need help with discussion - compare and contrast innovative framework

Teaching Business Students the Art and Science of Innovation

Dr. Uma G. Gupta, State University of New York at Buffalo State, NY, USA

ABSTRACT

Today the ability to innovate has become a core and sought after business competency. While innovation is often taught in capstone business courses as a topic, this paper argues that the time is right to make innovation the central theme in teaching strategic management. The McKinsey &Company framework is used to teach students the eight essential ingredients of innovation and its execution. The opportunities to integrate previous knowledge about other business functions into the teaching of innovation is outlined. The critical business lessons that can be imparted to business students through the McKinsey framework is discussed.

Keywords: Strategic management curriculum, innovation, innovation framework, business competencies.

INTRODUCTION:

Strategic management is a capstone course in most undergraduate business degree programs in U.S. institutions. The strategic management course integrates fundamental business concepts from accounting, finance, production, human resources, marketing, and leadership and challenges students to apply these integrated concepts in order to leam how to run a business. This gives students a deeper understanding of the many challenges that CEOs face in ensuring the success and sustainability of their company in the face of rapid changes. They realize that while hindsight is easy, consistent and high-quality execution is not.

One of the key factors today in ensuring the long-term success and sustainability of any business is the art and science of innovation. The rise of the new economy, characterized by intense global competition, advanced information technologies, a virtual 24x7 workforce, and an almost ubiquitous world of online business transactions free of geographical boundaries, has made information, knowledge, and innovation integral and invaluable in creating and managing sustainable competitive advantage. In other words, it is not enough if our students understand the fundamental concepts of business and how to apply them to a business setting. Instead, today they should know how to apply core business concepts through the lens of speed, innovation, and customer service. This paper focuses on how to integrate the fundamentals of innovation into the strategic management curriculum. There are at least three challenges in teaching innovation to undergraduate students.

1- What does it mean? Not only students, but business owners and leaders too, sometimes struggle to define innovation in meaningful, concrete and operational terms, although many understand it intuitively. Words such as creative, unique, transformation, revolution, etc. come to mind, but how can we teach students to translate this into operational concepts that can be executed for the long-range success of a company?

2. Company size: Most students are familiar with the big brands. Ask them for examples and they gravitate toward Walmart, Starbucks, Apple, Nike and other big brands. However, the bigger the company, the greater the challenge in being innovative with a few exceptions like Apple. Instead, the Silicon-valley, bom-yesterday companies are ideal examples of innovation and students are often unfamiliar with these companies.

3- How to be innovative? It is one thing to understand innovation as a concept and its importance. It is quite another to be innovative. How can we teach students to become innovative, to recognize untapped opportunities, and to successfully execute innovative ideas?

In spite of these challenges that many faculty face in teaching this topic, innovation is an ideal concept that deserves special attention in all strategic management courses. This is because innovation is cross-functional and requires understanding and integrating key concepts from different business functions into a cohesive whole. This ability to think holistically is the foundation of all capstone courses which challenges students to integrate complex concepts from multiple business functions and to execute transformational ideas by building meaningful systems, structures, processes, and principles.

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FRAMEWORK FOR TEACHING INNOVATION:

McKinsey & Company has identified a holistic framework that captures the eight essentials o f innovation for any company, regardless of size, industry, geographical location, product or service. This framework is simple and can be used in teaching innovation and in integrating innovation into solving business case studies that are often an essential component o f strategic management.

Table 1: McKinsey framework for innovation Phases of Innovation How to implement Aspire Set clear goals and objectives to target and execute ongoing innovation Choose Choose projects that are innovative and risk-oriented and create a strong

portfolio for innovation for the entire organization Discover Identify the value proposition of how innovative ideas and projects can be

translated into competitive advantage and profits Evolve Identify how existing business models should be modified or new business

models should be created to absorb and benefit from innovative ideas Accelerate Identify the rate o f speed to implement innovation that aligns with the culture

and capacity o f the organization Scale Analyze if innovative ideas, products and services can be scaled and

sustained appropriately Extend Identify external networks and partners that can be leveraged to yield greater

returns on investment in innovation. Mobilize Motivate and train employees to participate and contribute to innovation

Each o f these phases is explained below:

1. Aspire: In several business courses, students learn how to set goals and objectives that are specific and measurable. Often, innovation as a goal is missing in these objectives. By including the specifics of innovation as an integral part o f goal-setting, both in the short-term and long-term, whether it is a case study or an assignment, students learn to make an innovation a core component o f all business discussions and decisions.

2. Choose: Students learn quickly that this phase is often not as easy as it may seem. In particular, students struggle with identifying innovative projects within large and well-established companies, such as Starbucks. Hence this phase is a great way to challenge the creativity and innovative abilities o f students. In addition, this compels students to study and understand the risk profile of a given company or industry. Not all companies or even industries have the same risk personality and students learn to assess and determine where a company falls on the scale between risk-prone and risk-averse and the positive and negative consequences o f its existing risk profile. Identifying innovative projects for a give company can be a group project or an assignment where the entire class participates. Students can be asked to rank the ideas generated by other students. Listening to the innovative ideas and perspectives o f others helps a student to expand their own thinking about what it means to innovate.

3. Discover! Innovative ideas are great, but ideas by themselves do not generate profits. In this phase, students are challenged to identify how an idea will add competitive advantage to the firm. How can they ensure that innovative ideas translate into profits? What is the unique value proposition o f this idea? McKinsey recommends addressing this issue by looking at the cross-section o f three key factors:

a. A meaningful problem to solve b. A technology solution to a nagging problem c. A creative business model that generates money by meeting customer needs

This phase helps students to develop strengths in the area of execution. The world is not short on great ideas, but very few are truly skilled at executing great ideas. It is the execution skills that separates the winners from the losers and students learn this key lesson in this phase.

4. Evolve It goes against the grain o f human thinking to tweak a good thing. Most businesses hang on to existing business models, sometimes even in the face of compelling evidence that the model is facing sweeping threats from upstarts. But the evidence is compelling that the companies that have survived the

18 Business Education Innovation Journal Volume 7 Number 2 December 2015

trials and tribulations of economic downturns and technological waves are those that have repeatedly revisited their business models, looking for opportunities to create, revise, or expand existing revenue sources through innovation. This phase helps students to better understand the meaning and value of a business model in addition to teaching them that no model is permanent and that all models need to be continuously monitored and revised.

5. Accelerate. Balancing the need for control and the need for innovation is never easy. The former demands systematic and meticulous thinking, structure, and systems, while the latter demands speed, freedom from stifling rules and bureaucracies, and willingness to experiment. In strategic management and other business courses, students are taught about the importance of systems and structures. Teaching innovation as a core component of strategy challenges them to learn how and when to abandon, modify or get around systems and structures in the interest of innovation, while following legal and financial protocols.

6. Scale: Grand ideas need even grander resources. Students are often fully engaged in the idea generation stage, but may sometimes lack the ability to configure the resources needed to execute innovative ideas. This phase teaches students to rethink the resources and capabilities of the organization. The differences between resources and capabilities and its relationship to the competitive strength of an organization are key concepts that are covered in books on strategy. By incorporating the issues related to scaling innovation, not only are these concepts strengthened but sometimes students realize that balancing resources and capabilities within the innovation imperative can be tricky. It highlights the pressures of financial constraints on organizations even as they strive to be innovative.

7. Extend: This phase helps students to recognize the importance of co-petition: the merging of competition and collaboration. Students are challenged to actively think about external networks that can add value to the execution of innovative ideas within a company. Limited resources, high stakes competition, economic pressures, rapid global disruptions of entire industries, powerful technological forces, and the ever- increasing and dynamic needs of customers have made it imperative for businesses to partner with external constituencies. It has challenged businesses to redefine value propositions.

8. Mobilize: Finally, no innovation is possible without talented and motivated people. The student is challenged in this phase to apply the concepts learned in Human Resources, Organizational Development, and Leadership courses on how to motivate, engage, and inspire people to take risks, be creative, learn from failures, and think futuristically. Innovative ideas can disrupt established structures, create fears and anxieties, lead to resistance, and even sabotage among those who may view innovation as a threat to their stability and security. Students must take all these factors into account to show how their change management strategy can help translate innovative ideas into competitive strengths.

INNOVATION AS A CORE COMPONENT OF STRATEGY:

Today many chief executives understand the meaning of “disruptive innovation,” a term coined by Harvard Professor Clayton Christensen, not because they read about it, but because their industry or company has either experienced it through great returns or to great agony or they have witnessed the power of disruptive innovation around them. Professor Christensen points out that all good decisions at some point become bad decisions because the environment has changed significantly, while the CEO is still making decisions as if the environment is static and stable. As disruptive innovation increasingly becomes the norm, business students of today will be able to survive and grow only if they have a deeper understanding and experience with what it takes to innovate. Business curriculum is today facing its own disruption and survival of business schools will depend among other things on its graduates being able to make innovation a core component of strategic management. This means that discussions about innovation and its execution cannot be relegated to a chapter, but instead, must take center-stage. Core business principles from different functional areas must be viewed through the lens of innovation because some of these functions themselves may become outdated over the long run. By challenging students to come up with innovative ideas and examine its impact and relationship to the competitive advantage of a firm, students will be better prepared to lead and to add value to future employers.

VALUABLE LESSONS

Innovation has now become a key and critical focus area for business executives. The myth that creativity is an inborn trait or that only a few people are capable of being creative and innovative has been systematically refuted and disproven. Hence, it becomes imperative for business students to understand the business world and its opportunities and challenges through the lens of innovation. By providing them basic training in innovation, students

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acquire crucial soft skills such as creativity, problem-solving, critical thinking, and leadership. They will be better prepared to lead a company when they enter the workforce. There are many valuable lessons that students gain from this approach. These include:

1. Understanding the key concepts of innovation and learning that everyone has the capacity to innovate and to be creative. It helps students to map bridges to creative collaboration (Lugar-Brettin,2014)

2. Developing innate skills to be innovative and generating innovative ideas to advance business goals. 3. Learning how to prioritize and rank innovative ideas, products and services while keeping the firm’s

resources and capabilities in mind. 4. Learning that innovation is not a one-person game, and thereby understanding the importance of building

external partners and networks. 5. Understanding the importance of change management, leadership and motivation to ensure the successful

execution of innovative ideas.

CONCLUSION:

The McKinsey & Company framework for innovation is one of the efficient ways to teach innovation to business students as it identifies eight essential components of successful innovation. The ideal platform to introduce the teaching and training of innovation is through the capstone strategic management course. This paper shows how this can be done and the many benefits and soft skills that students leam within this framework.

20 Business Education Innovation Journal Volume 7 Number 2 December 2015

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