribution to the overall strategy.” Thus, innovation in the method of producing goods being offered to the customers is the innovation in operational strategy. There are several operational strategies which make the company process efficient and effective such as adopting Just – In – Time approach and six sigma lean, implementing quality circle at the shop floor, . Some of the organizations which innovated in its operational strategies and enhanced the customer satisfaction are as follows: 1. The operational strategy of Wal–Mart, most successful and largest retailer, is the use of low inventory level and prices, with the aim to generate faster sales [Newton Chris, n.d.]. By maintaining the low inventory and prices the company is able to replace with the new product which helps in increasing the demand, and when this increase in demand is coordinated with the low prices the overall sales of the company increases. 2. The operational strategy adopted by the online merchants is entirely different from the traditional brick and mortar retailers, whereby the online merchant creates and maintains the easy to use and reliable website, such that the customer can easily navigate and can carry out the purchase. The operational strategy of such online merchant is to lay the emphasis on of usability and design of the site [Newton Chris, n.d.]. These merchants upload the photo of the product along with the complete technical and non technical description. Moreover, they also give the list of the most preferred items which facilitates the decision making process of the customer. 3. Caterpillar Inc., a leader in manufacturing of construction and mining equipments, natural gas and diesel and diesel electric locomotives, carried out the massive transformation in its operational strategy in the year 2001, through the Six Sigma initiative which targeted on the production of the low emissions diesel engines, redesigning the processes and streamlining the supply chain [Lubowe Dave and Blitz Amy, 1st September 2008]. With this innovation in its operational strategy, the organization was able to increase its profitability by 80%.
Thus, innovation in the operational strategy can be helps in stretching the performance goals of the organization. It helps to effectively engage with their people so as to generate valuable business which involves the quick conversion of the high potential idea into a new business value. The major goal of the management is to focus on the way the things are being done around so as to change effectively.
Every organization in the external environment and the operations is facing the impact of globalization, migration, technological and knowledge revolutions, and climate change issues. In the strategic operations, the innovation is imperative if people want to improve, the quality of life is dependent on these circumstances (Johne and Davies, 2000).

Goldhar J. and Berg D. (2010). Blurring the boundary: convergence of factory and service processes. Journal of Manufacturing Technology Management. 21(3) pp.341 - 354
Newton Chris,(2013). Operational Strategy Examples [online], Available from: [Accessed: 1st August 2013]
Lubowe Dave and Blitz Amy, (2008). Driving operational innovation using Lean Six Sigma [online], Available from: [Accessed: 1st August 2013]
Johne A., and Davies R. (2000). Innovation in medium-sized insurance companies: how marketing adds value. International Journal of Bank Marketing. 18 (1) pp.6 – 14

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