1.1 Introduction
Good business management is mostly attributed to key factors that help a firm meet its competitiveness in the market (Chesbrough 2007, p. 27). Despite the global agreement about the management role in fostering business innovation in ensuring business growth and development, so many people still confuse the concept of a business management role in fostering innovation. Therefore, the relationship between innovation and business performance still remain a factor for many people to prove.
The Lions Company, through its management tends to achieve its competitive advantages through innovation where they deploy the wider use of digital technology in their operations (Goleman et al., 2002, p.112). Technologies, for example analytics, cybersecurity, and the Internet of Things (IoT) including wearable computing have significantly improved both the effectiveness and efficiency of the company’s operations. Technological advancement in any business setup has become a necessity since it plays an important role in helping the workforce and even customers to effectively engage. Most importantly, embracing technology helps the management in elevating the potential benefits on the assets of the organization.
Innovation in this context implies technological advances in the general business environment that offers easy access to information to both customers and producers (Magretta 2003, p.88). By extension, technological advancement enhances production, human capital among many other impacts that will help managers run the business smoothly. With these concepts in mind, this study seeks to; explore the general idea of business innovation as an important role of managers looking through the dynamic business environment, important business functions, ethics and social responsibility in business, and integration of systems and individuals (a case study of Lions Company). The paper will also explore the concept of innovation and its significance in the development of a business entity (a case study of Lions Company).
In the modern business world, the value of firm's innovativeness have gone up remarkable and has achieved enormous proportion hence requires a lot of focus especially from managers and entrepreneurs. To understand all these concepts, the study will integrate an organization named Lions Company; the company is assumed to be offering seafood products along the beaches.
1.2 Background Information of the Company (Lions Company)
Starting a new restaurant business is one of the major business ideas that entrepreneurs consider (Jon 2004, p.29). According to me, restaurant business is one of the appropriate businesses to operate along the beach following the nature of activities undertaken along such locations. Lions Company is the proposed name for the venture; the main activities in this venture will involve selling steak and seafood for the people around the beach. The Lions Company will be run from various retail outlets following online business portal from where its customers will purchase what they want from the company. The restaurant will operate 24 hours but most importantly, most of the retail outlets of Lions Company will be strategically placed along the beaches and main public roads from where customers can access its products conveniently. Through its business of offering seafood products, Lions Company is expected to evolve as one of the biggest company in the global food markets providing seafood products and outdoor catering using innovative technology. In the beginning, Lions Company is expected to use one distribution model to reach out its products to the customers, and with time, it will consider establishing other branches in different markets. The company’s management team is expected to do an extra job through the provision of technical support aimed at establishing customer loyalty in the market.
Through research and development, the management reached out to this kind of business having exploited the available options based on the number of customers, available resources, competition level and the returns from the business. With all these considerations, Lions Company is expected to grow to and be among the largest companies working through big subsidiaries and provides seafood products in the global markets. One of the objectives of the company is to attract more than 20 affiliates and hence, its operation will extend to offering catering services and accommodation services (Dittrich and Duysters 2007, p.518). With its strength, Lions Company is expected to enjoy a large market niche since most of its products are able to compete well. The key focus for the management is, therefore, primarily ensure the existence of good relationship between the workers, customers, as well as suppliers. Using its good financial position, the company will be committed to ensuring that production methods and inventory management align with the required standards as it is able to employ innovative technologies in its production and inventory management aspects.
1.3 Management Hierarchy of Lion Company
The impact of authority delegation in any business management setup results in the establishment of various levels of governance in an entity (Aalst, et al., 2003, p.106). In every business management hierarchy, there are three levels of management namely; operational level, middle management level and finally top level management. Lions Company is expected to have a three-level management, for example, first-level managers who operate at the lowest level in the management hierarchy of Lions Company (they work as supervisors). Such a level is commonly known as the operational level; it is so called because it is the front line level of management that deals with the daily operations of the business. At this level of management, managers have direct contact with other employees who are not at the managerial level. Manager at this level of management act as the general supervisor of the organization since there are more involved in the actual execution of the work. At this level, the manager is expected to be in close contact with non-management employees most of the time as he or she is responsible for daily operations of the business. The manager is working as the supervisor and therefore has more interaction with company employees hence will be charged with the duties of scheduling, the disciplinary function including human resource functions.
Second most level of management in this hierarchy is the middle management level; the lowest level of management is often guided by the decisions made at the middle level (Cantor and Packer 2006, p.44). The level obtains information from the operational level and thus, take the decisions concerning resources utilization within a specified period. Managers under this level are expected to help the organization to achieve better operational financial outcomes annually. Additionally, managers under this level are generally more knowledge-oriented than those in the lower level of management given that they exist between operational employees and the general top management. The middle-level manager is also charged with the responsibility of monitoring daily operations of the business though will be much dependent on the inputs of the lower-level managers in executing his or her duties. In certain cases, this manager may work as the general or regional manager charged with the responsibility of controlling business operations at any business locality.
The third level in the management hierarchy of Lions Company is the upper-level managers who are the key stakeholders when it comes to the important decision-making process. At this level of management, managers will obtain their information from the middle-level managers to make critical business decisions. The manager is charged with the responsibility of designing the company’s mission and vision as he or she is the key player in decision-making processes (Magretta 2003, p.86). The highest level is the top level management; as the name suggests, the manager under this level is found at the apex of the hierarchy of management. Managers under this level of management assume positions such as CEOs and managing directors among other high profiled posts. These managers are responsible for discharging duties like planning for the operations of the business and hence, oversee the general performance of the business.
Figure 1: management hierarchy in a business
Source: (Magretta 2003, p. 82)
Lions Company created a hierarchal structure for its management to improve the effectiveness of how tasks are done within the business premise; the structure has three levels namely operational, middle and top-level management. The phenomenon is commonly known as the management hierarchy; one of the best structure in the context of a business entity is the hierarchical structure. The management structure of the Lions Company is subdivided into management levels where each level tackles its own set functions and accountability among other activities. Managers under the hierarchical structure may in one way or the other delegate power and responsibilities to another person to make the required contribution to other co-workers (Handy, 2008). In this manner, every person associated with the entity needs to focus on the duty delegated. The idea of authority delegation directly implies that the decision-making process is also delegated and, therefore, it means that action is required for implementation. Authority to make and implement decisions in an organization is, therefore, spread through delegation of power and authority. The advantage of this type of hierarchal structure arrangement is very important when speed is needed in decision making as it does not incorporate many people. In this arrangement, responsibilities get clearer and definite hence very easy to understand and implement.
1.4 The Rationale for a Good Business Innovation Idea
Most of the business organizations tend to adopt technologies in their operation for various reasons, for example, to obtain the required business synergy that will assist the business to improve its performance at a reduced cost. In so doing, organizations consider innovation as a way to complement their strengths and weaknesses and thus, favorably compete with other firms in the market. Another reason why a firm may resort to innovation and technology is to sharpen is business focus and even diversify its operations thereby increasing its profitability (Brody and Schmittlein 2012, p.2). Any business entity that seeks to sharpen its business focus tends to adopt technology or a business idea that can assist it in penetrating the market easily. Indeed, innovation offers endless opportunities for business organizations/firms to increase their market share without going through the tedious work of purchasing shares from other companies. Business organizations that have adopted innovative business ideas have a relatively greater performance in the areas of profitability, managerial skills, and many other competitive advantages.
1.5 The Broader Scope of the Study
In the last many years, most of the technology-oriented companies had a lot of their focus on establishing new technologies in most of the operations (Mentzer and Kahn 2005, p.244). These organizations paid a close attention to innovative business ideas hence their interactions especially to the external environment were greatly limited. Most of the business organizations that adopt closed innovation models tend to be relatively self-reliant and thus, generate their financial resources and even market through their business ideas. The rising level of business complexity such as the high cost of research and development, increasing number of educated customers, and suppliers’ demands make innovation process relatively hard for most companies. Despite the fact that most business organizations hardly use the concept of closed innovation, complexities as a result of innovation development force business entities to come up with innovation processes focused on openness.
1.6 The Narrow Scope of the Study
Most researchers for a very long time have been conducting their studies following open innovation especially when it comes to business management operations (Snowdon and Stonehouse 2006, p.172). Despite their efforts, there are still many gaps that characterize the available literature especially on the interconnection between business management and innovation. The ability of a business organization to innovate is very much dependent on various factors including the technical and human resource management components (Richardson 2004, p.33). The study aims at adding to the wider field of business innovation by facilitating the identification of the various ways of forming human capital and its important components to enhance organizations innovativeness.
1.7 Objectives of this Study
The aim of this study is to help interested parties to identify and appreciate the impact of innovation in running or managing a business entity looking through the role of business managers in fostering innovation. The primary area of focus will be on the impact of business innovation on performance for instance customer base, the profitability of the organization, capital base, and market share. The study will begin by defining innovation in the context of business management and moves on to explore the impact of business innovation on the performance of Lions Company.
1.8 Research Questions
Most business entities have the tendency of considering key aspects such as customer base and capital base to boost their capabilities of innovation. If a business entity uses its capacity to innovate, it gets the opportunity to develop a set of unique products and services that meet the performance expectations of key stakeholders including investors and customers. With this knowledge in hand, most governments usually support studies that provide extensive knowledge of the possible relationship between business innovation and performance. Economic factors such as financial crisis, globalization, economic situations and many others account for the increasing pressure on the investors, as well as competitors. For these reasons, there is a need for flexibility in an organization to survive in the market. Therefore, the internal growth and development of most business entities seem to be very slow and not efficient enough for matching market competition. As such, both external and internal growth play a considerable role in the firm's innovativeness and adoption of new technologies to boost performance. With this knowledge of business innovation and its impacts on business organization, this study seeks to answer the questions outlined below.
What is the best management strategy that a business manager can adopt to boost the performance of the business?
What is the relationship between business innovation and business performance?
What is the relationship between the capacity of the firm to innovate and its performance?
1.9 Hypothesis
Hypothesis 1: Innovation is very much important when it comes to boosting the performance of any organization as it enhances profitability through boosting sales volume and customer base and even the profitability of the firm.
Hypothesis 2: Performance of the business organization is very much dependent on its ability to embrace technology and innovative business ideas. As such, it helps in providing the business with a competitive edge over its market rivals and most importantly, it enhances human resource capital.
CHAPTER 2: LITERATURE REVIEW
2.1 The Role of Managers in Boosting the Performance of the Organization
In the current business world, it has become open that, in several business organizations, duties for employee growth and development have been devolved to various managerial departments to enhance the effectiveness, as well as efficiency of management. Carrington (2001 p.21) contends that the central function of the managers in the current business world is to "support the management of performance or the management of learning". Therefore, business managers are under big pressure to effectively and efficiently manage the learning process to bolster the productivity of employees. A recent research and development survey conducted by CIPD (2003, p.106) provided the extent to which the current business managers are expected to drive the growth and development agenda of a business. The study indeed asserts that there has been considerable devolution of duties for employee development to line managers in various business sectors.
Research conducted by IES concerning specific business competencies that managers need to have to effectively manage business activities. The study highlights the competencies to include the following; the ability of the manager to plan ahead, to have the bigger picture of the organization and to effectively manage relationships with other business employees. Most businesses have shifted their focus on viewing the role of managers from being the controller of the business to being seen as the mentor or a coach to other workers. Despite the change in the viewpoints, there is still very little research that comprehensively looks at the role of managers as developers of other organization employees. Developing other staff members is a managerial competency that touches much on assisting other workers to gain knowledge and skills that will help them overcome barriers that may in one way or another hinder performance. According to Beattie (2002, p.234), business managers who are good at helping their co-workers develop will in most cases try to put them in environments that tend to challenge them thereby resulting in improvement. Such managers usually help other employees identify their strengths and weaknesses and push them to learn about improvement measures especially on their weaknesses and develop their strengths. Best business developers invest a lot of their resources in the success of their employees; they provide feedback and assist people to overcome development barriers. A quantitative research study conducted by Carter (2001, p.31), identified important behaviors or skills that make an effective or ineffective manager.
Zwell relates “hard" and “soft" stand of the managers as the challenge against nurturing to come up with a combination that offers emotional support to the employees. In this context, the challenge is attributed to the intellectual value of the entity while nurturing in this context is attributed to emotional value. According to Zwell (2009, p. 29), the ability to effectively manage the emotional and intellectual reaction for instance to the external stimuli is a defining attribute of a functional excellence. With regards to individual employee relationship, Zwell argues that challenge-nurturing attribute can be joined together with a measure of directive behaviors (2009, p. 30). Directive behaviors in this context imply the experience of the managers in defining learning goals, planning on how to achieve such goals, and providing feedback.
Figure 3: Dimensions of mentoring as provided by Tyers (2003, p.36)
In the early 1980s, poor performance in the business was attributed to low educational skills of the managers and by extension the adoption of low levels of development training. As a result, most governments made efforts to persuade employers to organize for the training of their managers to ensure effective development in the business. The implication was that investment for example in human resource management provided a direct impact positive impact on the business performance, as well as flexibility in management. Richardson (2004, p. 30) proposes that staff development for a very long time has been neglected even though it forms an important management role in the business. Furthermore, Afuah (2004, p. 230) points out that business stands to benefit in case the employers review their informal development of managers providing special attention to the competencies of their managers.
In a study of various UK business organizations, Rankin (2002, p.12) concluded that the unclear external business environment needs managers who are very flexible, adaptable and most importantly has specific management competencies. Shading more light on the issue of efficacy, the personal managerial aspects as one of the most important management skill identified by Rankin (2002, p.12) included ability to develop other workers. Despite the fact that many of the business managers have the knowledge of the significance of employee training and development, some authors are still worried about the preparedness of most managers in effectively undertaking their duties.
According to the research conducted by CIPD (2003, p.118), the majority of the people support the fact that managers are trained to offer support to learning and development to other employees. Managers are seen in the organization as mentors, the concept of coaching other employees should be adopted in the organization to help managers shape the skills they need to coach other workers. According to Timmers (2008, p. 7), coaching in this context is an interactive process between the manager and the worker designed in a manner that assists the individual to develop fast and in turn become more focused on improving behavior or performance. It is important for organizational managers to develop soft skills that will allow them to instill approaches required for development in an organization. Learning initiatives that put a lot of emphasis on getting feedback and learning supports such as mentoring and coaching helps in equipping managers with the necessary soft skills.
Currently, most business environments are very dynamic in the sense that they change very first in terms of competition and thus, most markets are very hard to predict (Afuah 2004, p. 234). Following these uncertainties, it is relatively hard and complex to make important business decisions hence there is a need for a good business model to offer a solution to such complexities. A business model in simple terms is a business idea of a tool used primarily by organizational managers in making important business decisions, especially in difficult situations. Managers use business models in assessing, measuring, communicating and even shifting business strategies to maintain the business competitive advantage. The idea of using a sophisticated business model is developing its roots among various entrepreneurs following the widely increasing trends in the information communication technology and globalization.
Bianco and Roman (2009, p. 5) suggest emotional intelligence another important attribute required of an effective business manager. The two scholars define emotional intelligence as a managerial skill that involves several behavioral or personality that helps define a behavioral competency framework that an organization should adopt. Emotional intelligence relates to the quick understanding of a person and how such a person is able to manage his or her emotions and emotions of other people at work. High levels of emotional intelligence help an organizational management to create an atmosphere in which the sharing of information, learning, trust and healthy risk-taking can flourish. These attributes are very salient especially when one talks about relationship management between the workers and the managers of the organization. Where developing other becomes a core competence, it is important for the managers to act in a manner that they are able to realize the expected result from others hence attaining the desired goal of the organization. Employee empowerment is another concept that an organization should be keen on achieving to realize the expected outcome in a business (Bianco and Roman, 2009, p.7). Employee empowerment, in this case, involves providing autonomy and direction to workers and to shade more light on the possible ways to bring about changes in an organization through training and supportive management leadership style.
2.2 Dynamic Business Setup or Environment
Business management in simple terms implies the process of managing operations of an organization through pulling together various business ideas towards the realization of a set objectives (Tarun 2012, p.22). For the realization of a business objective, the organization's management should work to ensure that there are stable and well laid down functions of the organization. Among the functions that the management should take a keen interest in include but not limited to proper planning, organize, and direct coordination among many other management functions. These business management functions are only possible to be achieved when there is a good and well-coordinated team. When an entity has a good management structure, there is a high chance of activities flowing smoothly and this may in turn results in greater success. In the context of a business set up, various dynamics within the environment may impact on the performance of the organization either positively or negatively. One of the most important concepts or ideas when looking at the dynamic business environment is the change in the economy. In this context, economic change implies to rapidly changing trends for example of the wider performance in the economy of a country. Economic changes may incorporate to some great extent both recession and boom which adversely or positively impact on the business environment (Blyton and Turnbull 2004, p.630). Economic boom brings a lot of good to the business since businesses are able to generate supernormal profits during this time. Economic recession on the other hand adversely impacts on the business environment as it contributes to slowdown in market demands hence reduction in business production. So many of the businesses go out of the market or even lay off some of their workers during the economic recession.
Another important area to look at in the dynamic business environment is the changing market conditions in various business environments (Bacon and Blyton 2004, p.770). Market conditions imply the extent of commodity demand and supply in a particular market set up. Prices of both goods and services in any business set up is dictated by the forces of demand and supply. Stiff business competition significantly contributes to the downturn of commodity prices in the market and to fit the market, an organization need to differentiate its products through offering goods and services of relatively higher quality. Apart from offering high-quality goods and services that meet the customer's needs, the organization through its management should work to create a good customer relationship. Good customer relationship has proved to be very important for the success of any business as it helps to increase sales revenue.The dynamic business environment also incorporates various changes in the government policies and regulation which tent to regulate the operation of business activities. Among the changes may include imposing taxes of businesses, registration requirements among other regulation aimed at controlling operation of a business (Bussey 2005, p.107).
2.3 Important Business Functions
The business organization is often divided into different operating units that undertake different core functions of the business. These operational functions may include but not limited to; human resource management, production, sales and marketing, research and development among many other functions. These business operational functions are done at different levels of management even though they are interconnected in various ways (Alex, et al., 2010, p.116). Just to mention a few, humane resource assist in training workers to operate in customer service; the quality of customer service has a great impact on the sales of the organization. Research and development department work in hand to come up with new production methods and even operation. By extension information technology impacts them on the manner in which sales and marketing officers' conduct their research on the customer in a particular market segment (Mayle 2003 p.520). Therefore, these business functions are interconnected and they assist the business management in generating a positive impact on the business especially when there are no barriers among the departments.
2.4 Integration of Personnel in the Business System
Good flow of business activities can be obtained in an organization only if there is proper co-ordination between the organizational management and the employees (Osterwalder 2004, p.218). The organization must take care of the three forms of communication flow to
