Question

Hamel makes these statements in Chapter 2.1 of his text: “We owe our prosperity to innovation” and “We owe our happiness to innovation.” What are the pros and cons of innovation?

Answer 1

To cope up with the growing competition, it becomes vital for every organization to always strive for technological advancements and innovation. To be ahead of the competitors, innovation is very crucial, be it a service industry or product industry. As we know, every coin has two sides. Likewise, with vast benefits of innovation come various drawbacks attached to it.

PROS OF INNOVATION

Increase in productivity and cost reduction: The foremost thing that encourages innovation is cost reduction. With the help of innovation, economies of scales can be achieved, which will in turn help increase the productivity.

Added value to products and services: Innovation helps to have Unique selling proposition of the products that differentiate it from the products of the competitors. This way it helps to create a strong customer base.

Easier recruitment of employees and retention of staff: Technologically capable organizations tend to attract more employees and motivate them to perform better and effectively.

Quality improvement: With the help of innovation, product quality can be improved that will help better serve the customer. Better quality products with satisfied customers will bring in more sales and profit.

Market expansion: With the emergence of innovative technology, small business can expand their business on a bigger scale or globally through the use of social media channels. Information about the products and following communication has become much easier with innovation.

CONS OF INNOVATION

Costly: Often R&D involvement for technology costs a fortune to the company. The initial activities are costly and the installation of that innovative technology is also very expensive. The innovation may have a negative effect if it does not bring the desired change.

Time consuming: Research and development activities require a lot of time and patience, and the results are almost not immediately visible. The company may initially incurs losses and have to wait a long to see the actual result or benefits.

Competition: Innovative technology catches the attention of the competitors which can be imitated and does not require that level of extensive research which was taken by the initiator/ innovator. Some technology cannot be patented

Employee cut-off: With the increase in automation, no manual work may be required. The workforce is cut down to avail the advantages of automation that leave the employees unemployed. This create a sense of insecurity among the existing employees and their performance may be reduced.