MANAGING INNOVATION ASSESSMENT ON TERRACYCLE

1.0 Introduction

With this advancing world the struggle to be on top is definite. It is because of innovation that the existence of humans has been modernized. Although innovation can sometimes adversely affect human existence, it has however positively impacted the society. Innovation can be defined as something fresh or new, that can result in desirable advantages. With the increasing competition in the market, innovation can help attain benefits over the competitors. Moreover, these innovations can not only help a firm establish its brand recognition but also benefit the environment. The study entails the beneficial uses of innovative theories in organizations and further recommends the use of appropriate theories for better service production and enhancement of work inputs and outputs in an industry. Further, the study casts light on the closed loop solution adopted by the TerraCycle industry and suggests incorporation of innovative theories to help the company expand.

2.0 Innovation theories

Creativity is a valuable aspect that can help as small as a nascent business firm gain desirable recognition and a brand image in the competitive market. Subsequently, there are certain innovative theories that can help the industries to gain significant benefits over its rivals.

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Figure 1: Diffusion of Innovation theory

(Source: Beever, 2020)

2.1 Diffusion of innovation (DOI) theory

An innovation can be any aspect that can help redirect the working mechanism of the company to identify and address the loopholes in the industry. In context to the above, Diffusion of Innovation theory can be regarded as a business impetus, and not just a specified theory or a methodological approach. Diffusion Innovation theory made developed by E.M Rogers. The intention of Diffusion of innovation (DOI) theory in an industry is to ensure that the employees and internal stakeholders of the company or organization abide by the cultural approach to support and develop innovative ideas for the company to benefit largely (Al-Rahmiet al. 2019).

However, despite the advantages of compliance of this innovative theory for the significant development of the organization, there is a limitation in the implementation of this innovative approach. The major challenge to the successful implementation of this innovation theory is that culture being a personal attribute, varies from one organization to another and in between regions (Min, So andJeong, 2019). Despite this major limitation, building innovative culture in a company is beneficial with regards to every aspect; since it guides a company to look within in the internal attributes of the industry and to identify and analyze whether the employees, workers, staffs, authorities, their leadership and working modules are performing abiding by the culture of innovation or failing to do so.

The Diffusion of innovation (DOI) theory regards the strategic measures that a company must take in order to reflect upon the working process it adheres to and identify the loopholes in the system; to overcome them with innovative inclusions (Min, So andJeong, 2019). The theory ponders upon the conceptual idea that a company must create and develop an innovative culture in the working process of the industry, in a way that is suitable and may turn beneficial for the advancement of the industry, to create brand recognition for the products distributed and services offered. However, building an innovative culture does not regard to copy the working ideas of a successful company in their own industry. Since, different industries require different working approaches; therefore, a proper analysis of the working environment must first be recognized and then implementation of the suitable innovative culture must be adopted. The inclusion of proper suitable innovative culture can help the company to increase its productivity while lowering the cost in the production and distribution of the products and offered services, helping the industry to expand itself in the market. 

Diffusion of innovation theory is basically a theory that describes the rate at which an innovation is adopted for the advancement of an industry or a business firm (Min, So andJeong, 2019). Further, there is eventually a five step process for the adoption of diffusion as it is adopted through a channel of communication mediums over a time period. The steps are awareness, interest, evaluation, trial and adoption. However, the innovation might be adopted or rejected during the ongoing of these steps by proper analysis of the same. Subsequently, the five stages were further reformed into knowledge, persuasion, decision, implementation and confirmation; although the concept remains the same. 

Stage 1: Knowledge

In this stage, the innovation has not yet occurred in the thought process of an individual and is exposed to the innovative idea, but lacks information in such, to progress with it further. 

Stage 2: Persuasion

This is the second stage that depicts the steps taken by the individual to understand and progress with the innovative idea obtained, after the interest has been driven (Min, So andJeong, 2019). 

Stage 3: Decision

This is the most crucial stage of all since it anticipates the progress of the firm on implementation of the innovative idea suggested. The decision stage refers to the calculative stage where the individual weighs the advantages and limitations of the innovation and settles on a decision to whether accept or reject the idea (Min, So andJeong, 2019). 

Stage 4: Implementation

This is the stage where after proper analysis of the innovation, it is implemented in an industry and ran in order to inspect its working measures and anticipate the longevity of the innovation (Burritt et al. 2019). The implementation stage helps the firm to further seek information for the progress of the innovation while determining the usefulness of the idea. 

Stage 5: Confirmation 

This is the final stage of the implementation of innovation as after proper analysis of the innovation the firm runs into conclusion of whether the innovation is to be adopted or completely rejected. It is both an interpersonal and intrapersonal decision of the firm and there may be some manipulation in the adoption of the suggested innovation through inputs.

https://lh4.googleusercontent.com/wRM7NdfRQTpQbR76mhF3RlNsuUn-qSsQ0VpaNgU8_naGiCHX1Sbwsitsoa14h5vEbrX3HY49e7NsjuNoHuX7ZGWrvQCBCRkxag160Yz-nzZbNG2mB2m8cLrqq491X5B0kFu6nuis

Figure 2: Stages of decision-making process

(Source: Beever, 2020)

2.2 Schumpeter's theory of innovation

To understand the process of innovation, it is of utmost importance to identify the needs for a firm to innovate. Innovation helps in the expansion of a business company through brilliant new concepts on the developed products or the procedure and process of running the firm. With regards to the innovation, Professor Schumpeter developed a theory of innovation in relevance to the other theories in a business cycle (Lambert andVelardo, 2019). Schumpeter suggested that the transformations in business innovation results in fluctuations in business, with an increased rate in investment.

The theory suggests that the innovation in a business can be viewed as the means of change in transportation, productivity and design of the new products and goods (SchweisfurthandDharmawan, 2019). In context to the same, Schumpeter brought forward a model to understand the innovation business cycle that helps in the analysis of the complete economic system of the business. The business cycle of innovation by Schumpeter has two approximations which are known as first approximation and second approximation. The first approximation lies with the primary impact of innovative ideas while the secondary approximation deals with subsequent responses.

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Figure 3: Schumpeter's theory of innovation

(Source: QS Study, 2020)

First approximation:

The stage begins with an equilibrium economic system in which no involuntary unemployment can be occurred. Further, the firm should focus on conducting marginal cost = marginal revenue and price = Average cost(Schweisfurth and Dharmawan, 2019). Therefore, the company undergoes complete economic equilibrium, in that situation if a company decides to undertake a new innovative process to increase production then the company needs to be financed from bank credit.

Since, the economic system of the company undergoes equilibrium; hence there are no surplus funds to finance the new venture. As for implementing the innovation, companies borrow money from the banking system and keep bidding higher prices for the inputs. Further, as the expenditure increases in the economy the price begins to rise. The process further expands and other firms also imitate the innovation and raise additional funds from the banking system (Mehmoodet al. 2019). Moreover by that time innovation is widely adapted. Therefore, outputs begin to flow in the market. However, after a certain level of output and price increase; this happens due to the fact that further innovation does not come by quickly. Moreover, the process of recession starts to begin and remains until the economic equilibrium is restored.

Second approximation:

The second approximation conducted to deal with the waves generated by the first approximation. Further, speculation is the main element of the second approximation. As the primary expansion began therefore, investors expect the production upswing and remain permanent and hence borrow heavily. Due to the higher price rate of product consumers failed to meet their obligation and this situation leads to a panic and depression (Chu et al. 2019).

3.0 Schumpeter's theory of innovation and Diffusion of innovation theory used for implementing closed loop solution within TerraCycle

3.1 Overview

TerraCycle is a private recycling business industry in the U.S. that majorly runs a program with the help of volunteers to help collect wastes of all kinds and donates it to the authorized firms that help reduce the waste into raw materials forming the base for new product designs (Grace, 2019). The company has its headquarters based in Trenton, New Jersey. Moreover, the company collects all sorts of wastes; be it non-recyclable, pre-consumed and post-consumed wastes. These collected wastes are then donated to the ventured municipalities and other corporate donors who mince the wastes into raw materials that form the base of the new products (Fransman, 2019). Additionally, TerraCycle also has its name registered to manufacturers of over 200 products that use the raw materials from this company to make new products.  

3.2 Closed-loop cycle

Since TerraCycle aims to attend to the products which are difficult to be recycled, it tries to manipulate the linear stream of the waste into a circular one to make the most out of it. The company uses the target of manufacturing products for multiple usages that can lower the amount of the waste production by products offering single use ventures. The company further enhances the work module by designing a much durable and reusable packaging for trusted brands to create a circular module incorporating a closed loop solution for the industry (Rashwan, Dincer and Mohany, 2019).

TerraCycle runs on the mission of recycling, reusing and reducing the wastes created and thinks of measures that can help transform the waste into reusable materials or products; reducing the overall waste created in the landfills and promoting sustainability of the environment. The closed loop cycle used by TerraCycle is a process where the collected wastes through the help of volunteers are recycled into raw material bases that can be used to form the base of new products. The organization uses innovative ideas that can convert these raw materials of the used wastes and products into new reformed products to manage the wastes created. Further, the company describes this innovative loop as a circular and never-ending investing program that takes measures to reform the created wastes into resourceful single-use disposable packages with multi-use packages of increased durability. Moreover, the company claims that the goods are collected in materials such as alloys, glass and engineered plastics which have a scope of being reused or completely recycled for the new resource. 

The research and development team of TerraCycle industry integrates with the stakeholders of the company to design close-loop solutions for the waste materials. In context to the same, the solution offered ranges from the manufacturing of premium products such as transforming the pencil cases into Frisbees on a promotional aspect (Antonelli, 2019). Whereas, the industry further develops plans to transform playgrounds into community gardens on a large scale deployment range. The company further considers using closed loop solutions from making secondary applications of the wastes by using the waste materials to be reformed into the same product; therefore managing the waste.

 

Figure 4: Closed-loop cycle

(Source: Durie, 2020)

3.3 Implementation of diffusion of Innovation theory 

The diffusion of innovation theory (DOI) can help the strict implementation of the closed loop cycle in the TerraCycle industry. Since TerraCycle industry deals with the management of waste, the diffusion of innovation theory must be adopted as such that it regulates the eco-innovation, efficiency and design of the work function. Further, eco-design can be referred to as the blueprint of a product which addresses all the impacts of the environment through the product, on the complete life cycle; however not compromising on the factors such as functionality of the product, quality of the product, cost of the venture and appearance of the service.

The theory of diffusion when implemented by the TerraCycle industry can help it significantly cut down the cost of the transformation of products and benefits (Schweisfurth and Dharmawan, 2019). The diffusion of innovation theory can be broken down into four stages- the stage of awareness, stage of interest, evaluation stage and the adoption stage. The awareness stage is one where the innovative idea is discovered, and analyzed for its effectiveness by applying the innovation in the expected future scenario mentally, deciding whether to adopt it or not. Subsequently, in the trial stage the industry makes full use of the innovation and continues the idea in the adoption stage. The diffusion of innovation theory is a process through which the innovation is communicated through mediums over channels, mediated by elements such as innovation, communication channels, time and society(Schweisfurth and Dharmawan, 2019). 

3.4 Implementation of Schumpeter's theory of innovation

Schumpeter's theory of innovation suggests the possible scenarios that might be expected in the near future of the industry on adoption of an innovation. The theory suggests the possible approximations that might save the company from the possible obstacles to adoption of innovation (Nyikuri, Nduta and Mutua, 2019). By adhering to the Schumpeter's innovation theory, TerraCycle can control the reinvestment of the saved profit into the working of the adopted innovation, since the approximations suggests a company to adhere to the finance backed by the bank credits in order to stabilize the flow of inputs and outputs. Moreover, the approximations further remind a company not to neglect the relationship of the stakeholders and the consumers of the industry by increasing the cost of the products, to meet the demands of the money input in the implementation process of the innovation. These innovative theories can help the TerraCycle industry to check on its investment plan and further maintain the relationship with the consumers, investors and stakeholders to regulate the working management of the company before investing in a costly innovation.

4.0 Recommendation of using innovation theories for making service pathway of TerraCycle

For any sort of business firm or industries, service pathway is a crucial aspect for the expansion of the business. Since, a company generally revolves around its consumers, investors and stakeholders (internal and external), it is essential for the industry to regard the value based relationship it has with them. In context to the same, innovations can sometimes disturb the working management of an industry by disturbing the financial equilibrium as well as the relationship with the stakeholders. Subsequently, these innovation theories help to regulate the working mechanism in which an industry runs and prepares it for the possible shortcoming the company might have to deal with.

Schumpeter’s theory can help the TerraCycle industry to enhance their closed loop cycle while abiding by the approximation of the theory offered (Bose, Dong and Simpson, 2019). Further, the theory entails as to how an implementation of innovation can disturb the working equilibrium whole also misdirecting the financial flow of the company. The theories suggest the need to adopt the innovation in such a way that it does not increase the cost of the product for the consumers, as it may lead the consumers and the investors to lose interest in using the products. Moreover, the theory further highlights the fact that a company must adopt innovation without causing any harm to the workforce of the firm. The theories can help direct the company to evaluate the possible benefits of the innovation considered for adoption and weigh it alongside the limitations to get a clear idea of the benefit of the adoption for the industry(Nyikuri, Nduta and Mutua, 2019). Since, TerraCycle runs on recycling the single use wastes and transforming the same into multi-usage or repurposed products, therefore these innovation theories can help guide the closed loop innovation of the industry to run with encountering major losses. 

Moreover, these innovation theories can help the TerraCycle industry to run its closed loop cycle in an effective way by reducing the potential risk of adopting innovative ideas in their closed loop cycle. The cycle dealing with transformation of hard-to-recycle projects will be restructured in a comparatively better designed framework for the enhancement of the product (Bose, Dong and Simpson, 2019). An old project initiated by the TerraCycle to recycle and reuse the plastic bottles in such a way that it seems creative and crafty for kids has been further directed on a larger scale aiding these innovative theories for the benefit of the company while inclining their financial profits. Additionally, the innovation has risen such that TerraCycle has further invested their company in the Zero Waste Box programs that are designed for the tough to recycle wastes through the free programs offered by TerraCycle and other municipalities. This particular innovation is a detrimental concept as it can lead to disinterest of the investors and consumers of the industry due to the involvement of money. In context to this, TerraCycle can adhere to the approximations and guidelines of the innovation theories to check on the financial and management equilibrium of the firm without hampering the innovation to be implemented for the advancement of the industry.    

5.0 Conclusion

The study seeks to highlight the need of innovation in the modern world to adapt to technological advancement with the advent of modernization on a global platform. Innovation theories have been stressed upon in this study for their definite benefits in the advancement of any organization in the competitive market. The study further provides recommendations for the adoption of the innovative theories in an industry to help it reduce the costs, improved productivity, enhanced services, increased competitiveness and significant brand recognition of the firm. Subsequently, the study further encompasses the significant benefits of adoption of the innovative theories in TerraCycle industry to up notch its services and productivity with a comparatively lower cost or investment. It further seeks to shed light on the possible scenario of the TerraCycle industry in the near future, through proper inclusion of these innovation theories with a prediction of the benefits the industry would gain over its competitors.

 

 

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