Introduction
Innovation is the process of transforming knowledge into new products, processes and services which, in return, generate new economic benefits (Western Diversion Economic Canada, 2006). Innovation is no longer a new topic. If you are going to search on the Barnes & Noble website, it will generates a list of over 2, 500 books within the tern “innovation” in the title (Abramson and Littman, 2002).
Innovation is the prime strategy for the first decade of the twenty-first century. This will lead to faster growth and increased market share and better corporate positioning (Stark, 2000).
As the number of vehicle variants proliferates and the demand for innovative vehicles and components grows, a company’s ability to successfully identify and launch new products has become one of the most important criteria for success (Korth, 2005). Innovation helps the large and small enterprises to begin to re-evaluate their products, their services and their corporate culture in attempt to maintain their competitiveness in the global markets of today. Some companies believe and recognize innovation as the only way to survive in the face of increasing competition (STUF n.d.).
Innovation enables companies and businesses to define and develop new products and services and deliver them to market. It is the fundamental source of value creation in companies and an important enabler of competitive advantage. Innovation is inherently a highly cross-functional activity that, when it works well, creates a constructive tension between competing objectives of development cost, product value, performance, quality and time to market (Bordia et al n.d.).
There is no doubt that innovation is critical to the success of organizations (Christensen, 2005), because it will either bring your business up or down.
Innovation will give a big competitive edge. New products and services can be knocked-off or copied but it’s harder for competitors to duplicate a management system and corporate culture that produces a continuous stream of successful products and services improvements, adaptations and extensions (Clemmer n.d.)
What is Innovation?
Innovation has been an important concept in the business community but the concept achieved attention only in the government community. Innovation boosted in the public sector during 1986, when the Ford Foundation created the Innovations in State and Local Government Awards program. Other similar awards came after the said award. In 1990, the Clinton administrator’s National Performance Review encouraged innovative ideas, programs and approaches in the federal government as a major component of its reinvention (Abramson and Littman, 2002)
Innovation is the successful exploitation of ideas (The Innovation Unit n.d.). The main difference between innovation and invention is that, invention is the first occurrence of an idea for a new product of process, while innovation is the first attempt to carry it out into practice (Fagerberg, 2004).
Innovation is the introduction of a new thing or method and the embodiment, combination or synthesis of knowledge in original, relevant and valued new products, processed or services (Luecke and Kartz, 2003). All innovation begins with creative ideas end with the implementation of creative ideas within organization. Creativity by individuals and teams is a starting point for innovation; the first is necessary but not sufficient condition for the second (Amabile et al, 1996). Innovation is just like many business functions, it is a management process that requires specific tools, rules and discipline (Davila et al, 2006). The words creativity and innovation are used interchangeable. This shouldn’t be because while creativity implies coming up with ideas, innovation is the bringing ideas to life (Davila et al, 2006).
The Five P’s of Innovation
Innovation is the result of different factors and elements join together. The five P’s of innovation are: the pissed-offedness, the passion, the pals, the politics and the persistence. This five are the common factors that will push the company to innovate and change (Peter, 2005).
The pissed-offedness deals with the enough-is-enough and let’s-fix-it situation. Commonly, this is the situations that will make the company mad and will push them to decide to apply an innovation to their system to fix their problem.
Passion drives most of the non-profit and the opposite companies to move and grow. This helps them to go into innovation because of passion in serving the people or passion in making life a lot easier.
Pals deals with the people of team that are connected to a company. Just like what an adage says: No man is an island. Never go it alone and be sure that there is someone that will hold you, so you will not fall.
Politics is the process of gaining sponsorship and as a way to sell ideas, products and services in the market.
Persistence is the quality of continuing steadily despite problems or obstacle. A company must know how to sell and push their products or services in the market.
Process for Innovation
There are four stages in applying innovation in a company. This four will be important in continuous change and innovation and will prevent chaos. The four stages are: exploration, experimentation, development and integration (Clemmer n.d.).
Exploration is the process of investigating or the study o something such as data or the consideration and testing of something such as possible courses of actions (Encarta Dictionary). This is the stage of decision-making on what kind of innovation must be done in order to solve a problem inside the company.
Experimentation is the process of conducting or using scientific method to gather facts and prove something (Encarta Dictionary). This will help a company to decide on what particular innovation is compatible to their business policies and standards.
Development is the process of developing something for growth (Encarta Dictionary). This will be the stage where in the actual improvement or the process of developing the innovation is done.
Integration is the stage where in the actual use of the innovation will be deploy to the company and will interact to the people and other machines that are involve in the process and transaction of a company.
This four processes or stages will help companies to achieve their innovation goals, which are: to improve quality of services and products; to create a new market; to extend the product range; to reduce; to cost by using machines and other new technologies; to improve and to speed up production processes; to reduce materials; to reduce environmental damage; to replace old and traditional products and services that will lead to boredom of target market; to reduce energy consumption; and to follow regulations (Wikipedia n.d.)
Kinds of Innovation
There are nine types of innovation that the scholars have identified. These are: the business model innovation, the marketing innovation, the organizational innovation, the process innovation, the product innovation, the service innovation, the supply chain innovation, the substantial innovation and the financial innovation (Wikipedia n.d.).
Business model innovation is the situation wherein the company or organization change their way of business in terms of capturing value.
Marketing innovation is the development of new marketing methods by improving the company’s products or services.
Organizational innovation the modification of business structures, practices, models, process, business model and marketing.
Product innovation is the introduction of a new or old but improved product of services.
Service innovation is the innovation in services and products that will offer a more interactive and information-intensive.
Supply chain innovation occurs in the input of products from supplier to output of product through delivery.
Substantial innovation is the introduction of a different products or services but within the same line of the old products.
Financial innovation is the combination of basic financial attributes with the progressive innovative way.
Dimensions of Innovation
There are different dimension of innovations. These are: product and services, manufacturing process, materials, business and practices.
Categories
Opportunities for Innovations
Product and Services
1. Design
2. Features
3. Technology
4. Quality
5. Price
Manufacturing Processes
1. Equipment
2. Technology
Materials
1. Composition
2. Properties
Business
1. Management Practices
Practices
1. Business Design
History of McDonalds
McDonald’s Corporation is the largest chain of fast-food restaurants in the world. The company’s primary product was hamburgers, chickens, french fries, breakfasts and soft drinks but recently, it also offers salads, fruits, snack wraps and carrot sticks.
McDonald’s was first built by the McDonald’s brother, Dick and Mack in 1940 in San Bernardino, California. In 1948, they introduced the “Speedee Service System” that established the modern fast-food restaurant. The first franchise of McDonalds was opened on April 15, 1955 in Des Plaines, Illinois by Ray Kroc. Later, Kroc purchased the equity of the McDonald’s brother in the company and led its worldwide expansion.
Because of the successful expansion of McDonalds into different part of the globe, it become a living symbol of globalization and spread the American culture in the world.
Today, McDonald’s restaurants are found in 120 different counties and territories around the globe and serve 54 million customers each day. The company also operates restaurant brands such as Piles Café and Boston Market. It also has a minor stock in Pret a Manger. The company also owned majority stock in Chipotle Mexican Grill (Wikipedia n.d.).
Innovation and McDonalds
The reason behind the success of McDonald’s is because of its proper management of innovation. The company is always making sure that they always have something new to offer to their customers. They are using recipe and technological innovation to improve their service to meet their customer’s satisfaction.
The Romeoville warehouse is the home of the McDonald’s Innovation Centre. This is where the fast-food group tests most of its gimmicks and ideas (Wallop, 2006).
McDonald’s established the Innovation Center, the Innovation Council and the Strategic Innovation Process to take different ideas from different branches of the restaurant from different part of the globe. Those ideas that will be gathered will be put into restaurant setting and try it to 50 to 100 restaurants to see if it will work. This will enable the company to test not only the menu, but also the operating platform and all the systems in the restaurant to synchronize up with the other changes (Gubman and Russel, 2006).
Healthy Food
One of the most important innovations of McDonalds in terms of health is their launching of their salad (Wallop, 2006). This is to join the crusade in favor of healthy lifestyle. This is a great move, because it will target those customers that are into diet or vegetarian. This will also add a new flavor and features to their menu that will surely hit the heart of their customers.
Wireless Toaster
This technological innovation that was used and implemented by the company will cover the safety issue of the company. This wireless toaster will automatically send a message or signal to the branch manager’s mobile phone when it over heat (Wallop, 2006).
Fast Services
McDonald’s is serving thousands of customer everyday just in one branch. And more often than not all of the customers are all in the hurry when they order their meal. This is the reason why McDonald’s think of various ways to improve and to speed up their services. With the use of new technology such as the vertical hamburger grills that will speed up the cooking of the beef and other patties. The use of hinges for fridges will also help the worker to shave off their time (Wallop, 2006).
New Services
Many McDonald’s franchises are now open twenty-four hours. This is to target those customers that are working in night-shift and even those families that are not that into cooking and are used in ordering to different restaurant. To try to draw people at slower hours, McDonald’s borrowed a page from Starbuck’s playbook, to improve their coffee and making is stores warmer and more accessible. This will encourage customers to linger in the afternoon or early evening (Christensen, 2007).
New Products
McDonald’s historic focus on serving portions that are fit for a meal presented another innovation: snacking occasions. The company introduced the chicken snack wrap. This product carries a low price point and can be easily consumed with one hand. This product has been a huge hit with a sale exceeding the company’s projections by 20% (Christensen, 2007).
All of the individual franchisee has the right to develop and launch a new food items. Because of this McDonald’s policy, it leads to many of huge hit like the Egg McMuffin breakfast sandwich, the Big Mac and the kid-friendly Happy Meals (Christensen, 2007).
A recent Wall Street Journal article describe the process of McDonald’s where in they are accepting suggestions from franchisee. The product of this study was the launching of the Snack Wrap, and it reached the mass market in six months, an astonishingly short period of time given the company’s size and complexity (Christensen, 2007).
Automated Beverage System
This automated beverage system is a handheld device that can read bar codes to confirm if a specific step in a restaurant’s daily inspection routine was done properly (Le Beaun.n.d).
Latest Innovation
There are two innovations that are now implemented in selected McDonald’s branch in the world (Le Beaun.n.d). These are the self-serve ordering kiosks that will help the worker and staff in managing the orders of the customers and the vertical grills that can cook hamburgers unattended (Le Beaun.n.d).
French Fry Packager
This will help the staff to manage their time and serve the customers more quickly by letting this machine to do the time-consuming task of packaging french fries (Le Beaun.n.d).
Comfy Chairs
This technology will help the restaurant to attract customer because of their well-furnished and comfortable chairs.
Meat-less Fridays
McDonalds also consider the culture and belief of the Catholic during the meatless Friday. The company launches the Fillet-O-Fish sandwich. This will allow the customer to enjoy McDonalds even in meatless days (Commonwealth Department of Immigration and Multicultural and Indigenous Affairs n.d.).
Halal Burger
Taking the community taste concept, McDonald’s decided to appeal to customer’s beliefs and taste by serving Halal burgers. This is to serve the devout Muslims by giving them Halal meat. This will give the Muslim people additional menu except from salads and desert (Commonwealth Department of Immigration and Multicultural and Indigenous Affairs n.d.).
Factors that will affect the Innovation process of McDonald’s
The innovation process of McDonalds in the past years of its operation was a big hit. This is the reason why there are lots of establishments that are now following the path of the said company. But because McDonald’s is an international companies that is catering different taste, different culture and different countries and borderline, the company will always have a hard time in deciding which innovation should be applied. The launching of salad was a good idea, but the company must consider that the Americans are different from Asians and Europeans. Just for example in the Philippines, McDonald’s spaghetti is not very famous in the said country because, people there are into sweet with a touch of sour style spaghetti; this is opposite to the American style. This affects the demand of the said product because of the different taste and culture of the said country.
The use of new technologies will also affect in some way the activities and the labor cost of the staff. By using these technologies, it will be a lot easier for them to serve their customers in a short period of time but will also affect the relationships between the management and the team.
Failure of Innovation
Failure of innovation is inevitable. Most of the innovations that often fail are those good but have been rejected due to budget constraints and poor management. Failure can be prevented if a company will learn how to manage all the resources that are needed and involved in the innovation process. Common causes of failure of innovation in most organizations are can be divided into five classifications: Poor goal definition; poor alignment of actions to goals; poor participation in teams; poor monitoring of results; and poor communication and access to information (O’Sullivan, 2002).
Innovation-friendly Organization
Fig 2 shows the six components that are needed in an organization to launch a successful innovation.
Importance of Innovation
Innovation is part of the human DNA. Without the willingness to experiment, to try something new, to solve a problem or confront and overcome a new challenge, the entire human race would not evolve as a species (The Innovation Unit n.d.).
Innovation is important due to the fact that the world of business now is facing a number of key challenges. Globalization, the technological and informational revolutions and the vast and huge competition are the factors that should be consider in answering the question on why do businesses needs innovation (The Innovation Unit n.d.).
Innovation will help companies to be more productive and confident enough to face their competitors. This will also enhance their products and services that will help them to build a name. This will also them to catch the attention of the customers by giving them excitement and surprises that will surely make them eager in buying and availing the company’s products and services.
Conclusion
Feeding about 50 million of customers in 12 different countries and over 30, 000 restaurants in the world everyday is not an easy task. McDonald’s Corporation knows that running its core business correctly is absolutely necessary for success but is insufficient to keep it growing (Gubman and Russel, 2006). It will need a lot of management and maintenance in order to improve and grow.
This is the reason why McDonalds now is at the peak of their innovation process and continue to research and experiment to improve their services and products. The company is continuing to work to capture the heart of the world by considering all the vital factors that will affect their innovation process such as the culture, the belief and the taste of their customers. This is the reason why McDonald’s is the world’s pioneer and leading fast-food chain. There is no doubt that McDonalds is the leader and founder of fast-food chain innovation.
Credit:ivythesis.typepad.com
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