Royal Dutch Shells Innovation - Assignment Example

? ROYAL DUTCH SHELL’S INNOVATION Given the nature of completion in product marketing sectors of the economy and the globalization of trade, companies are prompted to heavily invest in innovation and technology as a cost-effective approach to competition. To move ahead of their competitors in the market, corporations must adopt modern technology, creativity and innovation which come at a cost. There are a lot of financial bearings which must be met by the innovative firm. The process of innovating a firm involves proper analysis of the market (especially in a perfectly competitive industry) which covers from products/services to management strategies. Shell being one of the firms which operates in an open economy is not left behind in adopting new technologies and innovations in exploration, production, and marketing of oil and gas products globally. As noted by Hamel & Skarzynski (2012, p.14), the future of an organization in this stiffly competitive world is bestowed on the ability of the firm to effectively and flexible use technology which stands the potential of enhancing its innovativeness. Royal Dutch Shell has been a pace setter in production and management innovation. Through its technological innovations and flexibility, Royal Dutch Shell has revolutionized the Energy sector for decades. However, like other firms in the industry, the innovation structure adopted by the Royal Shell has certain drawbacks and strengths. The innovation management structure of the Royal Dutch Shell builds on its strengths as a key tool to satisfy its customers and the well being of the employees. The success of the innovation initiated at Shell is believed to be supported by the senior management team. Unlike other organizations (which are rigid to change), every at Shell (from top to bottom) are opposed to old school production and management technologies especially in this competitive economic era. Therefore, the management leads the path towards eliminating technological hurdles which stands on their way to success and market dominance. The level of openness to new ideas, concepts, and technologies is evidenced by the degree at which the management is ready to take the risks of investing in modern technologies both in service delivery and production units. For instance, the scenario planning strategy which has been used by the company over the last forty years has been successful in solving energy crisis. With the uncertainty facing the future of petroleum and oil products, orchestration of probable uncertain scenario rests on how well the management is open to innovation and technological changes both in operations and service delivery. Besides, Shell uses more environmental friendly solutions such as blueprints. Blueprints advocates for electronic engines in the transportation process as a way of reducing pollution. The success of Shell is also explained by its innovational culture which promotes change and technological advancements. Little cultural residence to change technology at Shell has been essential in helping the company to remain competitive and reputable in the oil industry. The company welcomes ideas and concepts from all its staff and goes ahead to reward the employees for their innovative efforts. A perfect example of cultural innovation at Shell is game changer program and social audit (Hamel & Skarzynski, 2012, p.12). Shell has been undertaking a number of management restructuring and product quality to remain competitively relevant in the global energy market .However, its efforts are being marred by some potential gaps that needs further consideration for it to achieve its goals of greater global market share. The basic asset of any firm is the effort of human capital which equally depends on the mode of co-operating and interaction. This company has invested averagely high in technology to improve the quality of its products at a lower value creation cost. On the other side of the coin, this company has given the interest of its staff the least attention and this has significantly contributed to its stunted market growth. This is one of the important aspects of a firm that determine the success of applying other co-operating input factors. Unless the management adjusts its employee treatment policy, the firm is still headed for a low quality and insignificant performance (Kotelnikv, 2001, p.76). The problem of lengthy bureaucracy has been detrimental to the creative works of people to shell. This is results from monopoly of strategy by the top management and dominance of management even on bright minds. This means that a lot of cost and time is wasted for the innovator and this has discouraged many people to support the research and development in shell. The performance of Shell has equally been dogged with numerous environmental related cases. There is the oil spill case pending by the Netherlands on behalf of the Niger delta inhabitants against Shell besides the USA (Ramirez, Roodhart, & Manders, 2011, p.266-7). The oil spills recently experienced are actually as a result of continued use of obsolete extraction technology. The effect of globalization has set stage for competition among firms and Shell is not an exception. Disruptive innovation has increasingly become the tool to beat other competitors in the local and global market for Shell. In respect of its increased investment on research and development, Shell has improved its modes of value creation and subsequently rebranded their products to displace other energy firms. To achieve the goal of disruptive innovation, Shell has put up relentless effort to campaign for reduced pollution of the environment and this is a gesture towards positive externality to the society at large (Kotelnikv, 2001, p.75). In so doing it has been winning the heart of prospective clients, existing ones and the international community especially at this wake of global environmental care debate. Another point it uses to beat the firms in the industry is its innovation and adoption of an environment friendly and efficient gas supplier. This has come to the rescue of many consumers and it is in tandem with the exponential increase in energy demand (Mainwaring, 2012, p.45). As other companies still use inefficient and environment hazardous methods of transporting gas and petroleum oil, Shell’s technology is slowly eating into larger market share. For instance the LNG project has helped reduce carbon emission by 20% while at the same time transporting the gas far and wide even against rough sea. Should the management rectify the above mentioned challenges, Shell will go higher in business excellence. References Hamel, G. & Skarzynski, P. (2012). Innovation: The New Route to New Wealth. Leader to Leader Journal. 19/60. 16-21. Mainwaring J. (2012) Shell Scenarios: Keeping an Eye on the Future. Rigzone.com. 13 Dec, 2012. Web. 18 Dec, 2012. Kotelnikv, V. (2001). Leading Innovation: How To Develop Innovation Strategy, Manage, and Lead Innovation-based Change. 1000ventures.com. Web. 18 Dec, 2012. Ramirez, R., Roodhart, L. & Manders, W. (2011). How Shell’s Domains Link Innovation and Strategy. sciencedirect.com. Long Range Planning. 44/4. 250-270. Read More