Innovation is the change that leads to the development of a new performance (Hesselbein et al, 2002). It is the creation and implementation of new ideas in order to add value (Rogers, 1998). Zhang et al. (2004) defined it as the development and implementation of new ideas by people who engage in transactions with others within an institutional context. More precisely, it is the generation of new ideas (Ling, 2002). Innovation is the introduction of new and improved products, services and processes developed for the commercialization of products and services (Gibbons, et al., 1994; see also Australia Bureau of Statistics questionnaire, Section B). Innovative identity, therefore, is the exhibition or the presentation of innovative characteristics including new product or service innovation (Miller and Friesen, 1983), process or technological innovation (Zaltman et al., 1973; Utterback, 1994; Cooper, 1998) market innovation (Gadrey and Gallouj, 1994) discovering new sources of supply and organizational innovation (Schumpeter, 1934).
The concept of product innovation has been of paramount interest to organizations (Masaaki and Scott, 1995; Schmidt and Calantone, 1998) and is generating more interest among business organizations than ever before. Several factors are responsible for the recent drive towards product innovation. First is the deregulation of various productive industries coupled with the relaxation of various market control instruments. Second is increased market competition (arising from the deregulation of markets) and third is the desire to satisfy the ever changing needs of the customers (Slattery and Nellis, 2005). Fourth, many organizations in the late 1980’s witnessed an untold amount of pressure, which had a profound effect on organizational performance and market share. Shepperd and Pervaiz (2000) argued that marketplace dynamics moved at top speed making it difficult if not impossible for organizations to track and identify changing customer needs. In addition, as market competition on the international scale became fierce, many organizations resorted to the use of product innovation (Zhang and Doll, 2001; Kessler and Chakranarti, 1996; Cooper and Kleinschmidt, 1994). These factors have made product innovation very important to businesses. This situation together with other market trends, forced many organizations to develop innovative approach to business.
Today many organizations have become system-builders adapting to new structures of production and operations. In many cases organizations have created change given their desire to become historical figures in their industries. Many innovative products came into being given organizational ability to adapt to turbulent business environment through activities of trial and error and risk-taking (Fuglsang and Sundbo, 2005). The ever changing business environment has forced organizations to rethink their product innovation processes. Unlike several decades ago when innovation was deemed to emanate from senior managements, modern business organizations of this age now adopt the use of crossfunctional teams that deliver development projects more efficiently (see Drew and Coulson-Thomas, 1996; Hershock et al., 1994). There is now an emergence of project-based organizations where teams form to deliver development projects and then disband to form new teams for new projects (Hobday, 2000) and there is evidence in theoretical literature to suggest that this new approach as adopted by many new business organizations is successful (see McDonough, 2000; Donnellon, 1993; Sethi, 2000; Hitt et al., 1996). Innovation is critical to the success of any product (Zirger, 1997; Sethi et al., 2001). It is a critical mechanism through which firms secure a place in the competitive world of the future (Van de Ven, 1986) and an essential process for firm success (Brown and Eisenhardt 1995). Product innovation is increasingly recognised as a vital component of organizational competitive strength, the survival strategy of most industries (Edquist, 2000; Laborde and Sanvido, 1994) and the sustainability of any organization depends largely on it (Henard and Szymanski, 2001). The introduction of new and innovative businesses and products present organizations with an unimaginable and unquantifiable opportunity to grow, expand into other areas of business, raise market or customer share and dominate the market. The development of new innovative products is central to the growth and prosperity of modern organizations (Sheperd and Pervaiz, 2000). Product innovation relates to the novelty and meaningfulness of new products (Slattery and Nellis, 2005). It is regarded as the perceived newness, novelty, originality, or uniqueness (Henard and Szymanski, 2001) of products. Organizations have pursued several types of product innovations but most notable are the routine and radical innovation systems, Nord and Tucker (1987). Under the routine innovation system, organizations introduce products that are new but similar to products previously developed by the organization. Using radical innovation, commonly regarded as breakthrough (Jean-Philippe Deschamps, 2005) organizations add new products that are completely different from existing product lines. Breakthroughs rarely occur but when they do they emanate unexpectedly through an unplanned bottom-up production process. 3M’s Post-It pads as well as Searle’s aspartame (Anonymous, 2006) emanated accidentally through such a process. Furthermore, radical innovation refers to changes in technology that facilitate significant improvements in the delivery of products (Foster, 1986; McKee, 1992). Baker and Sinkula (2002) argued that the movement towards radical innovation of products has in many organizations rendered state of the art technology obsolete. Time or timing is important to product innovation processes. As such organizations are now driven to implement production and operations changes that speed products through development and improvement processes (Griffin, 1997). Today’s organizations speedily investigate existing opportunities competing for limited resources (no matter how large they are) and ensure they can be efficiently prioritised – leading to improved sales volume and improved profit making for organizations. Recent research by Pavar et al. (1994), indicating a strong correlation between product innovation and organizational health, supports this view. Product innovation has increasingly become one of the most important functions of successful business organizations (Trygg, 1993). Furthermore, many organizations have recognized not only the need to develop innovative products but also sustainable innovative products as well. Anthony et al. (1992) argued sustainability holds the key to achieving product innovation success. Consequently, business organizations are ongoingly seeking product innovation as a source of competitive advantage (Bowen et al., 1996) in the marketplace.
Product innovation is a form of sign to stakeholders. For Saussure, a sign is a word, image, sound, odour, flavour, act or object resulting from the association of the signifier with the signified. The signifier is commonly interpreted as the material (or physical) form of the sign that is seen, heard, touched, smelt or tasted. The signified, refers to stakeholders mental construct or meanings made of the signifier (Chandler, 2006). Following Saussure, therefore, it is conceived that anything including product innovation is a sign. The theory of signs begins with the sending of signals or signifier or any organizational activity, which may include buying, selling, hiring and firing, promoting through advertising. In the course of these activities as Olins (1995) argued, organizations communicate their identity to stakeholders. Similarly, when organizations introduce new and unique products, identity signals of novelty and originality (see Henard and Szymanski, 2001) are sent. These identities are processed in the minds of stakeholders and in return a product innovation image emerges. Technological innovation refers to the invention of new technology and the introduction of products, processes or services based on new technologies (Betz, 1998). Pavit (1994) identified four characteristics of technological innovation including first, continuous and intensive collaboration and interaction among functionally and specialized groups and second that this intensive collaboration and interaction often remain profoundly uncertain. Third, they are cumulative involving the development and testing of prototypes and pilot plants and fourth, they are highly differentiated based on specific technological skills required in the innovation process. These characteristics help us to understand the meaning of technological innovation. Technology has made immeasurable contributions to changes witnessed in society (Twiss, 1993) and has played a crucial role in organizational development. All organizations (without exception) owe their origin and continued existence to the successful application of technology in the development of new products and improved manufacturing processes. The role of technology in business organizations has been profound, so much so that organizations failing to maintain technological innovative momentum will be overtaken by more youthful and vigorous organizations. As Twiss (1993) argued, a comparison of today’s market leaders with those operating over two decades ago reveals how many of the once great names have declined in importance or been made extinct from the business environment, all due to their inability to anticipate the effects of new technology. The use of technological innovation could be traced to the period of industrial revolution of the 1800s (Wells et al. 1995). Industrial talents like Morgan, Rockefeller and Carnegie built enormous factories using latest technological innovation of their time. New products were created and state of the art transportation networks were established to deliver these products. This was followed in the 1900s by industrial geniuses like Ford and Watson who opened the door to mass production with new innovative technologies. Rather than reduce its pace, the Second World War of 1939 to 1945 had a significant and even more positive effect on technological innovation – this time in the military. Newer technological innovations emerged in the form of war equipment. The Germans for instance developed automobiles that required no carburettor. Many factories in the United States became the hub of innovative war technologies. Tanks, jeeps, artillery and ammunition and fighter bombers were developed (Wells et al. 1995). After the war ended, western economies witnessed a new phase of technological innovation – the emergence of a new range of technologies founded primarily on information technology.
In many business organizations and most especially the banking industry, technological innovation has been central to the achievement of organizational goals. The banking industry all over the world has embraced all forms of technology namely information technology, computers, automated teller machines to mention a few. Scarbrough and Lannon (1994) averred that major British banks were enthusiastic about the adoption of sophisticated technologies and that they were among the first financial institutions to automate the ‘the heavy work load of back office operations’ fuelled by the increasing volume of bank operations in the 1950s and 1960s. Since then the use of information technology has grown rapidly. It has played an important role in the delivery of fast and efficient financial services to customers and has been the source of competitive advantage (Barney, 1991; Clemons, 1986; Clemons and Kimbrough, 1986; Clemons and Row, 1987; 1991a; Feeny, 1988; Feeny and Ives, 1990). More precisely, the use of innovative information technology has resulted in the proliferation of electronic cash dispenser networks. Today, customers no longer carry cash around as they now withdraw cash using the Automatic Teller Machines (ATM) which have been strategically distributed at various locations round the country. Unlike the back office automation systems of the 1960s and 1970s, the ATM technology promised competitive and immeasurable benefits (Scarbrough and Lannon, 1994) to customers and banks alike. While, banks no longer spend time preparing cash balances across the counter, customers carryout bank transactions withdrawing cash through the ATM at any place and at any time (even over the weekend). In addition the use of innovative information technology has provided the benefit of constant access to certain core services reducing the need to interact with bank staff for many people (Devlin, 1995). Another major technological innovation in the banking industry is home and telephone banking, pioneered in the UK through the Nottingham Building Society (Devlin, 1995). Innovative technology has triggered the development of home and telephone banking systems. Customers can now carryout banking transactions, privately in the comfort of their homes and offices. Further technological innovations have stemmed and reduced the cost of entry into certain retail financial services markets by reducing the dependence on the existence of a branch network to distribute product offerings (Devlin, 1995). Through innovative technology, the banking industry moved rapidly towards increasing the ability of its customers towards transacting business online (Mullighan and Gordon, 2002). Many banks’ customers now interact with their banks online transacting business through the internet. In the comfort of their homes, offices or even under mobile circumstances, customers can now transfer funds from one account to another through the internet. In a nutshell, technological innovation through computerization and information technology allowed banks to centralize accounting systems and develop comprehensive database of customers, providing services online or over the telephone. The adoption of information technology through the internet and telephone brought fast and speedy and more efficient customer services. Customers no longer have to wait for hours on end to get their money. The adoption of computer, telephone and online technologies sent signals of better and more efficient customer service identities and resulted in favourable image for banks among stakeholders. Organizational innovation refers to the adoption of innovation in organizations. It involves the generation, development and implementation of new ideas. Organizational innovation may be founded on the adoption of a new product or service, a new production process technology, a new structure or administrative system, or a new plan of programmes relating to organizational members (Damanpour, 1991). Following Draft (1982); Damananpour and Evan (1984); Zaltman, et al. (1973), Damanpour defined organizational innovation stating thus:
The adoption of an internally generated or purchased device, system, policy, programme, process, product or service that is new to the adopting organization Broadly speaking, the main intention (by organizations) in adopting new innovations is to contribute to the successful implementation or efficiency of its core business activities and operations. It is a means of re-aligning organizations to respond effectively to rapid changes witnessed in the business environment. The implementation of organizational innovation often requires the development of a new culture. The discipline of organizational innovation has been pursued by organizations in several ways. Organizational innovation evolves over time in three major ways (Subod, 2005). First is via a value based entrepreneurial system, second via a technology based functional system and third, through a strategic reflexive system. The value based system is the start of an exciting journey which will re-energize the organization. It occurs where organizations assume an entrepreneurial role with a spirit of independency and creativity. Writing in support of Sunbod (2005), an anonymous author identified seven factors impinging on value based innovation system. These include fear of failure, lack of step-change in growth and value, poor commitment from middle managers, poor shared commitment across boundaries, ‘the running of good ideas out of momentum’, pressure to manage measures more than value and unnecessary focus on processes and outcomes. Similarly three strategic ideas (immersion, innovation and impact) otherwise called 3i’s were put forward by the same author as a possible way out of this quagmire. First is to understand what the consumer wants and not sell what the organization can produce (immersion). Second is to gain insight into the business demand and re-defining resources (innovation) and third is to make innovation an organizational culture by engaging the entire organization in innovation (impact). Organizations build systems, create new structures, lead and create change and within a short period of the change become reference points and heroic and historic figures in the industry. The change or invention led by entrepreneurial organizations does not happen accidentally. It occurs through a series of activities of trial and error and risk-taking behaviour and organizations that change the business environment with new innovations display leadership behaviours at each stage along the way. Entrepreneurial ability is, however, weaved together by organizational entrepreneurial charisma and personality relating to organizational behaviour and communication (Albert and Whetten, 1995) and resulting in organizational innovative identity. Importantly, it is observed that organizations involved in value based innovation systems automatically project industry leader identities and in return create similar image among stakeholders.
Organizations that pursue technology based systems are mostly driven by institutional routines that lead to the production of specific goods and standardized technology-based services at specific prices and volume. Under this system, organizations are hierarchically structured through various socialization mechanisms, ranging from the patriarchal leadership of an individual person to more indirect forms of socialization, for example, in the professional organizations. Organizations that pursue the technology based system of innovation take a very careful route in the course of adapting to changes in the environment. The technological innovative policies pursued by such organizations (particularly pharmaceutical industry operators) rely heavily on empirical evidence and identifiable trajectories of change. Highly rigorous systematic routines existing within technical and natural science research are strictly and religiously followed in the course of the technological innovative process. Thus, a lot of time is consumed in arriving at the product through this innovation process. Consequently, this process send identity signals of the pursuit of ‘laid down’ rigorous systematic scientific rules. Thus when received, the signals are processed and converted into perceptions of the quest for technological innovations founded on the pursuit of rigorous systematic routines existing within technical and natural science. The strategic reflexive organizational system is driven by the entire organization. Organizations operate in turbulent business environments where things occur for the good or bad at most times and forecasts and business predictions hardly come true. Organizational activities in most markets are highly dependent on the strategic moves made by other market operators. Organizations operating in the biotechnology industry for instance are forced to develop networks and strategic alliances, share information and take joint strategic decisions that affect all if they want to survive in business, but are left unsure about where to go and how to move. Strategic decisions are taken among such organizations because of the recognition that modern technological developments evolve rapidly, creating uncertainty concerning which technological fields companies need to focus on. Firms therefore tend to specialize in their core competencies and look for appropriate partners when it comes to activities that they have less competence. Thus, when deciding to establish partnerships, firms take into account their own needs as well as the core competencies of potential partners (Van der Valk, Tessa and Meeus, Marius and Hu, Haifen, 2003). The value or rule of behaviour of organizations in this context is called strategic reflexivity. Importantly, when organizations pool their resources together, share information and take strategic decisions that affect all market operators together, two conflicting signals are given. First, a harmonious identity is developed by market operators and sent to stakeholders. Second, a homogeneous identity is also drawn based on the similarities in the decision making activities of operators. Either way, organizations operating the strategic reflexive organizational system of innovation develop industry wide generic image on the one hand and a harmonious image on the other.