Operations illustration Operations theory


In business terms,innovation is the commercial exploitation of an invention. This involves dedicating resources and bringing a new idea to market. The succession of multiple innovations is able to help grow the whole economy over a period of time.

Companies that put emphasis on innovation and high levels ofresearch and development (R&D) usually have key differences to other companies in the way they operate. There is often a more informal atmosphere within companies that hold innovation and creativity in high regard. There is likely to be more trust rather than supervision, creating a more nurturing atmosphere. If a company pursues innovative strategies there can be knock-on effects to other areas of business, includingfinance,marketing andhuman resources.


Innovative companies are likely to have different financial priorities, as opposed to companies who don’t put as much emphasis on innovation. Greater amounts are spent on R&D. Investors may be reluctant to risk their money in companies that rely so much on innovation and R&D, which can often result in failure. Companies may struggle to attract funding from potential investors, instead relying more on share capital than on loans.


There’s a close relationship between innovative companies and the marketing department. Many new ideas come from the customers themselves and R&D projects must address the needs of the customer. The marketing department is responsible for gathering up current and reliable information from market research and communicate it effectively to R&D centres. The marketing department is also able to help ease the product onto the market, overcoming common problems, for example consumers not believing in what a product offers. Once established, innovative new products usually get good distribution.

Human Resources

In order to nurture and accommodate the needs of their creative employees, innovative companies often have a more relaxed approach to working, offering a more flexible and less regimented office space. These companies may also need to recruit different types of people, for example they might need a lot of graduates. An increasing number of research companies are ‘spin-offs’ from university departments. Workers within these innovative companies are more likely to be part of the introduction of new methods and working practices. Innovation often occurs when people from different backgrounds work together in teams. An innovative business needs to be prepared for and to accept such working practices from its employees.

Supporting Documents

These downloads will help to put operations theory into context using real world examples from real businesses.

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