In your quest to encourage innovation and entrepreneurial behavior in the medium
ID: 2731860 • Letter: I
Question
In your quest to encourage innovation and entrepreneurial behavior in the medium sized medical equipment company you founded five years ago, you see the need to develop specific measures of performance against which innovative products or services can be measured once they are developed. Explain how the following financial and non-financial measures will be used to assess and evaluate recent innovations: Financial Measures •Return on investment •Growth in market share •Profitability Non-financial Measures •Employee loyalty and commitment •Breadth of employee participation •Employee retention •Employee willingness to change •Strategic repositioning •Competitive capabilities •Potential creation of further breakthroughs •Number of potential future innovations
Explanation / Answer
Return on Investment: It is the most common way to quantify and report the profit and value earned by the organisation. It mainly deals with what money you invest in the business and the return realised on that invested money. Here the earning from the investment made on innovations may be quantify using the return on investment method.
Growth in Market Share: Growth in market share is directly related to the demand in the market. Here there is an growth in the market share means that the demand of the product increases. Hence it may be said that beacuse of the innovatiion in the product the demand and the subsequent sale has been increased. Therefore it is the positive impact of innovation.
Profitability: Profitability has also the direct relation with the assessment of product innovation. If the profit increases it means company has managed to implement the innovation process correctly. If the profit decreses then it means that the company has failed in the implementation of the innovation. Higher sales means higher profit and lower sales means lower profit.
Employee loyalty and commitment: Employee loyality means all the employese are committed towards the positive implementation and development of new innovative products and towards the overall success of the organisation. Under this case employee believes that working for the new developed product is the best available option for them. The relationship between the financial benefits and organisational committment also be established by the study of employee loyality and commitment. A better committed and loyal employee means a good implementation and development of innovative products.
Breadth of employee participation: It is a process where employees are participated in the decision making process also, rather than simply acting on the orders. A healthy employee participation process increases the trust and conficdence amongst the employees. It is a part of empowerment process at the workplace in the organisation. If the employees have willing to participate in the development of innovative products then it is a positive sign for the company.
Employee retention: Employee retention means the ability of the organisation to retain its employees. If the company maintains to retain more and more of its employee means the company has an ability to motivate and secure a healthy employee strength.Higher the retention rate means company has retained higher number of employees. If after the implementation and development of innovative products the retention rate decreases it means that the company's ability to retain the employee also decreases and vice versa.
Employee willingness to change: Employee willingness to change means that if the emloyee is willing to change then he wants to paticipate in the changing activity with his own consent and support. The change or development supported by employees has a positive on the organisation. If the innovative products require changes in the curent process of the organisation then the employees are willing to change them also as per the requirement.
Strategic repositioning: It means changing of status of strategies in comparition to that of a competing brand. Repositioning is effected usually through changing the marketing mix in response to changes in the market place, or due to a failure to reach the brand's marketing objectives. If the strategy to develop new innovative product achieve its success then it is a positive strategic repositioning by the company.
Competitive capabilities: Competitive advantage is created by using resources and capabilities to achieve either a lower cost structure or a differentiated product. The new developed innovated product makes the company capable to compete with the competitors. A successfull implementation of a different product makes a brand amongst the other competitors.
Potential creation of further breakthroughs: Breakthroughs means a sudden and important development and discovery. A success in the current breakthrough gives experience to the organisation during the implementation of further breakthrough. It is an instance of achieving success in a particular sphere or activity. Here the activity is development of new innovated product.
Number of potential future innovations: If the number of potential future innovations are high then it means that the current innovation in the development of product has got a success and . A better further innovations indicates the sign of experience earned in the present innovation.