Innovation refers to the process of applying relatively better solutions that in meeting existing market needs or new requirements (Kumar, 2012). Innovation has the aspect of making existing methods and technology better which is contrary to invention which must have originality. This essay will seek to answer the question how creativity and innovation has played important roles in the evolution and success of business organizations, in the past and today.

How Innovation Has Helped Organizations to Succeed In The Past

In terms of business and economics, innovation is a factor that helps catalyze and stimulate growth. The global economy has greatly been revolutionized due to advancement in transportation and communication. This is because of the major focus that has been placed on innovation. One of the greatest advocators for innovation was Joseph Schumpeter who was also an economist. He advocated that industries should participate in revolutionizing the economic structure from within. The market players should focus on innovation through better products or more effective processes.

The need for innovation has always been driven by the fact that organizations are looking for the best way to satisfy their customers. At the same time, they also seek ways on how to minimize their costs and maximizing their profits in the long run. The fronts through which organizations have aimed to satisfy their customer base include price, service, durability and quality. This calls the need to have effective organizational strategies that has helped the organizations gain competitive edge against their competitors.

One example of how innovation has helped organizations in the past is the story of how the Silicon Valley in Stanford industrial park started. Out of dissatisfaction, a group of employees working for Shockley Semiconductor left to create their own independent firm in 1957. Thus, Fairchild Semiconductor was formed. Over the years, the company became a major industry player to reckon with. After years of development, the founders of Fairchild left to start their own companies based on there are of expertise and unique ideas. Eventually, start-up companies became over the next twenty years based on information technology. Sixty five new enterprises were formulated out of Shockley’s eight former employees. These sixty five enterprises form the Silicon Valley.

Form the context of organizations, innovation has another approach. It is directly linked to positive changes in market share, competitiveness, quality, productivity and efficiency. As far as advancements in innovation in organizations is concerned, organizational culture usually plays a contemporary role. If the members of the organization have adapted to a culture that is not accommodative to changes that take place in the technological context, innovation will not have much impact on the organization in question. Innovation has helped many organizations improve their performance in terms of productivity. It has also helped organizations increase their profit margin by reducing production costs. All organizations have exhibited the potential to innovate and be successful and competitive in their respective industries. Even local governments, universities and hospitals have ventured into innovative practices in the past.

For example, the former mayor of the City of Baltimore has used innovation to reduce costs. Former Mayor Martin O’Malley advocated for the city to use a performance measurement and data management system that was referred to as CitiStat. This system helps the city officials maintain and access statistics on trends that take place in the city such as crime. It is a system that helps in the assessment of procedures and policies with efficiency and accountability in terms of money and time. During its first year, the City of Baltimore saved an approximate figure of $13.2 million.

The transit system is another organizational structure that has used innovation in its development. Companies operating hybrid bus fleets can now easily track their buses’ activities. The mobile data terminals helps serve as a communication center between vehicles where they automatically send information regarding passenger counts, location and engine performance. Transportation systems have therefore been easily managed using this tool.

How Innovation Has Helped Organizations Succeed Today

This part of the essay has taken a specific company and uses it as an example to demonstrate how innovation has helped it succeed. eBay Inc. is one of the multinational corporations in America. It has based its headquarters in San Jose, California. Pierre Omidyar founded it in September 3, 1995. The website is used to auction a variety of goods to a wide range of buyers and sellers. The first item to be auctioned on the website was a broken laser pointer for fourteen U.S dollars.

Pierre Omidyar operated the website as a hobby at first. He was later advised to switch it to a business account since there was an increase in the volume of traffic to the website. Jeffrey Skoll was later appointed as the company’s president in 1996. In January 1997, the company’s activities grew to 2,000,000 auctions compared to 250,000 auctions in the whole of 1996. In that same year, the company changed its name from Auction web to eBay.com. Benchmark Capital, a venture capital firm, gave eBay 6.7 million U.S dollars in funding.

In 1998, the company appointed Meg Whitman as the chief executive officer of eBay and it expanded its operations to 30 million employees and 4.7 million dollars in terms of revenues. On September the same year, the company went public and on the first day of trading it sold its shares for 53.50 dollars. In the year 2000, the company ventured into software development and signified aggressive sales forecasts. Their share price however fell 20% the same year. By that time, the company was arguably destined to fail like other past internet giants like MySpace, Urban Fetch, Webvan and Friendster among others. There is a general concept that once decline has started in an internet company, it was irreversible.

After its share price peak in 2004 of U.S $58, Meg Whitman, who was the chief executive officer, stepped down in 2007 and joined politics. She was succeeded by John Donahoe. By that time, the company’s auctioning business had matured and this was evidenced by how growth was slow. The stocks for the company started to slump slowly. There were a lot of complaints from sellers transacting through the website concerning poor support and the high fees. The company later on wrote off its Skype acquisition, which was the biggest loss ever recorded in the company. By 2009, its stock price was down 80% from its peak in 2004 and was barely over U.S $10.

However, over the recent years, the company has been able to build capabilities and become very much dominant in its respective industry competing sustainably against other major players such as Amazon, AOL and Yahoo. This online dominance is expected to continue in the foreseeable future. Its success is majorly attributed to the company’s ability to incorporate innovation into its structure. Their latest earnings have shown that internet companies have the capabilities of turning around. The company’s revenue has jumped to 23% and its profits have more than doubled.

For the company to record such success, they focused their attention on the mobile phone revolution and advanced its innovation through creating an eBay mobile application. They also coupled this advancement with PayPal online payments, a company they had earlier on acquired. This was in a bid to get closer to their consumers since the way people shop and purchase items online have been changed by the mobile phone revolution. The company developed an eBay application through which people can easily buy and sell in eBay.

Before the launch of the application, users had to be in front of their desktops and laptops in order to transact items on eBay. Now clients can access eBay while they are on the go. Statistics have shown that more than ninety million users have downloaded the application. Six hundred thousand users made their first purchase within their first quarter of downloading the application. eBay is not the only internet company that is focusing on innovation. Other internet giants like Amazon is investing heavily on innovation and they have also launched their own mobile application. In order to stay ahead of the competition, the company must maintain and continue building capabilities as they have done in the recent past.

A capability in business refers to what the business or organization needs to do in order for it to implement its business strategies (Nickerson 2013). eBay as a company has been able to build capabilities for itself within a very short period of time. This has been made possible by considering a number of factors. Through the leader or the president of the company, there must be an established accountability, change, mindset and associations across boundaries creates company’s culture and help the organization build its capabilities (Nickerson 2013).

The company has been able to gain a competitive edge through having priorities in their strategies. The company focused in growing its operations in the United States before it ventured internationally. It started out quite small and expanded its capital base until it went public in 1998. This step by step expansion ensures that a company is stable instead of starting out with vast ambitions and overlooking some factors in the process.

Having an alignment to the strategies that have been put in place is also of vital importance when an organization is aiming to build its organizational capabilities. eBay has periodic checks and balances in its system in order to ensure that the company is moving towards the desired direction. Every simple operation should be relevant to the company’s objectives.

The training methods that eBay has used over time have been effective for it to be able to build its capabilities. This increases productivity and the quality of services being offered and in the long run, the company gains a competitive advantage.

The company also has future plans and the aspect of looking ahead helps it create a good foundation for its vision. By the year 2000, the company had made aggressive sales projections and this gives the parties involved a sense of motivation.

The main focus on innovation will ensure that the industry operations have been changed and the competition has been elevated. The new innovation of using mobile applications has ensured that the users do not have to type their credit number or Pin number while transacting on the site. It has been made quite efficient for the clients since the entire transaction is just one click away. This shows how the company has moved towards making the most out of innovation. In the past companies used to survive by incorporating very little amounts of innovation.

In conclusion, organizations operating in the current business world must appreciate the importance of innovation (Kumar, 2012). Innovation is important in order for organizations to be able to attract clientele using the social media, have a unique selling point, respond effectively to competition and reinforce their brand for creative and sustained development.

References

Kumar, V. (2012). 101 Design Methods: A Structured Approach for Driving Innovation in Your    Organization. Wiley; 1^st Edition. Print

Nickerson, J. (2013). Leading Change from the Middle: A Practical Guide to Building        Extraordinary Capabilities. Brookings Institutional Press. Print

eBay (2013). Company Overview. Available at:             http://pages.ebay.co.uk/aboutebay/thecompany/companyoverview.html

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