Relationship between Business Architecture and Innovation - Essay Example

 Introduction Today’s firms, enterprises, or organizations are looking forward to be a cut above the other and this usually is achieved through gaining their competitive advantage. Competitive advantage is a way to give rise to an edge over the other in order to ensure remarkable market share, market power, profit and the bottom line is to be a cut above the other on other related corporate concerns (Bobillo et al., 2010). There are many strategic moves that are in proportion to gaining competitive advantage, one is innovation. The common move toward competitive advantage today especially in an organization with certain potential to compete in industry or sector where it belongs is to go for a strategy. The most familiar tactics include application of innovation through the potential use of advanced technology and maximum allocation of limited resources. However, firms or certain organizations are constantly faced with challenges that involved their customers, employees, suppliers, and various stakeholders. In other words, to effectively instigate competitive advantage, a certain firm aiming to reach its innovative edge needs to establish a secure relationship with its stakeholders and apply substantial strategies. In this paper, the proponent tries to analyse the relationship between business architecture and innovation. Furthermore, the role of business architecture in sustaining competitive advantage is included in the discussion. In order to have abounding knowledge of this issue, a certain case is included. The issue that innovation cannot be sustained without [business] architecture in relation to Kodak is integrated in this essay. Business architecture and innovation The business architecture is structured within the bound of strategy, organization, technology, operations and leadership (Kodama, 2010). All of these elements are interconnected with the customers, employees, suppliers and various stakeholders who are important agents of change within the industry. Thus, both of business’s external and internal environments are momentarily transforming from time to time. This is due to the fact that many organisations today are able to create a need for their various products and service offerings using their own best possible ways. In fact, modern marketing points out the fact that organisations create a need for their various product and service offerings (Kotler et al., 1999; Boone and Kurtz, 2006). Marketers are very sophisticated in setting up a need for their offerings due to their ability to get the picture of customer’s needs and competition in general. In other words, the dynamic changes in the business environment contribute to the expanding opportunities for exploring possibilities in the business architecture. In fact, every corporate system has to establish business models that will fit in the required business architecture of their business. Regarding this, there is a need to change or even enhance existing business models in order to survive in an ongoing trend of tight competition. Strategy is necessary. Competitive strategy is required in order to achieve competitive advantage. In line with this, the business architecture integrates organisaational and business processes in order to realise effective and successful corporate strategy (Kodama, 2010). There are many issues that need to be taken into account especially in the integration process between architecture and innovation. It is in line with this that both internal and external factors of business environment should be interrelated with each other in the context of business architecture. Strategy is necessary, and competitive strategy is one. Coming up with competitive strategy ensures that the move for innovation is effective. According to Porter (1998), effective competitive strategy ensures understanding the entire area of concerns within the industry. This is to ensure that the competitive strategy leads to competitive advantage of the firm. Porter added that each organisation should have clear definition how it is going to compete and including certain objectives for achieving profitability, growth, market share, social responsiveness and more. Its goals should be in line with both economic and non-economic concerns. In order to maximize all of these, various organisations are making substantial innovative moves. Innovation is a significant driving force that pushes the organization forward to reaching corporate goals due to existing tough competition. According to Porter (1998), there are forces that drive industry into competition. This is illustrated in Figure 1 below. These forces allow the organisation to come up with competitive strategies unswerving with their corporate objectives. These forces include the new entrants, suppliers, bargaining power of buyers and the presence of substitute products or services. All of these are integral parts of the business architecture in such a way that the competitive strategies of an organisation need to be based on them. For instance, before a certain firm could produce certain product or service offerings, it is crucial in its decision making process to include information about certain threats of potential entrants. This is to ensure that its newly-produced product or service offerings could compete well in the industry. In addition, the innovation strategy should also be based on considerable threats of substitute products or services. Regarding this, a certain firm should establish products or service offerings that are not vulnerable to potential threats of substitute products or services. There must be something new and unique about them. Figure 1. Forces Driving Industry Competition (Porter, 1998) Business architecture in sustaining competitive advantage As stated earlier, competitive strategy such as innovation is an essential part of business architecture. Based on Porter’s idea, competitive strategy is necessary in order to achieve competitive advantage (Porter, 1998). Competitive strategy therefore has the ability to sustain competitive advantage. It is in this reason that business architecture sustains competitive advantage in great detail. This is further justified in the following discussion. New entrants for instance are very aggressive in their effort to gain market share and acquire potential resources. Their effort usually results to bringing down prices for their offerings which may become threat to existing firms. The usual contradiction in line with this is to create substantial strategy such as acquisition of an organisation with the intent to build market share. Other existing firms may focus on product differentiation which can be advantageous among them due to established brand identification and customer loyalties. Customers tend to be loyal to those highly identified brands in the market and this is true in the case in mobile phone industry and even in hardware sector in computer industry. The result is they try to achieve position which usually results to using different tactics such as price competition, advertisement, product introduction and increase of customer service and warranties (Porter, 1998). Different organisations have varying important concerns when it comes to achieving competitive advantage. The result is that the ultimate measure of an organisation which obtains competitive advantage is the achievement of profit which should be far beyond the average in its industry (Jansen, 2009). However, prior to the achievement of this, there are various contributing factors for the success of an organisation and these primarily include the human resource, culture, company values and more. Within these noteworthy elements, each organisation can definitely create vital innovations in order to maintain their competitive advantage. The Apple Incorporated for instance was able to sustain its competitive advantage by building on something revolutionary in the human resources as impacted by the impeccable leadership standard at some point of the late Steven Jobs. Jobs clearly emphasized innovation with technology as another important trend in today’s way of sustaining competitive advantage. This resulted to innovations in operations and leadership that have also become the ultimate goal of various organisation, as far as reaching their competitive advantage is concerned. Conclusion Business architecture sustains competitive advantage. This is implemented through the use of competitive strategies such as innovation. As a result, there is always a good reason to create competitive strategy in order to ensure competitive advantage. References Bobillo, A. M., Iturriaga, F. L., and Gaite, F. T. (2010) Firm performance and international diversification: The internal and external competitive advantages. International Business Review. 19 (6), 607-618. Boone, L. E., and Kurtz, D. L. (2006) Contemporary Marketing. 12th ed. Mason, Ohio: Thomson/South-Western. Jansen, M. (2009) Knowledge is the Organisation’s Essential Source of Competitive Advantage: A Discussion. Norderstedt: GRIN Verlag. Kodama, M. (2010) Boundary Management: Developing Business Architectures for Innovation. Tokyo: Springer. Kotler, P., Saunders, J., Armstrong, G., and Wong, V. (1999) Principles of Marketing. 2nd European ed. Upper Saddle River, New Jersey: Prentice Hall. Porter, M. E. (1998) Competitive Strategy. New York, NY: Free Press. Case study: Kodak In 1880, George Eastman was responsible of the inception of today’s one of the renowned companies in the world, the Eastman Kodak Company or widely called as Kodak. This organisation has the foundation of important core values of entrepreneurship, philanthropy and concern for the employee, which have significant connections with its ability to stay in the competition for years until at present. Kodak supplies wide range of various specifications and needs in its consumer products and services and commercial businesses. Under its consumer products and services are those renowned digital cameras, video cameras, cameras accessories and gears and down to print at a store service. Its commercial businesses include graphics product, services, document imaging, retail solutions, motion picture film and pro photo products. As observed, Kodak carries different line of products but they are all interrelated. They all have one thing in common; Kodak is focused on production of technology in line with images and film creation and enhancement. Kodak sees itself as a customer and supplier or even both to its suppliers and vendors. It relies on the availability of materials from its suppliers and customers’ needs, just like the rest of many other firms with their production. In addition, just like the other organisations, Kodak aims to achieve sustainability through its principles of innovation, stewardship and engagement. Kodak defines sustainability as having clear identification of strong governance functions, care for the environment, and communication with surrounding communities. Under its innovation, Kodak is willing to provide opportunities for more products and services with great value including their less environmental impact. Under stewardship, Kodak sees itself as having the responsibility to manage everything in line with the products and services it sells in order to come up with a healthy workplace and protection of natural resources. Finally, its engagement would mean communications, collaborations and sharing of learning with its stakeholders. The question if Kodak could sustain its competitive advantage without the role of business architecture most specifically in its point of innovation is discussed below. As stated earlier, business architecture has important and fundamental elements that composed it in great detail, which primarily include strategy, organisation, technology operations and leadership. All of these primary elements are actually present at Kodak’s recent business model and operation. Considering that it has to interact with both its external and internal business environments, Kodak needs to ensure not just creating focus on its customers, but including its suppliers and immediate environment. Kodak has actually initiated innovative move in order to protect the environment, and that is to create more new products and services for its customers that have less environmental impact. In this way, what Kodak eventually initiated is a strategy that aims for its sustainability which from the point of view of Porter would result to a competitive advantage provided it would result to a significant market share. Modern concern about sustainability includes understanding how business might be affected by oil price and its direct and indirect consequences, the most important raw materials to be used in the production, the source of raw materials, the safety of supply chain and the scarcity of the raw materials involved in the production (Wimmer et al., 2010). All of these substantially include economic and non-economic issues on how the product should be priced, what differentiates it from the other existing products, and many other business concerns included under Porter’s idea of creating competitive strategy for reaching competitive advantage. In other words, Kodak has eventually found a competitive strategy that involves innovation on how it could sustain its core values in today’s modern market. Competitive advantage has direct impact on organisation’s performance (Li et al., 2006). Kodak’s core values are essential on how its entire organisation should perform especially on what directions it should take. As stated earlier, under its competitive core values are innovation, stewardship and engagement, which are actually principles that are guiding the entire organisation on what approach it needs to create with its products and services together with its stakeholders. Another point of Kodak’s innovation is the sophistication of its technology. Such technology is in line with its innovative move to produce new products and services for its customers that are less detrimental to its environment. Under its operations and leadership, Kodak is again making another innovative move and that is its integration of its core values in order to produce and offer products and services that are aimed to provide customer satisfaction with less environmental impact, high sense of corporate social responsibility, and clear communications, collaborations and sharing of additional substantial learning with its stakeholders. This eventually made Kodak become a market leader in its industry considering that it has made the initiative not just to gain competitive advantage for its own benefits, but including sustainability that also has potential impacts on its various stakeholders. All of the above points specially indicate that there exists a strong relationship between business architecture and innovation in the case of Kodak. It is also evident that Kodak’s competitive advantage is sustained by the fundamental elements of business architecture which primarily include strategy, organization, technology, operations and leadership. References Li, S., Nathan, B. R., Nathan, T. S. R., and Rao, S. S. (2006) The impact of supply chain management practices on competitive advantage and organizational performance. Omega. 34 (2), 107-124. Wimmer, W., Lee, K. M., Quella, F., and Polak, J. (2010) ECODESIGN – the Competitive Advantage. London: Springer. Read More