Implementing the New Innovation Strategy - Essay Example

Implementing the New Innovation Strategy Table of Contents 0 Introduction 3 1 Background information 3 2 Innovation Management Structure of WAZ/FMG 3 1.2.1 Strength and Weakness of the current structure 3 1.2.2 Improving the organizational structure 4 1.3 Sourcing new ideas and technologies 6 1.3.1 Effectiveness and efficiency of the current approach 6 1.3.2 How the current approach can be improved 7 1.4 Types of Innovation 8 1.4.1 Lead user innovation 8 1.4.2 Open innovation 9 1.4.3 Disruptive innovation 10 2.0 Scenario Analysis and Planning 11 2.1 Scenario Analysis 12 2.2 Scenario Planning 13 2.3 Embracing innovation 15 2.4 Implementing the new strategy 17 2.4.1 Implementation overview 18 2.4.2. Managing the implementation process 21 2.4.3 The potential challenges and solution 22 2.4.5 Monitoring the success of the new innovation strategy 23 References 27 1.0 Introduction 1.1 Background information Westdeutsche Allgemeine Zeitung-Mediengruppe (WAZ/FMG) is a media firm established in 1948. The firm which is based in West-Germany is the largest and leading news printing company in the region with over 28 and 23 local editions and editorials in Ruhrgebiet respectively. Customers of the firm include but not limited to news publishers, advertising agencies, newspaper retailers and cataloguers. The fast changing technological environment in Germany and other countries globally has brought about radical changes in ways in which news and information are made available to the consumers. In the light of the above, print media is no longer the preference of many consumers especially the young generation who are technologically savvy. Therefore, there is need for a serious shift to the production of news and information on an internet platform. The main overall goals of the company are to expand to new areas such as Luxembourg and Brussel among other areas; and maintain and scale up its market dominance. 1.2 Innovation Management Structure of WAZ/FMG 1.2.1 Strength and Weakness of the current structure WAZ/FMG has a well defined formal framework in which the innovation team members perform their roles in the existing broader company structure. Owing to the fact that WAZ/FMG is a large company and has been in existence since 1948, its innovation management structure is inclined more towards mechanistic structure. The mechanistic structure has an inbuilt shorter span of control, rigid departmentalization, and many vertical layers of management. It also has a centralized decision control nexus as well as a long chain of command that lags decision making. According to Gitman & McDaniel (2007), this type of organizational structure may be useful where the personnel in the lower level have limited knowledge, skills or training to perform their roles effectively. This kind of structure prevents them from making decisions that could lead to devastating mistakes. Mechanistic structure also, promotes efficient and effective communication lines and reduces or eliminates duplication of efforts. Furthermore, existing structure of WAZ/FMG regulates and prevents the emergence of unproductive competing objectives among the team members. The mechanistic innovation structure of WAZ/FMG chokes innovation activities because it does not permit lower cadre employees to make decisions (Zairi & Duggan, 2010). It also constrains lower cadre employees from acting freely and high level personnel do not delegate roles and responsibilities. Furthermore, WAZ/FMG has many other strengths which include but not limited to ability to validate information; understand and comply with the regulatory environment; ability to synthesis all type of information including information on politics, crime, environment, development, public relation and investment among many others and the firm has a good reputation of being accurate and balanced in reporting. 1.2.2 Improving the organizational structure Zairi & Duggan (2010) suggest an innovation management framework that allows quick decision making at the lower levels of the structure, delegation of roles and responsibilities. Therefore, there is need for few levels of management, short chain of command, and wider span of control to allow lower level employees to act freely and make decisions. According to DeSai (2013), an appropriate organizational structure for an innovative organization need to built upon a series of designed procedures and policies that can be controlled by the management and at the same time that can positively impact on the freedom of employees. This will create a dynamic working environment for the employees as it promotes openness to new ideas. The new organic structure requires proper training and appropriate behaviors of the team members to enable lower cadre employees make appropriate quick decisions as demanded by circumstances, communicate effectively, and to encourage them to work towards common objectives (Gitman & McDaniel, 2007). The employees of the company should be made to understand they can make significant impact to the organization through their contributions to the general good of the company. The company should also communicate clearly to the employees that they are allowed to act freely so long as it promotes generation of productive outcome. In addition, employees; ought to be allowed to take risks without fear of failure, should be moderately aggressive, should take responsibility of their decisions and actions, and be encouraged to have forward thinking mentality and to be opportunity seekers. The structure need to be implemented when employees are more willing to take more responsibilities and managers should be willing to share more power and responsibilities with their subordinates. It is also important for the employees and other stakeholders of the organization to understand the culture, values and implications of getting things done. Management need to make employees aware of impact of their decisions to company’s financial positions, knowledge of business and culture of the organization. 1.3 Sourcing new ideas and technologies Overtime, WAZ/FMG has developed different ways in which it could obtain information that is used to create the content for its print and online articles as well as for improving its internal processes. The company relies majorly on its research and development department; specialized technical publications; and information collaboration and exchange with content producers such as research institutions. On rare occasions, the organization utilizes universities and research centers; and local, national and international trade fairs. Diagram 1: Key Source of Information Will prepare a chart. 1.3.1 Effectiveness and efficiency of the current approach This approach is moderately useful. Internal research and development department is reliable. However, establishing and running internal research and development department involve high expenditures. Secondly, the content generated may not be sufficient to obtain representative information to the general population and market insight from one or very few sources may be insufficient. Specialized technical publications are released seasonally and may not be very reliable. The information from exchange and collaboration with other persons in the industry has been quite helpful and provide outward perspectives which help the company be in touch with the outside world. 1.3.2 How the current approach can be improved According to Cassiolato, et al. (2003), apart from the above named sources, WAZ/FMG need to explore other avenues such as exchange of information with its clients, be it of national, regional or international status. If in future the company will wish to improve its content development, production and display technology, it should source information from national, regional as well as international suppliers of both the machineries and technology required. Obtaining information from a wide spectrum of informers is useful when the level of innovation needed in the organization is sophisticated (Pyka & Fonseca, 2011). Gathering rich information that will be useful during the innovation process requires strategic collaborations with key stakeholders such as external research centers and other industrial players. This kind of interaction with many informers at the same time may reduce cost of sourcing critical information. Different sources can be used to reinforce each other or obtain information that would otherwise be difficult to access as in the case of information under the possession of competitors. In addition, use of more than one source may help to bring out more of market insights. The company should always avoid obtaining secondary information because market insights from secondary sources may lead to mimicking methods and getting results of groups or individuals who sourced the information category before the company. In addition, secondary information could be obsolete for new ideas may have been developed. As a result, the company may not be able to differentiate itself from the others. The firm will develop pages in social networking sites as well as support and encourage blogging and messaging service in its online platform. 1.4 Types of Innovation 1.4.1 Lead user innovation Walder et al. (2006) ascertain that chosen or specific customers/consumers play a critical role in lead user innovation. This approach can be used to complement the traditional methods of driving innovation. Its main approaches are consumer or lead user (early adopters) approach to contribute ideas, innovations, and inventions. With lead user innovation, it is possible to unearth not only explicit needs and preferences but also latent needs that can only be revealed by the user of the service or products as they consider their preferences and behaviors. Through this approach they help in defining needs and desires of a larger community as well as create solutions for themselves. The lead users are normally opinion leaders, and or employees of the company. This approach assumes that the selected few represents the needs and preferences of the entire members of a given society or geographical demarcation. This approach is applicable to both the industrial or consumer markets. It is important for the company to ensure that the feedback received or content generated need to be reliable. Information could be collected through customer observation, customer surveys, complaint analysis, experiments and blueprinting. Of the three, the most promising influence and determinant of innovation at WAZ/FMG is lead user innovation as it focuses in meeting the wants and needs of the consumer (Nordic Council of Ministers, 2006). As a result the company will be in a position to produce content that sells. 1.4.2 Open innovation Sigismund, et al. (2013), confirms that this approach use individuals contributors who are often self selected. This approach promotes exchange of information and the leader coordinate participation of many and varied contributors and organizes solutions in a democratic approach. Companies embracing this approach have both inbound and outbound processes. Inbound process identify and mobilizes own resources, ideas and technologies to develop the business. On the other hand, outbound process comprises of company’s strategic move to out license or sell their ideas, resources or technologies. The approach also specifies how resources will be identified as well as how assets would be exchanged and how outcomes of the process will be valued. For open innovation to work, its ecosystem is usually larger than any other approach to innovation; involves modulation of complicated challenges to allow multiple contributions to address them simultaneously; the requirements for qualification are very minimum or non-existent; it apply voluntary participation; it demand intrinsic and / or social motivation to be effective; it require high levels of transparency in both content and process so as to improve results; workers select their leaders; may not necessarily use users or customers; there is free movement of task oriented information; and limited and unobtrusive control systems that are fully implemented; This approach enabled Wikipedia to be the most consulted internet site overtaking Encyclopedia Britannica. Wikipedia has generated more than 4.5 million articles and other over 270 languages across the world (Sigismund, et al., 2013). Since its voluntary (self selected contributors), the business model is different because the content is not sold. This open source seemed to be applicable to product based companies such as Proctor & Gamble; P&G. in fact P&G attributes more than ten increase in its sells to open innovation. Other companies include Erickson, Apple, Ebay, Clorox, SAP and Cisco among many others. The most practical way of getting the consumers really interested in the firm’s services is to offer online platforms that support blogging and messaging services as well as create pages in social networking services such as face book and twitter to name but a few. Using the above three services will enable consumers of information to share their experiences in terms of knowledge, interests and information among others. This will help the editors and journals of the firm acquire more relevant information and customize it to meet the needs of other customers. 1.4.3 Disruptive innovation Narayanan & OConnor (2010) state that this innovation is applicable to products or services that are of technological nature. Features of new products are intended to outperform in terms of lower costs, simplicity, smaller size or convenience as compared to the incumbent product or services. This approach usually broadens or develops new markets. In addition, it is niche- market based where it attempts to meet the undressed needs of certain group of consumers. However, this approach suffers from innovation dilemma where it demands creation and development of new competencies that are not easily acquired. Online services and print on demand have revolutionaries print media and have significantly reduced print media and most media company including WAZ/FMG have experienced significant drop in sales in print media. New point of sales is being created 2.0 Scenario Analysis and Planning Diagram 2.1: Implementation Graph According to above graph, the items introduced by the company fall into category A, where they are adopters. This is because the items exist and soon it will enter category B, where there will be followers. At category A, market growth is slow. Soon items will enter category B. This is the category where the growth is expected to happen at a higher rate. Therefore, the firm should prepare itself for the opportunity. At category C, market grow but at a slower rate because the market is about to be saturated as more chasers enter the market. At category D, there is no growth because the market is saturated. At category E, the growth is negative because new and better products may have been introduced. 2.1 Scenario Analysis Table 2.1 Ansoff Matrix Existing Products/ Service New Products/ Service Existing Markets Market Penetration – category where online services and print on demand of the firm fit. Product development New Markets Market Development Diversification For WAZ/FMG, the new first items that are being introduced are integrated online news and information that will enable readers to access the information using gadgets with internet connectivity. The second item to be introduced is print on demand service. Luckily, consumers already exist as changing technology has enable them acquire gadgets to access the information. In fact some media and information entities have introduced this kind of service. Both items to be introduced and scaled are not new thus, to increase sales the firm needs to pursue market penetration strategy. Diagram 2. 2: Innovation Matrix WAZ/FMG Company’s new strategy to offer online news and information is likely to create a new market niche of individuals younger than 50 years. It will be more appropriate considering that in future; technologies will do away with papers thus reducing cost of production as the company will not need to buy papers and printing plants and ink as well as no need to spend in transportation or storage facilities. This will lower the cost of news and information significantly. In addition, news and information will always be up to date because new information could be added online with speed as they happen. To implement its new services, the company will partner with internet providers so as to make internet connectivity available in strategic places such as shopping malls and restaurants to name but a few. 2.2 Scenario Planning Diagram 2: Scenario Planning Scope out Process The people involved in the process are the board of directors and innovation committee. The board will approve the innovative strategy. On the other hand, the innovation committee will oversee the strategy from inception to implementation. The Information that will be required will be varied from the content of both news and information to be offered as well as information concerning the best way and methods of identifying, filtering and producing the news and information to the target groups. The support for the innovative strategy is varied and includes but not limited to user innovators, consultants and endorsement from top management among others. Structure Template The Information needed would be limited to content and methods of producing news and useful information. Providing news and information is a ceaseless activity with no time limit. Personnel to be involved would be news crew and editors as well as independent and reliable content generators. Equipments to be used include electronic platform to display news and information, video recorders, microphones and computers. Populated road Map The service in terms of news and information provision via online will be planned for five years considering increasing pace of technological changes. Emerging market for online news and information are the younger population of between 16 years and 40 years. The technology applicable in the provision of online technology is likely to change within five years. Start-up resources needed may cover a period of one year. Interpreting patterns The key milestones include the number of online readers, amount of income generated and type and quality of content generated. Priorities would be given to breaking news and advertisements. Communicating and decision Critical issues are the target market, the content generated and value added to the company. Review and refresh Online readers, amount of income generated and type and quality of content generated will be monitored and evaluated and significant changes will be noted. Established new practices will also be given prominence. When new milestones are identified, they will be added to the project. Emerging requirement in terms of finances, assets and information would also be noted, monitored and evaluated consistently. 2.3 Embracing innovation Diagram 3: Embracing Open Innovation Preparing for exposure Open innovation is a good thing. However, the company will only share news and information. The method of identifying and producing news as well as support and capital outlay will remain company’s secret. Synthesizing challenges News crews and content development personnel will undergo refresher training after every four months to enhance quality and consistency of both news and information produced and offered to the target population. Creating market rules Apart from salaries paid to the generators of content, commissions in monetary terms and recognition in terms of giving awards will be part of the methods that company will use to motivate staff. Identifying connections The company will add more informers to its wide network so as to cover areas in health, investment and finance. Identifying Exit and Entry Points The company will only be interested in breaking news and classified information. Other news and information would not be mandatory. Diagram 4: Managing Innovation Selection criteria The critical areas when deciding the services to be offered would be risk verses the probability of success; payback period; return on investment; competitive advantage; and alignment of strategy. Building a portfolio The portfolios created in the company will be those of high commercial success, high rate of return, distinct competitive advantage, shorter payback period and clear in alignment with the overall strategy. Therefore, portfolios that will fall with the purple shade will have high likelihood of being accepted if they will have distinct competitive edge as well as properly align to company’s strategy. Assessing alignment All services in line with overall strategy alignment will be accepted and those that reveal disconnect with overall strategy will be dropped off. Drilling-down & deciding The company will consider a portfolio with an overall positive outcome. 2.4 Implementing the new strategy Figure 2.1 WAZ/FMG’s Innovation Strategy 2.4.1 Implementation overview The act of implementing a strategy is not easy. Abernathy (2014) shares that implementation of innovation strategy just like any other new idea in an organization is an uphill task. Implementation process demand that an organization and its leadership should make constant conscious judgments regarding succeeding activities, which dictates whether adjustments that are made take into consideration changes in the business environment too or whether they hold steady even in the face of obstacles while at the same time ensuring that bigger goal- vision, is fixed. The strategy need to be broken down into short-term and long term strategic activities; and align the strategy with changes in company’s systems, competencies, process and resources as an integral part of daily activities (Strikwerda, 2007). The innovation committees need to determine on ongoing basis whether the new organization structure is promoting the company to achieve its goals. WAZ/FMG needs to therefore invest more of its skills, resources and energy in activities that will reveal both the explicit and latent needs and preference of the consumer. This will empower the company to develop specific content to meet the specific target population. In addition, the company needs to foster an environment of openness and collaborations at all levels and to create more flexibility. Finally, for a new strategy to be implemented successfully the management must assume full responsibility, develop, implement and own major task schedule; they must also develop schedule reviews, have meeting schedule, control process, facilitate communication and organize linkages (Shinkle, et al., 2004). Specific investment is needed to expand to key areas in European zones such as Brussel and Luxembourg; create information technology infrastructure including but not limited internet enabled gadgets; invest digital printing machinery and platforms such as Peech, Qoop, Blurb and Lulu; enter into partnership with internet providers and identify and locate strategic shopping malls, hotels, coffee shops and learning institutions, so as to establish internet hot spots such as WIFI; and recruiting fine arts personnel who would be in charge in design activities that will facilitate creation of animated news, advertisements and commercials among others. Table 2.2: Innovation Action Plan Strategic Intent Objective Performance Indicator Timeline Responsibility Presenting innovation strategy to the board To solicit the required authorization and endorsement Commitment of needs resources October 30, 2014 Chairperson of the innovation committee Acquisition of required technology including the internet platform To ensure that resources will be ready for use before the company start operations Delivery notes, invoices and receipts November 30, 2014 Chief Executive Officer Allocation of new roles and responsibilities to personnel To dedicate skilled, determined and competent personnel to obtaining and production of integrated online content News, advertisements and well researched articles Continuous starting November 5, 2014 Director, human resources and Innovation committee Recruit Information Technology personnel To optimize the use of online platform New IT related employment contacts and agreements duly signed Continuous starting November 5, 2014 Director, human resource Develop marketing objectives and tools for WAZ/FMG online integrated services To prepare relevant departments- Sales and marketing and public relations and personnel for marketing purposes Brochures, Company website, Banners, Face book page, Twitter handle , Other social media available in different regions in Germany. Continuous starting November 5, 2014 Director, Sales and Marketing Implement market activities To make the company visible in the eyes of existing and potential customers lead generations and conversions Continuous starting November 20, 2014 Director, Sales and Marketing and Innovation committee 2.4.2. Managing the implementation process Dawson (2003) confirms that the processual nature of change need to be considered because every organization undergoing change goes through many dynamic states that overlap and interlock nearly all process that are associated with change. For Alfred (2006), processual nature of change requires consistency in behavior of all actors that evolve overtime. This approach to change often creates position or niche of the company that result in success in the long term. For processual nature of change to work, views, contributions and compromises of top management is essential. Concerning managing change, the change agents need to be aware of manager’s meaning as well as employee interpretation. It should be noted that when a new thing is introduced, all or some employees may often resist (Hiatt & Creasey, 2003). This is because individual employees experience change at all stages involved. Therefore, there ought to be visible and active sponsorship from the side of management as well as reinforcement of company’s value system and positive culture so as to influence employee positively. Change management emphasizes the need for employee support through change and creation of feedback loop to management. 2.4.3 The potential challenges and solution Gallivan (2013) asserts that introducing new strategies to transform a company come with it loads of challenges that need to be addressed so as to facilitate its implementation. The challenges include but not limited to creating and developing new business models; creating and developing implementation strategy; balancing many responsibilities; holding individuals accountable ; and length of time to achieve tangible results. The first challenge is creating and developing new business model. The new model is necessary to position and align the mission and company’s services as well as internal components such as people, tools, process and culture in the external environment or industry. The proper alignment will enable the organization to deliver its services as per the requirements of the consumer. To gain support, it is important to ensure that active and visible sponsorship is instituted at all levels of innovation process. In addition, the value system and culture of the organization need to be reinforced. There is also need for the management to identify employee resistance points so as to train them, identify and fill gaps in communication and implement corrective action in time. The second challenge is creating and developing implementation strategy. Once a strategy is formed, there is need to provide enablers in form of external support, time, people, money and positive environment influence (Kotnour, 2009). External support is comprised of support from key stakeholders such as the board of directors, consultants, major suppliers, key customers and even government of the day. The enablers increase the chances of successfully implementing innovation strategy. The third challenge of implementing the proposed innovation strategy is balancing many responsibilities. Responsibilities increase when a new business model is created and introduced into an organization for it is important to execute both the new and the existing business models at the same time for the company to run smoothly. The personnel may be compelled to invest more of their time and other resources. The fourth challenge is holding all individuals involved in the process accountable. This can only be possible when the employees have understood and accepted that the new innovation strategy is important for the survival of the company. As a result, they will be able to commit to the execution and successful implementation of the new strategy. The fifth challenge is the length of time it takes to see and experience real fruits of the new innovation strategy. It may take some time to realize the expected outcome and as a result, the payback period for investment will also be extended. Therefore, it is important to motivate employees adequately and always promote hard work, perseverance and positive thinking. 2.4.5 Monitoring the success of the new innovation strategy Monitoring comprises considering the statement below honestly. 1. Determine whether the new strategy been able to shed off inefficient costs. 2. Determine whether the employees have more negotiating power; are independent and professional. 3. Determine whether the there is increase in access over transactions. 4. Determine whether the value created was based on market opportunities. 5. Determine whether the strategy is supported from the top 6. Determine whether objectives, mission and vision are still relevant 7. Determine whether meeting achieves their intended agenda or objectives 8. Determine the lesson learned 9. Determine whether customers are reacting positively to change 10. Determine whether the strategy is expressed in operational terms 11. Determine whether the operation plans have inbuilt measurable milestones and deadlines. 12. Determine whether delays in implementation are permitted. 13. Determine whether the capabilities of the business necessary to implement the project- compare current skills and performance with the needed skills/performance 14. Determine whether all personnel work as a team towards achievement of common objectives as well as rewards 15. Determine whether the multifunction team is working with passion and collaboration 16. Determine whether the management has set deadlines, 17. Determine whether the management demand commitment to quality outcome 18. Determine whether the management provides adequate support. Annexes 1. Direction in the production of services 2. News Print Trends and Assumptions 1. The average age of a news paper reader is 50 years. 2. There are only 4% readers under the age 20 years. 3. There are about 367 daily newspapers in West Germany 4. There are 110 e-papers in  West Germany References 1. Abernathy, P. M. 2014. Saving Community Journalism: The Path to Profitability. North, Carolina: UNC Press Books, 2014 2. Alfred. R. 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