The Role of Innovation in Business Development - Coursework Example

THE ROLE OF INNOVATION IN BUSINESS DEVELOPMENT Table of Contents Table of Contents 2 Introduction 3 Innovation: A Case of Amazone Inc. 3 Role of Innovation in Business 5 Ansoff matrix 11 Developing Organizational Culture to support Innovations 12 Conclusions 15 Appendix 19 Introduction The business is changing fast with the change in business environment, globally. With incorporation of new technologies and processes the efficiency and affectivity of the business is been kept at par to stay competitive in a market. Therefore the change in business for its development is created by innovations, no matter small or large. The essay would focus upon the innovation aspects of business to critically analyze the role of organizational culture on such developments. The innovation’s role in developing and its purpose in attaining objective oriented results are critically examined in global business context, herein. The context of Amazone has been a great example of change and adoption of new innovative processes incorporated for business development and competence development. Innovation: A Case of Amazone Inc. The case of Amazon is a good example to suggest the role of innovation in business. The idea of how business uses innovation to new market’s attention and further develop the foothold on the present markets. The business today is a global phenomenon where the strategic implecations of each processes undertaken are throught in coorelation with gloabl impact that the business may achieve. The brand of Amazon the multinational online shopping portal is a great example of innovation in business to change the way the brand did business even a decade back. The Amazon CEO Jeff Bezos in one of his speech came up with an extraordinery idea. He wished to use Drone technology to deliver packets across long distances in least possible time, without relying upon thord party logistic servicesa that dont have the flexibility to fly unlike Drones (Johnson 2010, Anthony, 2014). The resercher finds few very distincy innovation from the businress of Amazon with time. One would be its diversification from webbased book store to online shopping portal that today have a varity of consumer product. This e-commerce intervention has not only given the business to achieve diversification but has also aided the consumers with an option to look and find products of their choice at one place (Business Insider, 2015). This business model of innovation and change of business model with change of time has been a key to the Amazons success story. However the model of Blue Ocean Strategy proposed by K. Chang Kim and Renee Mauborgne developed the framework in four step model to give a tool to the managers to see that innovation creates value, creates differenciation over competitor, get a long term benefit. Based on the Eliminate-Raise-Create and Reduce model Amazon can be further studied from their innovation ideas and concepts (Business Insider, 2015). The elimination of middle men like retailers or stockists is been reduced by Amazon by utilizing internet technology to create a business consumer interface. The elimination of one ‘inbetweener’ stakeholer has reduced costing which is further paseed to the consumer as added benefit. The choice and diversity of the product choicesfor a ewide variety of consumer segment has given the business an edge over other competing e-commerce retailers. The consumers are supplied their needed product and needed vissit multiple pages making the ease and divercity attractive to make Amazon a favoured brand to many (Konsti-Laakso et al. 2012, Winter, 2012). Ofcource the investments and infrastructure development associated with such a innovation is huge. The negative effect would have bneen the faliure of the concept incurringa paramount loss of revenue. The CEO in his interview with CNN said, "If you want to continuously revitalize the service that you offer to your customers, you cannot stop at what you are good at1". The attitude of the business towards innovation is expresses with his outlook (Curtis, 2014). The model of innobvation ensures that the consumers perceives value when shopping with Amazon, may it be the Kindle gadget or Web retails (Ryzhkova, 2012). The short time profitability is avoided for a long term global sustainable protential building. Kindle e-device and cloud computing for ecommerce purpose are two major aspect of business that Amazone introduced. The changes were fueled and aggregated by the different business envuiornmental factors that has lead to the evolution of internal technology into a powerful cloud computing platform (Anthony, 2014). The inputs from business atmosphere like economic changes, political influences, changing consumer behaviour, social expectations and cultural aspects has been effectively integrated by Amazon in the venture of developing economies (Johnson, 2010). Role of Innovation in Business The role of innovation in bushiness has been to modify the business processes to sustain and improve its state. The most important source of competetive ability development for the business in advanced economy is innovation (Morris, 2009, Mullins, 2010). In this context, Business.gov.au (2015) suggests that a business can sustain in market with its existing strengths for a while but with time the competitors develop the same and brings in new challenges for business. Further, Srdjevic et al. (2012) argues that in a particular market, the consumers taste with time along with several other market dynamics forcing the business to acquire the same for future existence. Therefore the change is a natural process of business where the innovation plays the part of catalyst for the changes required. However, Williamson (2002) noted that the spending on research and developments do not mean success for a business. The value created through innovations and how it serves the larger organizational purpose is more significant. Hence the purpose of innovation is the value that it generates for the business. The different dimensions of innovation are observed in business. Product innovation or a new technology or product as in the case of cellular phones, are patented innovations that starts off a new set of norms in the business (Bettiol et al. 2013). Process innovations are the improvements achieved in the business process to create value where an example of robotics can be stated over manpower in car production. Promise Innovation is the one which offers a new opportunity to the market and creates own value. An example can be the model of business that Fed Ex took to compete with traditional post office delivery systems. The promise innovation sets two businesses apart in a competitive business environment where one promise to deliver a value of significance over others (Mullins, 2010). However, the delivery idea via personalized drone technology, idealized by Amazon may give challange to this idea of Fed-ex, in the longer run. The purposes do not drive the innovations at times but gives the certainty of objective that keep the minds of business leaders open to new inputs. Therefore the clarity of purpose for innovation gives an open mindedness to accommodate new innovations in business processes (Puett, 2011). However, Griffith and Rubera (2014) argues that the purpose do not guarantee the sensitivity towards market stimuli and may happen in isolation. Nevertheless, for the innovator the purpose of such innovation is key to their motivation to create something new as the outcome of the processes is uncertain (Chattopadhyay, 2014). The purpose of innovation can thus be identified in the business process as a new addition or change in existing process to improve and stay competitive by incorporating improvements. It is imperative for a business to identify the market factorswhile forming the strategies for future market development. The PESTLE model is one that is used by various business managers akong with other various models to assess the market conditions as well as interprete the effects that they may have on business perfoemnce in the future. A broader operspective of PESTLE model is added in the later part of the essay. Simple put the PEST or Political, Economical, Social and Technological interventions in business process has the ability to have adverse impact, if not suitably assessed and process modification is done to suite the changing PEST dynamics of the market. The example may be suggested as the ease or guidelines of doing business in UK is different to that of China. The reasons of such differenciation have its roots in the PEST factors which varies from one economy to other. However, the global pressure of business that has changed the socil perspectives by educating consumers more oppertunity to get the best value for the price offerings. The change of proces, product or even new market interventions has its roots in the PESTLE factors. Each of the elments has its own attribute to bring in modification to keep the business competeteive in a oligopolistic market. The innovation, change management, process adoption, technological inputs for improved quality and cost effective outputs are few to name where the Pest factors have played a significant role in Global business outlook. The purpose of innovations is moderated with the kind of change or the targeted change that business seeks to stay competitive. In such a process a new idea or a new incorporation may make the business further successful reviewing the processes it follows to enhance productivity. The purpose of reviewing the existing ways is to seek for improvements to make the processes more efficient in cost, time or qualitative scales. However, Sharma (2003) observes that when there is a team effort in innovation, the purpose are more objectively related to the business purpose and policies. As the people involved in the business are aware of the organizational processes, the alignments of innovations are more likely to be aligned with them along with financials (Puett, 2011). Therefore the benefits of business from the innovation perspective can be in enhanced efficiency, cost and time savings, for increased consumer satisfaction, compliances with norms and legislation, give the business a competitive advantage etc. The assessment of business with its external enviornment (Macro-Enviornment) is discussed based on the elements of PESTLE model. Amazone’s example is used with some of its sector partners yto investigate the role of PESTLE on innovation. Political: The role of the politics on business processes are driven by the political enviornment/stability of a market situation that the business is working in. Based out of the political stability, laws and regulations of the economy that the business operates, the internal processes are accomodated to suite those conditions. Puett (2011) suggests that the political factors determine the entry, exit, ease or difficulty along with scope of doing business in a specific market. For Amazon the political effects were in the various laws that have strong regulation and bureaucratic regime determining their entry in a specific market that is time consuming. The Kindle devise enables the business to earn forms the contents of the devise by selling the devise at a cheap cost. Nevertheless, the UK media has been very critical about the operations and working conditions of Amazon bring in the political pressure to re-design their operations worldwide. Economic: The government’s initiative to promote e-commerce, liberalization to promote competition helped the business of Amazon gain a larger market across various economies. New market, reliable e-commerce channels and expansion were the benefits that the business achieved from it. The business has gained a substancial growth in sales volume and market share with Technological inputs. Factors like piracy and free download options were not in the hands of the business to control. The lesser the disposable income the more is the stress on book market. To overcome it the brand came up with Kindle devices that has multiple use for reader’s comfort which made the content sales reach all times high for the business. The economic slowdown of Europe and US of 2007 made the business to innovate new models of cost savings while ma9intaining quality delivery all throughout. The business for a brief period of 8months faced a pressure of revenue generation, which of-course they came out of with time. Social: The social role of a market determines the taste, cultural affinity, age, distribution etc or demographics of the consumers which are taken into consideration while developing business strategies. The growth of TV, Mobile technology, media rich contents with a huge user base has helped Amazon venture and seek for varied markets via e-commerce means. The changing social structures and demand has always shaped the business may it be Amazon. The business tries to compete in a highly competitive market and Amazon was one that upgraded its ‘fresh-fashion’ on the web portals in accordance to the changing tastes to stay stable and competent in the market. Further the changing consumer behaviour has been another aspect where the social perspective has guided to have the most efficient strategies to be at par with social change. Legal: The legal factors are the laws of the land that the business operates in. Business formulates its operations in accordance to the legal framework of a market to stay out of legal liabilities. The difference of legal structures and safeguards are different in various economy. This also has helped the Consumer rights get new momentum for growth and choice suiting them the most. The illegal trade of developed economy of pirated books and reading contents had a major effect on the Amazon’s primary business of books and journals. To fight this menace the business innovated Kindle to give the content theft a challenge. The negative aspect of such a step was realized when more than a dozen cases were filed by various writers and publishers complaining that the Amazon did breach of contract on Intellectual property by giving the kindle users a set of free add-on reading material (Curtis, 2014). Technological: The rate of new development and improvement of business processes is determined by the technical inputs. The ease of doing business brought in by e-commerce is an example, where the business has accommodates the technology to stay relevant in global oligopolistic business environment. Kindle or the handheld reading devise of Amazon is a technological innovation that changed the way books and contents were read till now. Kindle has made the reading much more personalized and carrying burden of books also got reduced. This innovation has been the one that has changes the book reading experience all together. The use of Drone technology for faster delivery, using cloud computing to enable consumers to have a ‘one point facility are few technological aspect that business of Amazon is planning and has started acting on them. Environmental: The environmental aspect affects the business from many a sides where legal and social norms play a major role. The growing inclination of consumers towards environmentally friendly processes is observed. Lesser but efficient use of logistics is one way that Amazon is tryig to deal with such menace of environmental degradations. The device for electronic reading has provided a medium to give paper a saving. The paper is produced out of plant substitutes and has enormous effects on the environment. Kindle stopped and gave humanity the way to fight the growing depleting forest resources. However the innovation may have its own peril for the business, if the innovation goes wrong. The revenue loss and tarnished brand image are the most potent of risks that a brand takes on innovation introduction. The technologies of drone is a high cost venture and have the risk of losing upon the money invested if the idea fails to attract consumer’s interest. In the same manner the Hofsteade suggested a 5 dimension of behaviour based on the cross-cultural view of power distance, uncertainty avoidance, individualism, masculinity perceptions of particular culture (Sharma, 2003). The model evaluates and suggests the business of the cultural attitude of a certain group, helping to develop an organizational culture to suitably accommodate them. The example of Amazon’s launch in foreign markets like India, Indonesia, Korea are few to suggest that it studied the cultural aspects well for these economies prior to their entry. Ansoff matrix Ansoff matrix is the strategic planning tool that provides four quadrents to plan future business growth (Please refer to Appendix for Figure). The quadrents in the matrix describes the product with the missions of business growth and the ways that the business may achieve them (Ncvforesight.org, 2012). Market Penetration: The business tries to grow its market size, in terms of consumer volume, with products and offerings in the market that it operates. Example is Amazon’s launch of its retail portal for Indian Market. The Indian market or the businesses suitabiuklity to serve a foreign social and cultural Market Development: The business tries to venture into a new market, international or domestic, with its existing products and offerings. Example is the launch of Kindle device in South East Asian market (a new market) with region specific reasing contents, to grab the new space. Product Development: The business may develop a new product and services in the existing market to achieve further growth. Example is the Kindle itself that has regenerated the reading habit of people having no adverse effect to enviornment as in paper printed books. Diversification: The business may try to increase its market share by introducing new offerings in new markets. However, the diversification of new product line in new market is a risky venture for the business and thus proper planning and execution is required. Example may be the diversification of Amazon’s business into E-Retails, cloud computing etc. The various innovative strateguies used by the business to accomodate the aforesaid growth strategies needs new style of functioning. The new market scenerio needs to accomodate the various factors in the market in business to be effective and successful in such ventures (Ho, 2012). The process and product variations needs innovative inputs that suites the product and market development strategised by the business. Developing Organizational Culture to support Innovations Innovation in business needs certain tangible values in business that supports and promotes positive environment that supports innovation and development. De and Petrillo (2013) opined that the internal and external cultures of business drives the ability to innovate. Further, the culture of risk taking drives the innovation culture to promote the values of risk taking, experimenting, adaptable and rewards such developments. Thus the organizational culture determines the scope of innovation that drives innovation to happen, for a particular business. Mullins (2010) suggests that the organizational culture or behaviour is determined from the way the people of a business interacts with the environment. The business in new market innovation needs to keep the aspect of employing people who are culturally fit for the organization and likewise develop the internal organizational culture to foster cultural competenmce. The business of Amazon is diversifying to different economies to gain new market and suitably build their foothold in newer markets for a long term sustainability. The e-commerce market in Europe and US is highly competeteive thus a new market gives the business a buffeing space to divide its risks by developing multinational presemce. The way people behaves and perceives events is different from one another, dependent upon education, experience, beliefs and ethics. The role of the management is therefore to create a organization wide culture that develops a commopn ground for all who works for the business. From a business perspective the organization can be seen from different angles: Individual: The personality of an individual, skills, attitude, values and needs determines the traits of each individual in a business process. The Promotion and Sustainence of Innovative Cultures in an Organization (Source: Kearney, 2010) Group: The functional structure among a group of individual in a business process with a common or shared role and responsibility creating an organization of its own with common objectives, in a business. The group structure however have its own influences where the individual is not as important as the group. Organization: The formal structure of people with common objectives in a business is the organization. The role and functional hierarchy is present guided by objectives and policies to function. Enviornment: The external factors in business like the economics, technical and social structure, government influences etc constitutes of the enviornment for a business. Figure: Management as an Integrating activity in business (Source: Business.gov.au, 2015) The management of an organization acts as the coordinator of organization people relationship development. Griffith and Rubera (2014) argues that the way management activities are entrusted to develop people–organization relationships that fosters organizational objective actievements. However, Garriga et al. (2013) points that the root of employee displeasure can come from the way a change or innovation is implemented. When people are not adequately informed and taken into loop while introducing a change, the resentment occurs where consultation, prepalnning before change execution, retaining programmes, participation with new technical inputs practice lacks. Therefore the process of such change or innovation introduction needs the people’s participation and insight to have a inclusive change management. Again, Guimaraes (2011) argues that the psycological employer-employee relationshoip develops with mutual respect and care for each other. The belongingness of an employee in business gets enhanced with care and attention from employers side. Conclusions Amazon’s business model innovation certainly allows it to deliver a diverse portfolio of customer value propositions that serves as its main competitive advantage. Culturally, a continuous focus on business model innovation keeps the company connected to its entrepreneurial roots, acting as an advantage that is well appreciated and followed by many other Multinational businesses. To do this, business leaders need to become business model thinkers. Where the need is to understand that both the current model underpinning their existing business and any new models they may devise are complex systems. Thus the efforts are to gain and deliver real value from each interdependent elements, that must work together. The culture for innovation in business is an aspect that the business management develops over a period of time to accommodate the changing macro-environmental aspects in business. The culture however is dependent upon the place of origin and outlook of individual or group based upon their geographical location. The innovation to accommodate the changes required are based upon the macro-environmental issues that suitably shapes the internal business processes. Therefore the business needs to build a culture of risk taking, reward oriented innovation support to achieve the ideas for change and stay competitive in ever changing business atmosphere. References Anthony, S., (2014) The Three Most Innovative Companies of 2013, [online] Available at: https://hbr.org/2013/12/the-three-most-innovative-companies-of-2013/ [Accessed 24 Feb. 2015] Bettiol, M., De Marchi, V., Di Maria, E. and Grandinetti, R. (2013) ‘Determinants of Market Extension in Knowledge-Intensive Business Services: Evidence from a Regional Innovation System’. European Planning Studies, 21(4) :498-515 Business Insider, (2015) Amazon Has A Key Weakness. [online] Available at: http://www.businessinsider.in/Amazon-Has-A-Key-Weakness/articleshow/45568055.cms Accessed 12 Mar. 2015] Business.gov.au, (2015) Create an innovative business culture | business.gov.au. [online] Available at:http://www.business.gov.au/business-topics/business-planning/innovation/Pages/create-an-innovative-business-culture.aspx [Accessed 23 Feb. 2015]. Chattopadhyay, S. (2014) ‘Innovation and Quality: Drivers of Successful Ventures that Seek Success in Catering to Consumers who Live in Poverty’ Nang Yan Business Journal, 1(1): 9 Curtis, S., (2014). The Innovations That Took Amazon From Online Bookseller To Dominant Global Marketplace. [online] Business Insider. Available at: Read More