Innovation and Enterprise (BBVA) - Essay Example

?INNOVATION AT BBVA of Innovation is critical aspect that adopted to ensure the growth of companies. This is a report identifying and analyzing various types of innovation pursued at BBVA; retail bank in Spain. The report also seeks to identify the sources of the inspiring ideas and principles for different innovation projects. The major types of innovations include process, product, market and organizational innovation. Ideas for innovation may come from research, commercial presentations, educational events and trade journals among others. Contents Abstract 2 Contents 2 Introduction 4 Types of Innovation by BBVA 5 Sources of innovative ideas 8 Conclusion 9 Bibliography 11 Introduction In most instances, innovation is commonly attributed to newness of a given aspect (Varis and Littunen, 2010, p. 128). However, they argue that there is no universally conclusive definition of the term since in the present world new knowledge is always coming up and not everything new can be classified as innovation. However, OEDC (2005, p. 101) described firm level innovation as planned change in an organization’s activities geared towards enhancing the organization performance. Innovation is differentiated based on main two aspects. The first looks at the object of change, such as product, market, process and organizational innovation (Oke, Burke and Myers, 2007, p. 735). Moreover, the type of innovation can be based on their how radical they are or their newness; that is based on the extent of change. According to Varis and Littunen (2010, p. 128), radical innovations usually bring up revolutionary changes and in some instances may trigger technological innovation. Basic ingredients of innovation are transferable and the most critical source of innovative ideas include the firm’s the employees, competitors and research (Beach, 2006, p. 1). This paper presents the types of innovation in BBVA and an analysis of the sources of innovative ideas. Banco Bilbao Vizcaya Argentaria is a major retail bank in Spain that offers a wide range of financial services to both end-user clients and business customers. The bank was established in about one hundred and fifty years, and has grown significantly to open branches in USA, Mexico and South America. Currently, the bank is the largest in Mexico and is listed among the 25 major banks in US. Moreover, BBVA is among the few Western Banks operating successfully in Japan. By 2008, BBVA had 112, 000 employees serving more than 47 million countries in more than 30 countries (Ramis-Pujol and Droege, 2011, p.3). The bank has been able to balance its corporate principles while still focusing on customer service. In addition, BBVA views innovation as an engine for its future growth. Presently, BBBVA is one of the seven largest banks in the world measured in terms of market capitalization after joining this league in 2009. Types of Innovation by BBVA One of the types of innovation implemented by BBVA is product innovation when the bank came up with tu cuentas. Some years back, BBVA bank identified the great potential offered by internet technology to retail banking. The bank felt that its customers could appreciate more online banking services to better manage their financial activities and make them more open. The bank envisioned that customers could be more satisfied knowing what they spend their finances in, average money spent on different items in the budget and compare their spending trends with those of their peers. Moreover, the new product could help the customers develop strategies to optimize their spending habits. Tu cuentas was also developed to improve the user experience and increase its functionality and flexibility. Moreover, BBVA intended to allow its customers incorporate their banking information from other their accounts in other financial institutions. This last functionality was a unique service in retail banking. Given that the bank was financially and expertise constrained, it decided to acquire 24 percent stake in an innovative IT company; Strands.com. Tu Cuentas was developed in accordance to SCRUM which is an iterative and lean process (Ramis-Pujol and Droege, 2011, p. 7). This type of innovation by BBVA is product innovation described as development driven by need to enhance the properties and operation of the finished product (Larsson and Bergfors, 2009, p. 267). The objectives of product innovation could be to come up with new product, improve the properties of the product or enhance its quality (Larger, 2002, p. 115). Product innovation is mostly initiated by market needs and customer service and consequently, product innovation is basically driven by a desire for effectiveness. In the case of BBVA tu cuentas innovation, the innovation is driven by a desire to meet customer service. This innovation was geared towards enhancing the retail banking services it offers to its clients. Most aspects of tu cuentas served customer needs that were being offered but where geared towards enhancing customer service. However, the desire to integrate a client’s bank accounts information from other financial institution was envisioned as a strategy to help customers manage their finances in a better way. Tu cuentas introduced a new functionality which allowed customers compare their spending with that of the mates as a strategy to help clients better manage their spending. This is a product aimed at enhancing customers’ welfare rather than that of the bank (Ramis-Pujol and Droege, 2011, p. 12). The other innovation by BBVA was known as POK developed in 2008 in conjunction with a major TV show where the youth could participate through evaluating and selecting the candidates on the show competing against one another. This innovative idea was aimed to get in touch with young people and learn their behavior on technologically supported social networks. POK was an internet and mobile enhanced communication platform where persons between 14 and 40 could interact with one another. The reasoning behind this idea was to get closer to future customers to the bank in addition to advertising the bank. The progress of the project was however hampered by the fact that by the end of two years of TV show, some individuals had already lost interest in the service and BBVA could not keep up with technological development by its competitors such as Facebook. Despite, the failure of POK, BBVA was able to learn the behavior of online customers. This is a form of radical innovation where the company was striving to change the strategies its uses to market its services. POK was aimed at helping the bank reach out to customers at an early age which is a change from strategies employed by other banks where they only market banking services to people who are already working. Radical innovation is described as a service, product, or method which differs from those adapted by competitors (Forsman and Rantanen, 2010, p. 1). Radical innovations change the relationship between the business and suppliers, redefine the marketplace and displace the products I the market. Radical innovation provides a road for long term business growth sought by business executives (Leifer and Rice, 2001, p. 104). In the case of POK innovation, BBVA introduced new method of ensuring the long term growth of the company and ensure the sustainability of the bank by ensuring that the youths when it comes to choosing their bank of choice will be BBVA. The other innovation by BBVA was tpresento. Tpresento is a service that offers small and medium sized companies a broad search and networking opportunity for all firms operating in Spain in addition to creating their company website within the bank’s network. The bank had recognized that small and medium enterprises lacked a place to get professional references for their business operations. Moreover, this service could allow SMEs know people they are working with and get timely information when customers want to purchase their products. Service innovation is defined as development of new activities undertaken to achieve core product and attract consumers (Petroni and Bevilacqua, 2002, p. 927). Tpresento aims at ensuring that BBVA attracts SMEs as part of its business clients while making it more attractive for SMEs to rely on its network platform to market their products. The other type of innovation implemented by BBVA is incremental innovation. This is brought out by eConta which resulted from a fusion of business model. eConta gathers information on bank accounts and the accountancy services. Moreover, this change applies the use of internet commerce and puts everything together. This was based on the belief that accountancy services in Spain are low and this drove BBVA come up with online accountancy services. In addition, BBVA realized that the accountancy services in the country had not been changed for so long and therefore there was need to build on the already developed procedures. Incremental innovation builds on an already developed product or service enhancing its performance through changes (Vermeulen, Van Den Bosch, and Volberda, 2009, p. 23). Virtualdoc was the other innovation adopted by BBVA where the bank aimed to exploit the most recent technology. BBVA had recognized that the traditional way of banks to handle documents secretly was losing touch with customers who wanted to access their documents from different locations. Virtualdoc innovation provides a professional and automatic service that scans document to allow information storage in online. The other innovation by BBVA was developing a ATM. In this project, BBVA recognized that some clients were assessing ATMs while others avoided them. The bank contracted IDEO to carry out an assessment and come up with a mock ATM machine. After working for years, BBVA was able to develop an ATM machine which was installed in the numerous bank branches spread all over. Sources of innovative ideas There are various sources of ideas that result to innovation to companies. Previously, research and development section was sole department that lead in innovation for companies (Ayuso and Ricart, 2006, p. 475). However, this has proved inadequate in the business where innovation gives a company a competitive edge against other players in the industry. The best innovative ideas come from a network of stakeholders in business. This include suppliers, scientists, distributors, customers, government and competitors (Stanleigh, 2008, p. 38) Research and development section in any company is important for incubating ideas that different idea that employees may have to bring changes in the company (Donnell, 2008, p. 15). Employees were identified as critical drivers of the innovation and offer the ideas required to streamline operations of a company (St. Clair, 2008, p. 5). Employees usually have viable ideas that company executives should nurture to ensure innovation. The other crucial source of innovative ideas is research conducted by freelance scientists and researchers in universities. Their ideas help company identify ways that they can use to bring about positive change (Brahmbhatt and Hu, 2007, p. 12). Moreover, researchers carry out an investigation on current issues and therefore provide valuable information that businesses can use to bring about change in the operations. Another source of innovative ideas is the government which through various legislation call upon businesses to change the way they conduct business. For instance legislation by the government for industries to cut carbon and pollutant emissions leads to industries coming up with measures to streamline their operations in line with the directive (Fowles and Clark, 2005, p. 50). The other source of innovative ideas is the competitors. When a competitor implements change, companies strive to develop on that idea and develop more viable options (Prodan, 2008, p. 277). Attending of business and seminars also acts as an eye opener to organizations to come up with ways to change the way they do business. Conclusion Innovation is a critical component for businesses seeking to achieve a competitive advantage. Innovation may either be process, product, service, or market innovation. Moreover, innovation can either be incremental or radical. Throughout the life of BBVA, the bank has gone through different types of innovation. Ideas on innovation come from varied sources and it is therefore critical that the management should be supportive to all ideas coming from different stakeholders. Bibliography Ayuso, S and Ricart, J.E 2006, "Using stakeholder dialogue as a source for new ideas: a dynamic capability underlying sustainable innovation", Corporate Governance, vol. 6, no. 4, pp. 475-490. Beach, G 2006, "Employee Power; where will 2007s innovative ideas come from? You need look no further than your own backyard", CIO, Vol. 20, no. 5, pp. 1-1. 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