Innovative Organisation: Topcon Corporation - Essay Example

Page Innovative Organisation – TOPCON: Total Stations GPT-9000A Series [Type the 3/28 Content Introduction…………………………………………………………………3 1.2 Market Share……………………………………………………………………4 1.3 Competitive Strategy………………………………………………………….4 1.4 New Product – Total Station GPT 9000A Series………………………….5 2. Innovation………………………………………………………………………....6 3. Literature Review………………………………………………………………...6 3.1 Classification of New Products………………………………………………7 4. Topcon’s Strategy Comparison with Literature……………………………10 5. Sustainable Advantage and Annual Reports……………………………….13 6. Conclusion………………………………………………………………………..16 Total words: 3119 1. Introduction Topcon Corporation established in 1932 is a Japanese conglomerate into the manufacturing of Positioning Business (Surveying instruments, GPS, Machicontrol system, 3D measurement, Precision agriculture, and Mobile control), Eye Care (Ophthalmic instruments, Optometric instruments) and Finetech Business (Semiconductor equipment, FPD/PV equipment, Optical devices). As of September 30, 2009, the company’s employee strength was 4,627. Topcon is listed with the Tokyo Stock Exchange. 1.2 Market Share Since its existence, Topcon has been into optics technology in a major way. Lately, it has merged digital technology into its core area of expertise, i.e. optics technology. In its line of business, Topcon is one of the three topmost companies of the world in producing surveying instruments. In optical technology, Topcon possesses expertise that only limited companies have, enabling it to provide a wide array of solutions to the customers with its vast range of wavelengths. Its global business far outstretches total sales, leading by about 74% of the total Topcon sales, as per the 2008 fiscal year annual report. Topcon produces many No. 1 products in the international market in the line of Positioning business, Eye Care business and Finetech business. 1.3 Competitive Strategy Electronic Total Station in the Positioning business segment is holding the largest share in the global market for providing functionality and performance; it is cost-effective and has product range. The company’s major competitive strategy, according to the company President, Takashi Yokokura, is providing the No. 1 products worldwide quicker than its competitor companies. It has followed “TM-1” (Time to Market No. 1) business functions to minimise operational processes time to half, speed up business and set benchmarks in quality. Focus is more on increasing technological acumen and marketing functions. Operational processes in R&D, product quality and cost competiveness will be speeded up to attain the specific target of TM-1 Company. Topcon Group’s future growth depends on speeding the product in as less time taken as possible to reach market. Only by following this strategy, Topcon can boost its profit by exactly predicting market requirements and delivering products hassle-free, exceedingly satisfying its customers. In positioning business, Topcon is integrating different technologies – electronic and laser technology into its backbone technology – optical technology, thus, enlarging its business domain with machine control, image analysis and GPS technologies for high-accuracy 3D position information. Topcon faces the challenge of excelling in attaining profit and sustainable growth to be a globally foremost company region-wise and market-wise. 1.4 New Product – Total Station GPT9000A Series ROBOTIC TOTAL STATION SYSTEM Topcon has once again set standards by introducing GPT-9000A Series in Total Station. Topcon’s total station is a positioning tool that exactly marks measuring points, offering correct and graphic 3D position displays. The new Total Station GPT-9000A Series offers reflector less range up to 2000 meter with comparatively faster servomotors (70%). It is totally cable less. It is laded with innovative X-TRAC prism tracking technology and speedier, full color FC-200 field controller. GPT 9000A Series is the example of excellence through technology. Although customers may not need to measure a range of 2000 meters but it is very muscular in short distance measurements. The latest 9000A series is equipped with one-touch fast lock feature, which is excellence in target attaining parameter with new RC-3 with Superior XTRAC™ Quick-Lock tracking technology. The machine detects the signal and automatically directs to the prism pole, getting instant resetting of the target lock. The new range of Total Station – GPT9000A Series offers 1000m communication range with its new 2.4GHz spread spectrum built-in radio. It is available in 1, 3 and 5 second angle accuracies to select from as per need. 2. Innovation 2.1 Definitions According to the American Heritage Dictionary, innovation is the act of introducing something new: something newly introduced. According to Frans Johansson (Harvard Business School Press, 2004), innovation is a creative idea that is realized. A practical definition of technological innovation is that innovation is the whole process through which a firm generates creative and new technological ideas and transforms them into new, useful, and dependable commercial products, services, and practices for the firm’s benefit in future. Top managers take keen interest in developing innovatory products to get competitive advantage, which “lies in the ability to create an economy driven not by cost efficiencies but by ideas and intellectual know-how (HBR, 2007). 2.2 Diffusion Theory According to Rogers (1962, 1995), diffusion is a process by which an innovation is adopted and gains acceptance by members of a community. Four main factors impacting innovation are: The innovation itself How information about innovation is communicated Time (how long does it take to adopt the innovation Nature of the social system by which it is introduced Topcon’s Total Station GPT-9000A Series is innovative in improving product features to make it highly saleable product through operational processes. The business definition for New Product Development (NPD) according to BNET Business Dictionary is the chain of processes involved in bringing a new product to the marketplace. As per the traditional product development cycle based on the stage-gate model the processes include concept, generation, analysis, development, testing, marketing and commercialization of new products. Alternative models stress on two areas – speeding the time-to-market models and integrated application of models, striving to achieve flexibility and speed of development (http://dictionary.bnet.com/definition/New+Product+Development.html?tag=col1;rbDictionary). 3. Literature Review It is important to comprehend how companies create this dynamic capacity of developing new products, making it possible to achieve what has not been done before. Actually, it is a way of remaining in the competition and ahead in market by introducing new or improved products. Research on the tools and techniques helps in the development of new products when inquiry into the future needs of the potential customers and suppliers is made. It can be easily achieved by transferring current product technologies to new markets. But depending on old technologies should not be a long term plan to get competitive advantage; new technologies should be developed. Research has been made on capacities like enterprising proprietor, multilayered development teams and partnerships in research efforts to help boost the company’s performance (Mosey, 2005: 115). 3.1 Classification of new products Mosey (2005) has developed a theoretical mechanism to research the behavior of firms divided into two sections. First, a particular quantifiable division of new-to-market products and secondly, a theoretical representation of the company capabilities for new product development (NPD) should be made. The NPD has different typologies of new product -- product capability and technology capability are two dimensions of NPD. These two dimensions incidentally support the thinking of the customer and the company as well. On the basis of product capability, they are typed either incremental innovations or “new-to-market” products. Performance improves multifold with the introduction of such products in comparison to currently in-use competitive products. Different types of NPD depend on the usage of technology in their development. The fist type of NPD uses the same technology as used earlier. The second type of NPD employs new technology in the firm although it is not new to the outside world. The third type of technology is new innovation in the technology. The second type of technology meets the needs of ordinary customers by being introduced in the new markets; enterprising companies just transfer the technology in new markets. For operational purpose, a definition of technology as a tool, a system and a big tool helps in working on the earlier research. From here on technology as a tool was used to make types of product technologies (Mosey, 2005: 115). Other aspects of technology as a tool are certain “best practices” in managing processes, organisational mechanisms that add in the performance level. Companies with set development processes are more successful than entrepreneurs with no set processes in focussing on prototyping and experimentation with new customers resulting in the development of innovative products. The role of the entrepreneur according to some authors is more critical in managing the processes, collecting market information and finalising deals with potential customers (Mosey, 2005: 115). Another dimension to this research stresses on the capacity of firms to remain in the market for long time to be effective in gathering resources for improving performance. Although there is no ideal path or alternative channels to achieve success in NPD capabilities, the notion of equifinality offers more than one path from different starting positions. To reduce the role of context in identifying and describing processes, the “dynamic capabilities have to be defined such as “organisational and strategic routines by which firms achieve new resource configurations as markets emerge, collide, split, evolve and die (Eisenhardt and Martin, 2000,p. 1107)). Unlike resource based capabilities, processes are generic to be attained and developed but need sufficient time and resources as well, deficient due only to learning capacity of the company. Developing dynamic capabilities is a time-consuming process through the process of organizational learning in the market context (Mosey, 2005: 118). A sequence of process development as recommended by Eisenhardt and Martin (2000:1107)) for attaining the dynamic capability includes (1) Single product development; (2) Searching the future; and (3) Joining routines till the last. Thus, processes need to be improved first of all, they should be streamlined to know the future trends in technology and marketplace and then be introduced for concurrent and recurrent learning on development of new product. New opportunities for partnering with end users should be used after identifying them. Issues arising out of such situations should be handled by cross-functional management team with the guidance from the company head. Team should be capacitated to change resources and processes to follow the emerging needs arising from new opportunities. To find whether these capabilities can be developed by finding the paths, positions and processes for new product development depends on the research findings (Mosey, 2005: 119). Firm resources play a crucial role in deciding success in product innovation. Whether a firm has been successful in innovation attempts can be judged via the PIP indicators. These are economic, financial and non-financial results of the firm’s product innovation attempts (Cooper, 1984; Cooper & Kleinschmidt, 1987; Gemunden & Heydebreck, 1992; Hise & ONeal, 1990; Hollenstein, 1996)). It needs to be new or crucially better in technical specifications, parts and assemblage, used software, its user-friendliness or other activity features (OECD, 2005))( Baker & Ahmad, 2010). It has been true with Topcon’s total stations GPT 9000-A Series. It is technically advanced than previous total station products by integration of backbone technologies with machine control, image analysis and GPS technologies. Additional software usage has made the product user-friendly through different usable features like its new RC-3 lock tracking with its innovative X-TRAC prism tracking technology, reflector-less range to 2000 meters, 70% speedier servo motors of the total stations new series: the GPT9000. The product is light in weight in comparison to other products in competition and the system design is totally cable free (Topcon, 2010). Out of the firm’s six strategy resources identified as 1) physical, 2) reputational, 3) organizational, 4) financial, 5) human intellectual and 6) technological (Amit & Schoemaker, 1993; Barney, 1991; Puente & Rabbino, 2003)), entrepreneurial orientation is counted as human intellect. Such manufacturing firms try to get competitive advantage and use both technological and non-technological innovation (Weerawardena & Coote, 2001)). Latest research indicates that innovation is affected by entrepreneurial tendency and innovative capabilities where as previous literature stresses on soft factors like employee involvement, management dedication, customer attention, entrepreneurial traits, organisational context and the external environment are strategic indicators that impact firms effectiveness (Dollinger, 1999; Hashim, 1999; Kao, 1989; Tracy, 1992; Zimmerer & Scarborough, 1998)) ( Baker & Ahmad, 2010). Resources are productive assets, the means to realize and fulfill functions. They are important stocks of knowledge and material assets that help in creating added value in comparison to competitor products. These resources are instrumental in wealth creation and redistribution. Category-wise, innovation is an intangible resource as it is created through knowledge, skills, reputation, entrepreneurial orientation (EO) like remaining on the front foot in taking risky decisions related to innovation (Runyan, Huddleston, & Swinney, 2006)). Contribution of intangible assets is more than tangible assets in adding value (Apintalisayon, 2008)). A company might be knee-deep in innovation but that does not stand guarantee to a successful product (Aboulnasr, Narasimhan, Blair, & Chandy, 2008). The fact that intangible resources are strategically more crucial than tangible resources in bringing together randomly necessities for producing sustainable advantage, which can not be easily copied and replaced by competitor firms (Barney,1991; Hitt, Ireland, Camp, & Sexton, 2001)) ( Baker & Ahmad, 2010). 4. Topcon’s Strategy The literature review above clearly substantiates the role of effectively managing the innovative processes based on research on the market changing needs surfacing from new opportunities. Money and good scientists cannot help in exploiting the opportunity alone until processes are improved as per the upcoming trends in technology and then used for developing new products. Thus, paths, positions and processes need to be innovatively managed. Topcon incidentally possess these characteristics. It has been using technology innovatively by integrating different existing technologies that add value to the features of the final product (Topcon, 2010). 4.1 Topcon -- Product Life Cycle Development In earlier series, total stations GPT 8200-A Topcon had used optimal data link for communication between the prism and the tool besides a remote control instrument RC-II to tell the surveyor the position of the prism after the loss of lock. In total station 9000-A, it is laded with RC-3 and FC-200 Superior XTRAC™ Quick-Lock tracking technology. So technology used is improvisation from the previous product. In the previous series, total station GPT 8200-A, distance could be measured up to 1,200 meters without a prism while in the new product, technology innovation has the capacity to measure 2000 meters, which is an improvement of approximately 70%. Some of the technological features make the new product very powerful like its reflector less EDM technology, which the previous series didn’t possess. So we can say that Topcon has a history of technology advances and is famous for depending on it for “total positioning solution”. It is this innovative technology that has provided a competitive edge to all – the surveyors, civil engineers, contractors, equipment owners, operators, on business issues by increasing their profits, superior craftsmanship, better productivity, less operating cost, and adding to the safety of the human resources at job site (Topcon, 2010). 5. Topcon’s Management Plan As discussed in literature above, new resource configurations by the firms add to their dynamic capabilities, Topcon also consolidated its business by acquiring Sokkia to become “global leading company”. Sokkia has been into positioning business. Integration of the two companies is a time consuming process to be completed by April1, 2011. Sokkia’s market in total station products has been adding value and will help in capturing good share of market for total station new product GPA 9000A series although competitors in the U.S. and Europe are going for M&A activity on global level aided by their sound financial position. Chinese companies are also trying to penetrate the market for positioning products with their low-cost products. Topcon also plans to remain ahead in global competition with the integration of the two companies by diving responsibilities; Topcon will see the sales aspect of total stations among others while Sokkia Topcon – the new name of Sokkia, will be taking responsibility of manufacturing and developing of total stations and other surveying instruments. The product – total stations’ platforms will be standardized through mutual cooperation by using technical expertise of both the companies for saving expenditure, reducing weight and creating differentiation in motor-driven total stations in developing 3D measurement instruments for both civil engineering and measurement market (Topcon, Annual Report 2008). X-TRACK™ Technology Advanced System Design Integrated Radio System New FC-200 Field Controller Completely cable-free system components 6. Sustainable Advantage and annual reports With the introduction of the improvised total stations 9000-A series, Topcon has been successful in creating sustainable advantage as no other competitive product by competitor companies matches its features. Topcon’s financial results for the third quarter of financial year 2009 indicate that the product expansion is happening in new territories; its positioning products have gained access to emerging markets including China, registering growth amidst global recession. Topcon is making inroads to world markets as its overseas sales were about 74% of the total sales in the fiscal year 2008. The electronic total station has been its leading product in positioning business because of the edge it has in technology resulting in better functioning, performance and range (Topcon, Annual Report 2009). Topcon has been aggressively maintaining the sustainable advantage from time to market efforts, reducing operation processes and working on strengthening technology and marketing capabilities. Actually, the company is determined to develop market in all its business sectors including eye-care business and Finetech business as well to firmly position itself in global arena. It is working to train the human resources in the direction of sustained business. Topcon made aggressive reduction in fixed costs as a marketing mechanism to sustain and survive against the winds of recession. Besides entering emerging markets helped in sales growth although reduction in net sales from Europe and the United States could not be compensated fully. As per the company annual report (2009), Topcon’s sales for the first half of 2009 was 66% of the sales in the financial year 2008 for the same period. Sales improved in the second half 0of 2009 due to business expansion and fixed cost reduction efforts started showing positive effects. In positioning business, sales increased due to new product initiation in the first half of 2009 and establishing business in emerging markets. Speedier integration with Sokkia and cost reduction efforts paid results by registering profit in the second quarter. In its financial forecast for 2009, Topcon had set target on realising better operating income by introducing new products and through minimising the break even point. Particularly in positioning business, the company had strategies of bringing down the break even point besides leveraging from speeding integration with Sokkia other than launching new product to compensate the loss in net sales and profit (Topcon, Summary of business results, 2009). Topcon Group’s management strategy in the wake of global recession has been to “becoming a truly excellent global company” by attaining “sustainable growth and profit”. It worked to improvise its operational processes to attain time-to-market No.-1 position. It was meant to keep ahead of the competitors by streamlining the cost structure, through robust marketing efforts, R&D capabilities, improving operation processes and attuning the human resources towards global outlook. Topcon managed to increase net sales even at the time of global downturn although its main business of positioning instruments was affected by the impact of the U.S. housing fiasco, one of the reasons being new product launch in eye-care business – the 3D Optical Coherence Tomography (Topcon, Annual Report 2008). Conclusion Topcon’s future in all the three business segments is secure, the basis of which is technological innovation by linking different technologies with the core technology. Future course of action for Topcon should be developing the product life cycle processes for future guidance besides investing more resources in operations optimization, marketing strategies and continuous push to globalization efforts. Other than promoting the current and latest product series, total stations GPT 9000-A, Topcon should put resources foe excellence in technology by improving the current product to the next level and carry on with its time-to-market strategy vigorously. Innovation characteristics should be promoted and improved upon not just in positioning business but in eye care and Finetech business as well. The company should carry on with its current competitive strategy and make strenuous efforts to attain sound financial position so that global expansion is not obstructed. References: Bakar, Lily Julienti Abu & Ahmad, Hartini. (2010), “Assessing the relationship between firm resources and product innovation performance: a resource based view”, available at: http://www.emeraldinsight.com/Insight/viewPDF.jsp?contentType=Article&Filename=html/Output/Published/EmeraldFullTextArticle/Pdf/bpmj-apr-2009-0024_rtc_cl_final.pdf (accessed 28 March 2010). Mosey, Simon. (2005), “Understanding new-to-market product development in SMEs”, International Journal of Operations and Production Management, vol. 25 no. 2, pp. 114-126 Available at: www.emeraldinsight.com/0144-3577.htm (accessed 28 March 2010). Topcon. (2010), “Topcon Europe Positioning”, available at: http://www.topcon-positioning.eu/uk/img/pdf/pdf_surveying/Leaflet%20GPT9000A-A4-euro-final.pdf (accessed 28 March 2010). Topcon. (2010), “Global Gateway”, available at: http://global.topcon.com/ (accessed 28 March 2010). Topcon. (2008), “Annual report”, available at: http://global.topcon.com/invest/ar/ar2008.pdf (accessed 28 March 2010). Topcon. (2006), “Robotic total station system”, available at: http://www.topcon-positioning.eu/uk/img/pdf/pdf_surveying/Leaflet%20GPT9000A-A4-euro-final.pdf (accessed 28 March 2010). Topcon. (Jan. 29, 2010), “Summary of business results for FY2009 Q3”, http://global.topcon.com/invest/finance/pdf/200912quarter_e.pdf (accessed 28 March 2010). Read More