Recommendations on Management of Starbucks Innovation - Case Study Example

Name Class Unit Introduction Starbucks have always been a tech-savvy organisation. The firm was among the first to venture into videos and digital media long before most competitors (Gallaugher & Ransbotham, 2010). At the moment, the company has adopted mobile apps and has mobile payments. Starbucks has over 37.32 million Facebook followers and is highly active on social media. This shows a successful social media innovation. An example is My Starbucks Idea which was launched in 2008. This is a web platform that helps the firm understand what the customers want through collecting their opinions and engaging them. The firm has been able to improve the customers experience through implementation of digital experiences (Corporation, 2016). This report examines Starbucks use of Facebook innovatively in the light of organising for innovation, serendipity and innovation strategy. The report then gives recommendations on management of Starbucks innovation. Organising for innovation For an organisation, the ability to come up with innovation requires them to have the capability for renewal (Markides, 2013). The success of Starbucks in their social media innovation can be credited to their organising for innovation (Corporation, 2016). Flat organisation structure highly supports innovation since it encourages co-creation and idea generation (Panne, Beers and Kleinknecht, 2003). Starbucks success has been based on having strategic organisation structure which is optimised for growth. The leadership has created a flexible structure which has lateral collaboration and innovation. Starbucks has an appropriate organisational structure which has high influence on the management and leadership. This is a structure that has evolved to meet the current market needs. The firm has a matrix organisational structure which consists of functional structure, geographical divisions, product divisions and teams(Gallaugher & Ransbotham, 2010). The current organisation structure is based on improving the customer experience and firm financial performance. Organising innovation has enabled Starbucks to use their social media as a tool to fuel consumer driven innovation. Through use of My Starbucks Idea Site, the firm was able to collect over 50,000 customer submitted ideas. This helped the firm to improve on customer experience, corporate matters and its products (Corporation, 2016). In organisation design, Starbucks have been able to come up with a digital team. This is a team which has a responsibility to come up with the global digital strategy. The global strategy includes social media, web, e-commerce and digital marketing. Through appropriate leadership, the team is able to collaborate with the chief digital officer as the senior leader. Cross-functional partnership makes it possible for digital teams to listen to customers and identify trends and new innovation opportunities. Also, transformational leadership enhance customer experience using the digital strategy (Gumusluoglu and Ilsev, 2009). In addition, the organisation culture plays a role in enabling innovation (Garrett, Buisson and Yap, 2006). For an organisation to succeed in innovation, they have to maintain an innovative culture. This is a culture that can challenge the existing status quo (Conway and Steward, 2009). The corporate culture at Starbucks is willing to innovate and come up with new products. Serendipity To be successful in innovation, there is need for serendipity. Serendipity is enabled through informality in an organisation. This is through having an organisation that is flat (Foster & Ford, 2003). Innovation excellence at Starbucks can be associated with the ability to have diversity in innovation which has enabled serendipity. This is due to fact that diversity acts as a precursor for serendipity (Cross, Nohria and Parker, 2002). This has helped Starbucks to stay ahead in social media innovations and avoid unanticipated disruptions. Innovation in social media at Starbucks has in most cases been emergent. This is through bringing together different fields and pieces of information. The firm has been able to come up with over 277 emergent ideas (Corporation, 2016). Innovation through social media has been emergent with most of the social media innovation ideas gained through serendipity. The virtual and physical spaces at Starbucks complement each other to enhance social media innovation. Virtual spaces such as social media have made it possible to amplify the knowledge that is gained through physical interactions. Also, the diverse virtual connections have led to real life opportunities for innovation and this is supported through informality (Krackhardt and Hanson, 1993). The close knit teams at Starbucks tackle all challenges that confront them. This has made it possible to spot complementary ideas leading to social media innovation (Corporation, 2016). The leadership in this case helps in serendipitously bridging the existing gaps hence assisting in ideas generation (Roberts, 1989). Firms with diverse employees working together lead to high levels of interaction. This interaction as in the case of Starbucks leads to unexpected opportunities. The firms then take advantage of these moments to come up with new innovations. It is important to look at Starbucks breakthrough innovation as part of serendipity. Knowledge flow in this case was critical for enhancing the breakthrough in social media innovation (Cross, Nohria and Parker, 2002). The flows made it possible for peripheral information to permeate. This led to combination of ideas in manners which were novel and useful. This is a proof of convergent and divergent thinking being integrated. Research shows that adopting strategies such as open innovation and physical spaces makes it possible to enhance chances for serendipitous discoveries (Roberts, 1989). The early adaptation of digital network made it easy for Starbucks to increase their bandwidth for serendipity. The discoveries were enabled through use of social networks such as use of My Starbucks idea. The tacit knowledge was converted to the explicit knowledge through socialisation, externalisation, combination and finally internalisation. Socialisation through the use of apps like My Starbucks Idea leads to high interaction and sharing of ideas (Corporation, 2016). This is in a space where there are no constraints that can be imposed by the organisation boundaries. Everyone involved was able to become the part of tacit knowledge. During externalisation, the tacit knowledge was converted into explicit knowledge. This made it possible for everyone to have an understanding (Foster & Ford, 2003). The newly created explicit knowledge was then combined with more explicit knowledge making it possible benefit Starbucks. Based on this observation, it is clear that serendipity led to more radical innovation. Serendipity thus acted as a search which led to unintended discoveries. The open approach to innovation adopted by the firm led to increased chances for innovation. Starbucks recognised early the benefit of open innovation and developed My Starbucks Idea (Corporation, 2016). This made it possible for Starbucks to connect their internal research with the unexpected discoveries and opportunities which the external environment would offer. The firm was able to enhance their innovation ecosystem through including the third parties. Collaboration was increased both inside and outside the organisation. Value was created through use of unexpected information (Foster & Ford, 2003). Innovation strategy Starbucks social media innovation is based on strategic decisions. These are decisions made with an aim of enhancing customers’ relations. The firm has a high presence in the social media with a lot of followers which has enabled their social media strategy (Gallaugher & Ransbotham, 2010). As a world recognised brand, Starbucks has been able to build their presence in the social media. The firm has earned the firsts position among the most socially engaged firms. Apart from gaining followers in social media, Starbucks uses the platform as a tool for customer driven innovation. Through My Starbucks Idea, the firm was able to collect over 50 thousand customer ideas which helped in product improvement (Corporation, 2016). Once an idea has been submitted in the app, customers can vote it up or down. This has helped in identifying and carrying out the best ideas. The firm has extended their customer experience from offline to online. This is through use of online channels such as social media. The firm through their digital network enables their customers to enjoy free Wi-Fi to range of different contents. The firm digital ventures were launched in 2008 enhancing their customer experience. Facebook page was created in 2008 with a small community of fans (Corporation, 2016). Through updating their social media page regularly with relent and engaging content, it was possible to increase the number of followers. The first step was to nurture relationship online through informing their customers on new products and services. The page posting helped a lot in telling the world on their procurement practices and the firm impact on the communities. Facebook offers an avenue where engaging discussion can be held (Gallaugher & Ransbotham, 2010). This makes it possible for the customers to share their experience on a given product. In this case, Starbucks was able to gain information on what the customers wanted. Starbucks used YouTube to upload videos based on their brand, coffee history, and their voluntary services (Corporation, 2016). Through social media innovation, it was possible for Starbucks to engage their customers in different ways. The digital media strategy made it possible to easily introduce new products to the market. It is important to note that social media makes it possible for the firm to address issues facing customers in addition to innovation. Through interacting with the customers, a strong relationship is built (Gallaugher & Ransbotham, 2010). It also makes the customers to feel as a part of the company. Through social media strategy, it is clear that Starbucks were able to realise what their customers perceptions were, their expectations and what changes were needed (Corporation, 2016). Social media acted as a cheap way to engage with the customers compared to traditional means. Innovation strategy used through social media has succeeded due to business crowdsourcing. This is through the My Starbucks idea website where community involvement plays part in improving customer experience. Customer feedback is turned into business intelligence. When the customers are allowed to interact with the company and each other, it helps in creating a base of loyal customers (Cassiman & Veugelers, 2006). It also creates an open dialogue between the brand and customers. This is collective intelligence which has helped in transforming the business. Starbucks social media innovation is based on a lot of channels and means (Prandelli, Verona and Raccagni, 2006). This has helped in keeping the customers at the heart of the business. Through this method of innovation, it has been possible to grow the business, build relationships and enhance customer loyalty. Social networks made it possible for innovations to spread quickly (Corporation, 2016). This shows that social media plays a great part in the process of innovation. Recommendations for the management of innovation Based on the analysis, it is important for Starbucks to continue managing their open engagement platforms such as twitter and Facebook. This is to avoid the drawbacks caused by poor management of these platforms such as grapevine and negative publicity. Open innovation must be part of their management strategy. Starbucks have to maintain and reinforce their social media innovation strategies. While using social media to co-create and generate ideas with the stakeholders, it is important for Starbucks to ensure that they get the best ideas (Gallaugher & Ransbotham, 2010). They must also ensure that they continue making the participants feel to be part of the process. In this strategy, there is need for the mobile workforce to be strengthened so that they can work anywhere and at any time. This is especially with the cloud technologies which can help in optimising IT. This will lead to acceleration of the creation of innovative products and services while at the same time making it possible to easily co-create (Corporation, 2016). The firm must continue coming up with strategic and innovative imperatives which can help them come up with transformation through value co-creation. Social media innovation management as in the case of Starbucks requires having a clear knowledge on where the firm is going. This is then supported by innovation which enables growth and effect change. The firm must decide on the type of innovation they want. As seen in the case of Starbucks, the firm is based on breakthrough innovation which involves significant changes through technology leading to significant growth. It is a product of continuous innovation based on the existing technologies and business models which has changed the way of doing business (Gallaugher & Ransbotham, 2010). As the firm market continues to expand, the digital strategy will continue playing a major role in their market position. No matter the social media platform one visits for Starbucks, the content must be based on firm goals, vision and mission. The firm attention to customer needs through use of social media innovation makes their social media strategy one of the best and this should be maintained (Corporation, 2016). Conclusion To sum up, Starbucks has been able to use Facebook among other social sites in digital innovation to keep their customers at the heart of their business. This is an approach that has made it possible to grow the business while at the same time enhancing their customer relationships. The approach also makes it possible to build a customer loyalty. My Starbucks idea helped a lot in creating a platform where co-creation would happen both internally and externally. It was a strategy that made the firm came up with innovative products while at the same time maintaining and expanding their customer base. It is possible to look at the firm digital innovation based on the lens of organising for innovation, serendipity and innovation strategy. The firm structure, enhancing serendipity and use of the right innovation strategy have made their digital innovation a success. It is recommendable that this innovation must be managed in a manner that ensures drawbacks are eliminated. The management must be carried in a manner that enhances IT optimisation through cloud technologies and also enhance co-creation. Social media co-creation requires having a clear knowledge on what the firm wants. Also, the firm use of breakthrough technology must be maintained. References Cassiman, B., & Veugelers, R. (2006). ‘In search of complementarity in innovation strategy: Internal R&D and external knowledge acquisition’, Management science, 52(1), 68- 82. 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