Saudi Aramco Organisational Innovation

Abstract This paper intends to look into the issue of innovation at Saudi Aramco. Progress is not merely based on the kind systems adopted by an organization. As for the case of Aramco, knowledge infrastructure has been understood to consist of technology, culture and structures. The importance of knowledge management in the organisation also needs to be backed by process architectures.Advertising We will write a custom case study sample on Saudi Aramco Organisational Innovation specifically for you for only $16.05 $11/page Learn More Such architectures should be able to facilitate acquisition, conversion and application of important organisational capabilities for the effective handling of the knowledge. Protection of the knowledge is another essential feature of these architectures. The main aim of intellectual capital and knowledge management need to be made clear through innovation in the organisation. Overview and Objective of Case Study Implementat ion of knowledge management systems, as well as utilisation of intellectual capital in organisations does not indicate performance or progress on their own. Knowledge infrastructure in Aramco, for instance, has been indicated to consist of technology, culture and structures. The usefulness of knowledge management in the organisation should also be backed by process architectures. The architectures should facilitate acquisition, conversion and application of important organisational capabilities for the effective management of the knowledge. Protection of the knowledge is another essential feature of these architectures. The ultimate results of intellectual capital and knowledge management should be made apparent through organisational innovation. The following study explores Saudi Aramco organisational innovation. The Concept of Organisational Innovation In the modern world, all business have to be aware of the term innovation and how they can apply it in their operations. According to Abdi and AmatSenin (2014), innovation entails creativity. Innovation involves taking action with regard to creative ideas. The successful execution of creative ideas within any particular organisation results to innovation (Dadfara, Dahlgaarda, Bregea Alamirhoor, 2013). The definitions reveal that creativity, whether by teams or individuals constitutes the initial point of innovation. One of the viewpoints manifests creativity as the first essential step to innovation while the second advocates for implementation. Although the first viewpoint is essential, the condition is not efficient for the latter.Advertising Looking for case study on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More According to Dadfara et al. (2013), innovation is fundamentally a management or organisational process. Under the diverse viewpoints, creativity is viewed as the foundation of innovation. The successful execution of creative ideas in a ny organisation is hence innovation. The viewpoints also reveal that although creativity can be exhibited by an individual, innovation, on the other hand, occurs under the context of an organisation only. The concept of organisational innovation generally means mechanisms employed by organisations in order to adapt to various conditions (Doroodian, et al., 2014). The changes can include competition and technological advancements. Organisations also seek to adapt to market expansion through newer systems, techniques and products. Consequently, organisational innovation is, â€Å"the tendency of the organization to develop new or improved products/services and its success in bringing those products/services to the market† (Gumusluoglu Ilsev, 2009, p.467). Usefulness is the inherent feature in innovation. It distinguishes innovation from invention as the latter does not necessarily have to exhibit practical application. In business organisations such as Saudi Aramco, the primar y desire is for innovations to make a contribution towards performance. Saudi Aramco’s Background and Focus of the Study Khursani, Bazuhair and Khan (2011) have indicated in their case study of Saudi Aramco that the company intellectual property and knowledge management systems are very extensive. One of the major reasons for the company investing in these systems is in order to develop the capabilities of the firm, chief among them being innovation. Company knowledge management systems such as ShareK, among others, have a great capability of driving the organisational innovation.Advertising We will write a custom case study sample on Saudi Aramco Organisational Innovation specifically for you for only $16.05 $11/page Learn More Business organisations operating locally in Saudi Arabia or internationally have realised that the global environment presents them with challenging competition. The inclination towards competitiveness has resulted in the identification of innovation as being very crucial to profitability and survival in the information age. Saudi Aramco as one of these organisations has to ensure that innovation in not only a dynamic process but also iterative. The organisational innovation process should facilitate creation and identification of ideas, as well as their development. The outcome should be applied in the provision of services, processes, products, policies and structures that are new to the company. According to Khursani, Bazuhair and Khan (2011), ShareK utilised in Saudi Aramco has three major objectives. The initial purpose involved promoting partnership, to help improve abilitiy. The objective apparently seeks to have reduction concerning redundancy in efforts. Essentially, Saudi Aramco boasts of numerous technologies, databases and solutions which are linked through ShareK. Another objective entails harvesting of knowledge from the system, in order to extend the technology and tools used in the c ompany (Khursani, Bazuhair Khan, 2011). The overall desired outcome of ShareK is, however, increasing Saudi Aramco’s intellectual capital and performance improvement leading to operational excellence. Despite the developments, it is apparent that Saudi Aramco intellectual capital and knowledge management have concentrated on employees’ and talent development. Consequently, the organisation needs to harness the extensive benefits derived from these systems to advance organisational innovation. Organisational Innovation Flow in Saudi Aramco from Exploiting Data and Analytics The main aim investing on innovation capability is in order to set up the appropriate technologies, or production of commodities or services that respond to market needs adequately (Razavi Attarnezhad, 2013).Advertising Looking for case study on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Also, innovation capability should also be able to enable an organisation responds to competitive conditions as well as unexpected technological developments. Apparently, the ability to respond and adapt to market dynamics relies on the speed and efficiency of an organisation to respond to changes. Read (2000), presents organisational innovation capability as a multifaceted development, that exhibits multiple aspects which both the managers and researchers need to have. Some of the dimensions of organisational innovation capabilities include learning, as well as research and development capabilities. Others include manufacturing, marketing, organisational, strategic and resource exploiting capabilities. The various innovation capabilities indicate that organisational innovation touches on all aspects of a firm’s operations. The range of these aspects is management process, human resource development, knowledge management, intellectual capital and market dynamics. Apparently, Saudi Aramco organisational inovation needs to be developed further, since the current company structure, culture and human capital are not enough. Organisational innovation capability can be enhanced by introducing several features into the company intellectual capital and knowledge management, and also in the operations function. The first area of improvement should be an organisational vision and strategy with a focus on the development of innovation in the company. Apparently, the present mission statement of the company addresses this requirement to a point. According to Khursani, Bazuhair and Khan (2011), the 2020 strategic mission is to be â€Å"the world’s leading integrated energy and chemicals company facilitating the Kingdom’s sustainable economic growth in a knowledge economy; and enabling a high-growth, vibrant Saudi energy sector.† The mission is a very significant step towards institutionalising innovation in Saudi Aramco. According to Razavi and Attarnezhad (2013), articulation of the common mission determines facilitates determination of the duration of innovativeness, leading to successful strategy formulation. Saudi Aramco strategy for innovation should discourage deviation of interest and attention towards realisation of this goal. For instance, Saudi Aramco has only embarked on development of a retail market for the company after being in the industry for numerous years. The company should in the future manifest innovativeness by being market leaders in terms of developing and investing in new markets. The recent initiative has perhaps been excited by the company’s enhanced intellectual capital and knowledge management developments. The second aspect in developing innovation capabilities in Saudi Aramco should be drawing on the competence-base. The concept implies the competence of an organisation in managing and allocating resources in an appropriate manner, to areas which facilitate innovative output. The know ledge management initiatives in Saudi Aramco attest to the level of organisational capabilities the company hopes to achieve. However, more needs to be done. According to Dadfara et al. (2013), firms are required to develop three fundamental perspectives of organisational innovative capabilities in order to harness the same. Organisations’ should encourage entrepreneurship and risk-taking through resources mobilisation at various degrees of the innovation process. Stimulation of innovation potential through various initiatives such as combining knowledge and resources and more investments should also facilitate innovativeness in the company. Saudi Aramco currently boasts of a very broad intellectual capital base. The company, however, needs to tap more into organisational intelligence to enhance competitiveness. Razavi and Attarnezhad (2013) define organisational intelligence as the capacity to process, encode, interpret, access and manipulate information. The process should be done in a manner which goal-directed and purposeful, in order to increase the organisation’s potential within the environment of operations. To facilitate innovation process through organisational intelligence in Saudi Aramco, the company should lessen potential uncertainty and ambiguity through intelligence surveillance. The company should learn about competitors as well as from its customers. Proactive competitive analysis, environmental scanning and technological forecasting should be carried out continuously. Ultimately, organisation intelligence should be useful in eliminating unprofitable ventures and identifying better options through utilisation of up-to-date information. Creativity enhancement and idea management are another essential aspects of enhancing organisational innovativeness in Saudi Aramco. Apparently, creativity has been immensely supported in the company, especially through the communities of practise (Khursani, Bazuhair Khan, 2011). The company shou ld however, further this initiative by allowing the unrealised, divergent and untested thinking. Also, radical ideas having the capability of creating new or transforming the existing businesses strategies should be acknowledge and acted upon. The consequence of these actions might be organisational innovation for the long-term. According to Razavi and Attarnezhad (2013), innovative ventures can be successfully implemented through either knowledge-driven or vision-driven idea management. According to Dadfara et al., (2013), innovative organisations allow their employees to by-pass rigid barriers by facilitating establishment of permeable and organic business boundaries. The structure of Saudi Aramco can be enhanced through rewards. Apparently, radical innovations and idea generation can be facilitated through individual rewards. Incremental innovations and implementation, on the other hand, relies heavily on group reward (Abdi AmatSenin, 2014). The reward structure in an organisati on thus plays a very significant role in the development of innovativeness. Creative firms’ create and establish motivating rewarding structures, which provide both financial bonuses and public recognition, among others. Although Saudi Aramco has also facilitated a culture of innovativeness therein, the company can do more to enhance this strength. Some of the factors concerning organisational culture and innovation that the company should focus on include tolerance towards ambiguity. Tolerance can be brought about by introducing manageable levels of uncertainty, controlling project milestones strictly and managing information effectively. Tight controls and tolerance should facilitate commitment from all the stakeholders in the innovation process. Under the organisational culture, employees should also be empowered by investing in them and respecting their exceptionalities and abilities. Communication and knowledge sharing should also be maintained, as is the case in Saudi A ramco. Cross-functional, hierarchical and technological sharing within the organisation as well as with external networks should be enhanced. Apparently, there is no doubt that Saudi Aramco is one of the most technologically competent organisations in the Kingdom of Saudi Arabia. The fact can be attested to by the full range of knowledge management and intellectual capital harnessing initiatives in the company. However, in order to meet the gross objectives of the business, technological competence should be enhanced. Apart from investing in the technological systems, Saudi Aramco should facilitate employees understanding of information technology. In addition, the fundamental factor here should be the integration of innovation and business strategies. Razavi and Attarnezhad (2013) postulate that research and development performance relies heavily on the effectiveness of the link between technology and business strategies. Technology competence has fundamental impact capability of e nhancing an organisation’s innovation capacity. Impact of Saudi Aramco Innovation Capability on Transformation of Saudi Arabia into a Knowledge-Driven Economy The various knowledge management initiatives undertaken in Saudi Aramco are in line with the national objective of transforming Saudi Arabia into a knowledge-driven economy. Apparently, Saudi Arabia is a commodity-driven economy, especially concerning oil and oil products. Considering that Saudi Aramco is a state-owned company, the firm is in a good position to offer a benchmark to others in the economy. The company offers a framework, as well as an example of the direction the government wants business firms’ in all the other sectors to embrace. Saudi Aramco is a position to manifest benefits of harnessing intellectual capital and knowledge management to other companies in the economy. The efforts in Saudi Aramco do not only suit the organisation’s operations but also propagate the overall national missio n and vision of being a knowledge-driven economy. Reflection on Contribution of Organizational Informatics Emergences of knowledge economies, technological advancements and high levels of non-price competition in businesses have led to innovation being the key to competitiveness. Technologically driven firms’ require being more innovative as well as pioneering in all aspects, for them to be sustainable. Organisational informatics is apparently the future of business firms. Economies as well as business institutions are becoming more knowledge-driven as opposed to being commodity-driven. The capability of an organisation to become more competitive and innovative depends on their ability to exploit the ever-growing market information. It is thus essential that all firms’ take stock of their intellectual capital and develop knowledge management systems suitable for their sustainability in future. Conclusion Realising such ambitious vision relies on organisations such as S audi Aramco to set the way. The intellectual capital base and knowledge management initiatives have the potential of making the company one of the best performing companies globally in the near future. With the implementation of the right concepts, the company can be sure of great success in the future. The management needs to put in place measures that will ensure the success of organizational innovation in order to realise immense growth. References Abdi, K., AmatSenin, A. (2014). Investigating the Impact of Knowledge Management on Organizational Innovation: Conceptual Framework. International Research Journal of Applied and Basic Sciences, 8(6), 686-691. Dadfara, H., Dahlgaarda, J., Bregea, S., Alamirhoor, M. (2013). Linkage between Organisational Innovation Capability, Product Platform Development and Performance. Total Quality Management, 24(7), 819–834. Doroodian, M., Ab Rahman, M., Kamarulzaman, Y., Muhamad, N. (2014). Designing and Validating a Model for Measuring Innovation Capacity Construct. Advances in Decision Sciences, 1(1), 1-11. Gumusluoglu, L., Ilsev, A. (2009). Transformational leadership, creativity, and organizational innovation. Journal of Business Research , 62 (1), 461–473. Khursani, S., Bazuhair, O., Khan, R. (2011). Strategy for Rapid Transformation of Saudi Arabia by Leveraging Intellectual Capital and Knowledge Management. Web. Razavi, S., Attarnezhad, O. (2013). Management of Organizational Innovation. International Journal of Business and Social Science, 4 (1), 226-232. Read, A. (2000). Determinants of Successful Organisational Innovation: A Review of Current Research. Journal of Management Practice, 3(1), 95-119. Bibliography Abdi, K., AmatSenin, A. (2014). 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International Journal of Business and Social Science, 4 (1), 226-232. Read, A. (2000). Determinants of Successful Organisational Innovation: A Review of Current Research. Journal of Management Practice, 3(1), 95-119. This case study on Saudi Aramco Organisational Innovation was written and submitted by user Wyatt Gibson to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.