Innovation at Adidas - Case Study Example

Adidas Student Name: Student Number: Course Code: Instructor: 17th August, 2016 Introduction One of the greatest contributing factors to an organization’s success is its ability to use innovation to achieve its core goals. More often than not, innovation leads to high differentiation in a manner that sets the organization apart and makes it better than many of its competitors. In a market that has players focusing on conventional means to survive, innovation brings in an angle of the blue ocean strategy that sets an organization apart from its competitors. Adidas is a world renowned top manufacturer of sports shoes and apparel, alongside other auxiliary goods that have spawned off the success of its original products. As a company that has a global appeal, it has only reached the status as a successful company through use of innovation and originality that is sourced from a constant research ethic that aims to keep the customers in all market segment satisfied with the top notch products. Table of Contents 1.0 Innovation at Adidas…………………………………………………………………. 4 1.1 Generation of Ideas………………………………………………………….. 4 1.2 Sustainability Innovation……………………………………………………..4 2.0 Lessons from the Innovation at Adidas……………………………………………..5 2.1 Profits…………………………………………………………………………..5 2.2 Customer is Critical Component of Success in Innovation…………………5 3.0 Innovation at Adidas vs. Innovation at Nike………………………………………..5 4.0 Why Mass Customization is Great at Adidas………………………………………..6 5.0 How other Firms can Adopt Mass Customization successfully…………………….7 6.0 Recommendations……………………………………………………………………….7 6.1 Use of Technology………………………………………………………………7 6.2 Allocation of Resources for Research………………………………………….7 6.3 Use of Employees……………………………………………………………….8 7.0 Summary…………………………………………………………………………………8 8.0 Bibliography…………………………………………………………………………….9 1.0 Innovation at Adidas 1.1 Generation of Ideas To Adidas, innovation is more than just coming up with designs and manufacturing aspects that are unique. In regard to this, Adidas, works in an unconventional way by engaging customers in aspects of its production and manufacturing by factoring customer response and using it to shape product. Aubrey and Judge (2012) opine that this sourcing of ideas from customers through online avenues such as Web 2.0 also incorporates employees and tasks them with offering creative solutions that may be geared towards making Adidas among the best. It goes without saying that when customers and employees alike are avenues of sourcing for ideas, then they are rewarded handsomely so that their efforts do not go to waste and are accredited accordingly. 1.2 Sustainability Innovation Sustainability ceased being a buzz word, and was effectively put into action after it appeared to be one of the genuine avenues of reducing wastage, hence minimizing hazards like environmental degradation. In more ways than one, sustainability is now becoming a key approach through which manufacturing is made to realize more through use of a limited amount of resources. For instance, Ragas et. al. (1995) point out that sustainable production requires a more driven approach that looks into systems that minimize use of hazardous material. However, a second angle could involve the use of recycled resources such as plastic in a manner that conserves the environment. At Adidas, Moser et. al. (2006) state categorically that the sustainability practices involve the active use of customers to co-design their own products enables Adidas to use fewer resources since they cut out middle men and market research, therefore enabling them to save more than other companies do. This facility was only allowed for celebrities and athletes, but is now available to a larger market base. 2.0 Lessons from the Innovation at Adidas 2.1 Profits The use of innovation at Adidas is a sure way to increase profits, since, as a means to cutting down on parts of the supply and demand chains, leaves more cash with the manufacturer. According to Fisk (2010), sustainability is a sure way to bigger profits since it keeps the company producing only according to demand, hence limiting resource wastage and maximizing on sales. It goes without saying that profits are critical for any company or business to run, hence Adidas meet this objective through exploitation of the sustainability strategy. 2.2 Customer is Critical Component of Success in Innovation Alsem and Broekhuizen (2002) illustrate the usefulness of customers in mass customization as a means for Adidas to succeed. Mass customization, as intimated earlier, creates an avenue through which customers decide, through channels for providing information that are availed by technology, for customers to make Adidas realize the strategy. In lieu of this, it is prudent to note that without the customers’ input, there would be very little success in the whole strategy of sustainable innovation. 3.0 Innovation at Adidas vs. Innovation at Nike Nike has been the biggest competitor against Adidas for a long time, and it is a proven fact that Adidas had to fight tooth and nail to win over a sizeable chunk of the US market after Nike had established a chokehold over it. This was after the latter managed to surpass Adidas by sales volume in the 1980s. It had then managed to force out other brands. Be that as it may, Adidas’ strategy to involve customers is unrivaled since it has incorporated a bigger customer base when compared to Nike (Ramaswamy, p. 11, 2008). It goes without saying that this attempt at fixing customers’ likings with their product goes a long way to increase loyalty and consistency. This means that overall, Adidas’ strategy earns it a bigger chunk of loyal customers when compared with Nike. Hastings (2003) argues that social marketing is a very critical component of marketing. Adidas and Nike have always had a fair share of competitive strategies. It can never really be quantified, but judging by how fast Adidas’ strategy won it a slice of the US and the larger North American market, we can sufficiently state that it made a bigger impact when compared to its bigger competitor, Nike. 4.0 Why Mass Customization is great at Adidas Mass customization is a success at Adidas because as things stand, Adidas is the pioneer of this strategy. While more companies have since followed suit and decided to use it as a strategy, Adidas has always maintained a bigger customer base that is using this method of sourcing for goods. Naturally, it is only possible that Adidas will have more customers through strategies it has pioneered. Piller (2001) makes the arithmetic simpler by putting profits at the front of using such a strategy. As things stand, Adidas has put premium prices on such mass customized products. This means that besides offering more people this facility, it gains even more from such a venture since celebrities are wont to pay more for such services. The mere fact that Adidas pioneered such a strategy means that established companies like Nike will take the strategy, but it will never want to use it more prominently since it may make it appear to only copy what Adidas does, thereby creating the notion that it is not as innovative as Adidas is. 5.0 How other Firms can Adopt Mass Customization Successfully Under Armour is among the companies that are putting up efforts to increase their strategy to include use of mass customization as a means to achieving a higher customer loyalty. To become successful at mass customization, companies like Under Armour need to embrace a more refined approach of creating customer loyalty. While it sponsors big football outfits like Tottenham Hotspurs in the English Premier League, this in no way helps it achieve mass customization. As such, there needs to be a bigger drive within strategies like sponsorships that ensures an authentication of products from Under Armour through mass customization. Rassman et al (2013) opine that sponsorships may as well act as channels where other strategies can come to use. This means that if Under Armour sponsors teams, then it can as well use this chance to implore the teams to accept mass customization where each team member has their apparel and footwear made to their liking. 6.0 Recommendations 6.1 Use of Technology Companies that aim to use mass customization have to inculcate the frequent use of technology to source for information from customers on how to improve designs just like Adidas does. Da Silveira (2001) clearly shows this by mentioning that information technology has been, is and will still be the best channel where information from customers may be sourced for with ease. 6.2 Allocation of Resources for Research More companies that need to enhance their sales and use of mass customization need to carry out market research on their respective market segments to ascertain that indeed, there is a big possibility that mass customization will work for them too. This means that they have to use financial resources more for this strategy. Zipkin (2001) associates this with the chances that one successful strategy at one company may not exactly translate to success in another. 6.3 Use of Employees Mass customization does not really have to be exclusively about customers. Employees too are a great bet when it comes to sourcing of ideas. Crowdsourcing of ideas from employees is well recognized as a strategy that may be important in ensuring that employees too become a very critical component in sourcing of ideas (Poetz & Shreier, 2012). 7.0 Summary Adidas has been a front runner in using innovation in its operations to gain more customers, and more naturally, generate profits for it ventures. In all this, we can learn that the innovation at Adidas has been solely driven by the customer, while the company provides an enabling environment. While Nike is identified as the biggest competitor against Adidas, Adidas’ strategy to use mass customization has placed it an advantage, even enabling it to recover the US and wider North American market. As such, companies like Under Armour can adopt this strategy by incorporating finances for such endeavors. They can as well use more employee input so that there is synergy in crowdsourcing. 8.0 Bibliography Aubrey, C. and Judge, D., 2012. Re-imagine retail: Why store innovation is key to a brand's growth in the ‘new normal’, digitally-connected and transparent world. Journal of brand strategy, 1(1), pp.31-39. Broekhuizen, T.L.J. and Alsem, K.J., 2002. Success factors for mass customization: a conceptual model. Journal of Market-Focused Management, 5(4), pp.309-330. Da Silveira, G., Borenstein, D. and Fogliatto, F.S., 2001. Mass customization: Literature review and research directions. International journal of production economics, 72(1), pp.1-13. Hastings, G., 2003. Competition in social marketing. Social Marketing Quarterly, 9(3), pp.6-10. Moser, K., Muller, M. and Piller, F.T., 2006. Transforming mass customisation from a marketing instrument to a sustainable business model at Adidas. International Journal of Mass Customisation, 1(4), pp.463-479. Piller, F., 2001. Mass customization. Wiesbaden: Gabler. Poetz, M.K. and Schreier, M., 2012. The value of crowdsourcing: can users really compete with professionals in generating new product ideas?. Journal of Product Innovation Management, 29(2), pp.245-256. Ragas, A.M.J., Knapen, M.J., Van De Heuvel, P.J.M., Eijkenboom, R.G.F.T.M., Buise, C.L. and Van De Laar, B.J., 1995. Towards a sustainability indicator for production systems. Journal of Cleaner Production, 3(1), pp.123-129. Ramaswamy, V., 2008. Co-creating value through customers' experiences: the Nike case. Strategy & Leadership, 36(5), pp.9-14. Rassman, F., Rashford, D. and Williams, J., 2013. Marketing Plan for Under Armour. Zipkin, P., 2001. The limits of mass customization. MIT Sloan management review, 42(3), p.81. Read More