Being the smart thinker of the group, you are assigned the responsibility to write a brief relating to the major considerations to launch a start-up to this effect. Structure your thoughts byresponding precisely and concisely to the 4 following questions,
1 Using the first 3 stages of the generic model of the innovation process discuss your idea/insight, and its design/development to sell and rent such E-bikes in UAE. Among Rothwell’s 5 Models of the Innovation Process, which one would you use in launching the technology to the market? Justify your answer?
2 Using the two components of a business model, discuss how you would create and capture value from E-bikes. Use the framework of the 3 key elements of Value Capture to discuss how value may be captured.
3 Using evidence from the above case study, make a business case the adoption of E-bikes as an environmentally friendly solution. Using the matrix discussed in chapter 13, what type of Innovation does the E-bike represent? Among the 3 strategies discussed in class for adoption of green innovations (Niche, partnership, endorsement) , which one(s) would you recommend for adoption by your Ebike start-up?
4 What recommendations in terms of policies, procedures, regulations and incentives would you make to authorities to support the adoption of E-bikes in the market?
The Generic Innovation Process for E-bikes
The first three stages of generic model of innovation with reference to designing or developing to offer or rent E-bikes are as follows:
This is the first stage of generic innovation model in which the idea of innovation is conceived. According to Benedek et al. (2014) the innovator conceives these new ideas about innovation from two sources, first from own experiences and second generate new ideas while executing the innovation process. This inspiration to bring about an innovation can come from own experiences, some sort of challenge or from the need to solve a problem. For example, E-bikes would solve the problem of pollution due to high consumption of non renewable fuel by large numbers of cars and the high rate of traffic jam in those cities. These two problems forced researchers to think of an innovative mode of transport like E-bikes which would be capable of solving these two problems and enabling the commuters to reach their destinations on time. An analysis of the discussion shows that problems and challenges lead to generate ideas to bring about new innovations to solve them.
According to Sarooghi, Libaers and Burkemper (2015) creativity inspires development of innovation. The innovators study the environmental factors to judge the feasibility of the idea and its limitations. The innovators take into account factors like government policies and customers preferences to develop the innovative products (Cui and Wu 2016). For example, in order to design E-bikes or electrical bike the innovators have to consider the opportunities and challenges to the innovation. The opportunities are reduction of pollution and traffic congestion, saving fuel and saving time while travelling. The threats are limitations or absolute banning of E-bikes in several major cities. This discussion shows that development stage of innovation is dependent on opportunities and threats the environment offers to the innovation in question (E-bikes in this case).
The innovators at this stage develop a preliminary model of the product and test its application. The preliminary tests show the strengths and weaknesses of the new products. Ilott et al.(2014) state that the innovators at this stage can generate new ideas to bring further improvements while studying the strengths and weaknesses of the innovative products. For example, after designing the electrical bikes, the innovators can test the aspects like their speed, energy consumption and riders’ safety. They can then bring about necessary improvements to make their innovation more efficient and acceptable to the customers.
The Business Model Components for E-bikes
The appropriate model among Rothwell’s model to launch the E-bike technology in the market would the coupling model. The coupling model has five stages idea, R&D, manufacturing, marketing and product launch. These five stages are integrated with technological factors like use of science to attain sustainability and market factors like demands from customers. The electrical bike is an innovative product and requires continuous idea generation and R&D to manufacture the product. It can also be pointed out that the product is new and demands aggressive marketing activities to create demand in the market (Wang et al. 2013) Hence, it can be justified that the coupling model is appropriate to launch the new technology of electrical bikes in the market because it contains all the five stages to launch a product and aligns it with science and market. This will result in continuous demand from the market on one hand and continuous improvisation on the other.
Two components of business model chosen to create and capture values for electrical bikes are customers and innovators.
The customers create demands for the products like E-bikes, purchase them and generate revenue for firms manufacturing those products. Their changing needs and new demands encourage the firms to introduce innovative products and improve the existing products (O'Cass and Sok 2013). Thus, customers create value for firms by generating revenue and encouraging innovation which makes them significant component of the business model.
Suppliers provide the firms with raw materials required to make new innovative products and bring about improvisation in the existing products. They add values by making these materials available to firms on time which makes them important components of the business model (Pang et al. 2015).
Appropriability refers to the ability of a company to bring about appropriate innovation using intellect and market information. The innovators can judge the feasibility of the innovative products like electrical bikes based on the market conditions like demand for the product and its utility to the customers. Complementary assets refer to the knowledge which innovators can acquire from the market like advancement in technology and changing customer preferences. They can exploit the knowledge available in the market to bring about innovation in their products like using high standard lithium batteries in the E-bikes instead of lead acid batteries which are more durable. Revenue generating mechanisms consist of marketing channel which allow the manufacturers sell their products to the customers and generate revenue. Inference of the three elements of value capture shows that appropriability allows the innovators to test the appropriateness of the new innovative in the market while complementary assets result in exploitation of the new market conditions like advanced technology to bring about improvisation of the existing products (Pantamee and Mansor 2016). The revenue generating mechanism allows the innovating firms to accede to the consumer bases and sell their products. This generation value for the manufacturers and encourages carrying on further innovation. This analysis shows that the three steps result in bringing about the innovation, exploitation of market opportunities and selling the product to capture or generate values for the innovating firms (Groves et al. 2016).
Environmental Benefits of E-bikes
Electrical bikes can be environment friendly solutions and can help in dealing with a number of environmental problems. The electrical bikes or E-bikes will use battery instead of petrol thus cause less pollution. They will use the bike ways which will allow the commuters to avoid traffic congestion (Collado, Yu and Pettersson 2014). Using more electrical bikes will result in the reduction of number of cars on the road and help to cut down the amount of smoke emitted by cars. The commuters can easily reach their destinations on time. The usage of E-bikes for private transport will help in conservation of petrol for public transport and heavy goods carriage logistics. The analysis of the discussion shows that E-bikes can be adopted as a environmental friendly modes of transport to reduce pollution in the cities (Pantamee and Mansor 2016).
E-bikes follow open innovation strategies because it would require the innovators obtain knowledge from the existing electrical bike manufacturers. The innovators need to acquire technological knowhow from the laboratories which conduct research on sustainable innovations. They need to gain support from the suppliers of lithium ion batteries to be used to fuel the bikes. This shows that E-bikes are open innovation using knowledge from third party identities like laboratories (Carayannis et al. 2014)
It is recommended that the new E-bike innovators and manufacturers show follow partnership mode to start their business. They can enter into partnership with firms having knowledge about the electrical bikes especially established manufacturers with deep market penetration. The start-up firm will be able to exploit the resources and goodwill of the partners to make and sell E-bikes (Solesvik and Gulbrandsen 2013).
The following recommendations can be made to the authorities in terms of policies, procedures, regulations and incentives with relationship with E-bikes:
- The authorities of nations like the United States of America and China should legalise E-bikes as legitimate modes of transport.
- The government should make licensing mandatory for E-bike owners and users.
- The authorities should register every new E-bike sold which will allow them to track the licensing of the bikes.
- The bikers should be directed to keep to the bikers’ way to ensure that they do not end up colliding with heavy transports and causing accidents.
- The authorities should have boards and signs installed in the crossings and beside the roadways to direct the other vehicles like trucks and busses to keep out of the bikers’ lane.
- The authorities should limit the maximum pollution limits private vehicles can cross.
- The government should regulate the number of E-bikes by imposing license mandating on the users. This will allow the governments to regulate the number of E-bikes in use in the cities.
- The transport authorities should regulate the movement of the E-bikes and regulate their mobility strictly to the bike ways.
- The bikes should be mandated to wear helmets while riding the bikes and riders without bikes should be fined heavily.
- The authorities should encourage people to use electrical bikes for private transport.
- The governments of countries like China and the United States of America should provide financial support to encourage more sustainable innovations like E-bikes.
- The tax authorities should allow tax rebate to E-bike manufacturers to promote growth of E-bike industry.
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