Innovation often involves uncertain risks that generally depend on the unknown assumptions. In spite of engaging the adequate resources for managing risks, many companies often face some uncertainties. In majority of the cases, the managers often make mistakes in taking the right decisions since they need to take the instant action for minimizing the uncertain risks (Robinson 2014). Hence, many of the innovations considerably go wrong. Risk management, on the other hand, is the essence and the accelerator of innovation. It has been observed that the energy industry often undergoes many innovations that have the remarkable influence on the business functionalities.
The study would thus focus on the identification of the differences between the innovation and invention. The study would thus ensure the successful implementation of the strategic innovations for achieving growth in the energy industry. Furthermore, the study will discuss the seven different dimensions of the strategic innovation framework. These dimension-based functions would be applied in the case study of Royal Dutch Shell, which is a renowned Energy Company in United Kingdom. In addition to this, the study would also discuss the role of Systematic Risk Management in the successful implementation of the innovative approaches.
Identification of the Difference between the Innovation and Invention
The closer observation towards the innovation and invention signifies the specific patterns in the real life scenario. According to Kedron and Bagchi-Sen (2017), innovation is the commercialization form of invention that has the significant impact on the business industries. The invention is about creating something new whereas innovations signify the formulation of something that creates values for the selling purposes. It is the fact that nothing is permanent in this world neither the product and services nor the technology. Technology is the one thing that uses to change en a regular basis affecting the functioning and operations of the entire business organization like Oil and Gas United Kingdom Ltd. innovation is something that leads in the rise in the profile of the company like oil and gas industry and many others. It helps in the promotion of the company as one of the updated and innovative company (Provasnek et al. 2017). The process of innovation helps in delivery and development of the industry worldwide as the marketing and promotion of the industry that place not only on the national grounds but also for the international markets. Day by day, there is a need to ring improvements and also up gradation to run successfully in the market that includes change in the technology that helps to lead on the way of new innovations and inventions (Lambert, and Davidson, 2013).
In beginning, the two terms innovation and inventions sounds like but there is only a line between the two terms. The fine line can be analyzed only when there is a deep discussion take place. Invention is termed as the creation of the brand new product in the company while innovation is related to the changes in the existing products and services by using the self ideas and creativity (Van Putten et al. 2013).
The application of the innovation in Royal Dutch Shell
In current lives, the necessity of energy services has become the part of the standard living. Therefore, it has become necessary to bring more innovations in the energy industry. At certain level, it has been noticed that the climate change remains the constant concern for the energy industry. In a Company like Royal Dutch shell, there is an increase in the support an attention on the innovation development which has become the key to improve and maintain the competitive competition (Buenstorf, and Geissler, 2012). It not only helps in achieving the competitive advantage but also to maintain sustainability in the organisation. The motive of the company is to expand socially and environmentally that can be done only by bringing changes in the current operations and functions. They are trying to expand by applying innovative technique to its business (Shell.com 2017). There is a separate committee that helps the company to ring innovation. In this way, they apply the innovative theories and models in their organisation so that they can have better benefits out of it. There are very few companies like Shell Company who have adopted systematic approach so that they can identify and also compare the possible models before choosing the final model in their company. It is very important to analyses the model as it has a huge impact on the organization in the future.
The company has paid attention towards producing the natural gas to help the power lives around the globe. This natural gas is the cleanest-burning hydrocarbon that is favourable for the environment. The resources of the oil and gas lie beneath the ocean’s surface that is required for the operational activities of the company (Shell.com 2017). The company has been using these resources to support the economic growth and meet the energy needs in the world. In fact, the company is quite concerned about developing the innovative technologies for improving the safety parameter and making it more affordable (Lai et al. 2014). The association of the creative people is also much helpful for the company to ensure the innovative approaches in future.
Different Dimension of Innovation and Application in Royal Dutch Shell
The business industries usually concerned about introducing the innovative methods of businesses to remain competitive. The innovations brought to the products and services help the organisation to grow in the industry. It is notable that energy industry has been following the innovative approaches much frequently (Gawer and Cusumano 2014). Similarly, Royal Dutch Shell is also focusing on improving the business functionalities by introducing the innovative approaches. The strategic innovation framework is associated with the seven different dimensions. These dimensions signify the systematic approaches of innovations that can be applied in the energy sector.
Managed Innovation Process
The strategic innovation framework includes the management of the innovation process at the initial stage. The business companies need to pay attention towards the sequential steps of innovations. The company, Royal Ducth Shell, has the clear vision regarding the necessity of innovative approaches for the future improvements in the energy industry. Therefore, the associated Shell scientists, engineers, and researchers are working on the R&D process. Royal Dutch shell generally adopts steering innovation in their organization in the business group, divisions and business corporations. Collectively, they make decision so that effective innovation can be applied in the company (Reed, Storrud-Barnes, and Jessup, 2012). The company has to adopt various types of choices so that they can make responsible decisions and innovation.
The second dimension of the framework is the strategic alignment that indicates the adequate supports received from the strategic partners. The company is collaborating with the specialists and the experts at the initial stage to design the innovation process. The company is investing in the research and development among the international energy industry. Each year the company is investing almost $1 million and employing around 43,000 engineering and technical staffs (Shell.com 2017). In the next step, the company is organizing the operational activities in an innovative way. The associated experts are designing the operational activities in a sequential process to manage such innovative initiative. It is one of the most relvaant models on innovation as it is the top level of authority that brings cross functional and multi disciplinary activities that are required to be steered in the open. In this model each and every member of the top level participates so that a healthy and effective innovation takes place in the business organisation (Audretsch, 2012). The top management team has the impact on the governance model as it emphasis a very strong impact on the process of innovation in shell (Bergek, Berggren and KITE Research Group 2014). The company generally expands their business by binging innovation in their company through new venture, projects and on the other process. It is one of the subset team of the entire group that always practices the entire responsibility of the team (Lambert and Davidson 2013). It is the major from in which a widespread from of innovation governance takes place.
The next stage of the dimension is Industry Foresight, which is concerned about the current trends in this emerging market. This stage helps in developing the detailed understanding to the people within the organisation. People associated with Royal Dutch Shell are improving their knowledge regarding the demands of the future world in terms reduction of the carbon emissions (Shell.com 2017). The company analyzed six city archetypes for the betterment of the understanding regarding the essentiality of the energy resources. Therefore, the company is focusing on creating the scenarios for the betterment of the cities in future. The New Lenses introduced by the company is linking the society with the energy services.
The adoption and consideration of the customer insight is specifying the basic needs and demands of the target customers. When the company is well aware of the demands of the customers, it becomes easier for the operational team to understand the necessary innovations. Royal Dutch Shell is expertise in CO2 and Gas (Buenstorf and Geissler 2012). The target customers of the company are:
- Energy Retail companies
- Large and energy-intensive industries
- Power producers
- Exploration and production companies
- Commodity trading companies
The company is much concerned about the future security. Therefore, the customers perceived for the future fuel formulation. The customers opt for the most frequent and innovative way to produce natural gas. This necessity is evolving around the concerns regarding the pollution free environment as well. Judging the customer insights is thus becoming the major agenda in the innovation steps of Royal Dutch Shell.
Core Technology and Competency
The next dimension is the core technology and competency that are considered as the major assets of the energy industry. Understanding the core competency and the necessary technologies is essential for the innovation process. The management team accordingly understands the capabilities, resources, and the competency level for achieving the determined objectives for the betterment of the industry. It comprises of CTO, CRO who occupy the higher positions in the company. In shell company, it is one of the most used models in the company has various authorities that are required to be distributed among the people working with the company (Buenstorf and Geissler 2012). The other reason due to which the company has applied this model is due to the fact that it equally distributed the work among the various people without making chaos. It provides chance to the young and new managers to join the group and it also use rotational basis so that everyone can get a chance. This model is famous for companies that use strong innovative techniques in their business organization by understanding the necessary competency and technological requirements.
It is one of the dimensions that drive the significant growth of the firm within the specific industry. The associated management and operational team need to be competent enough to take the instant action when it is necessary. With the help of this dimension, the company is also able to meet the requirements related to the political, financial, political, and operational factors. Royal Dutch Shell undertakes the hands-on approaches in responding back during the crisis scenario (Gawer and Cusumano 2014). The company is much concerned about the nearby communities and their safety parameter. The potential contractors and the employees maintain the superior level of security and deal with the adequate resources to manage the emerging risks. The operational team ensures the alternative plans for responding back during the risk scenario.
According to West and Bogers (2014), discipline implementation involves the set of activities that are supportive enough to engage the potential stakeholders in the innovative process. These stakeholders contribute to the technical and product development process, designing and prototyping, and establishing feedbacks. This dimension includes the high-level of elements for driving the innovation process in a structured way. Royal Dutch Shell is establishing the regional technological centers for speeding up the chemical reactions. The overall process is quite effective in gaining access to the natural gases. The motive of the company is to expand socially and environmentally that can be done only by bringing changes in the current operations and functions. They are trying to expand by applying innovative technique to its business (Shell.com 2017). There is a separate committee that helps the company to ring innovation. In this way, they apply the innovative theories and models in their organisation so that they can have better benefits out of it. There are very few companies like Shell Company who have adopted systematic approach so that they can identify and also compare the possible models before choosing the final model in their company. It is very important to analyses the model as it has a huge impact on the organization in the future.
Role of the Systematic Risk Management in the Successful Implementation of Innovation
The motive of application of innovation is to offer progress and complement to the existing ways taking place in the business environment. It helps the company to obtain various types of advantages like competitive advantage by reconfiguring the company. Innovation for an organisation that is multinational has become very relevant to succeed in the fierce competition and to survive in critical business conditions. The mechanism of the innovation is very easy and easily applicable o the companies. The changes and innovation leads to significant growth in the company which is very relevant for the continuous upliftment (Bogers 2014).
Inventions on the other side equally relevant as it provides a brand new thing that can be used y others. The biggest benefit of invention is it is totally unknown to others and there is no competition in the market. There are certain things in royal Dutch shell that are invented by the company only in the past years. The research and development department of the company is now become very active to do the same for the company. At last, conclusion on the present study is that royal Dutch shell plc is leading and a global economic giant that has pushed forward towards the success due to the innovation take place in the organization on a regular basis. Still the company has a high scope to adopt changes with the changes taking place in the economy of the United Kingdom as well as in the entire world. The company has clear published goals to move closer to their targets and dreams that must be interlinked to the innovation. The company shell is using various types of decisive and innovative methods to match the global economy. Although, the company has faced many problems that are related to the innovation like changes adoption by the internal and external sources of the company. They also faced problems that the customers were not happy and satisfied with the changes in the beginning.
Audretsch, D., 2012. Entrepreneurship research. Management Decision, 50(5), pp.755-764.
Bergek, A., Berggren, C. and KITE Research Group, 2014. The impact of environmental policy instruments on innovation: A review of energy and automotive industry studies. Ecological economics, 106, pp.112-123.
Bogers, M., Afuah, A. and Bastian, B., 2010. Users as innovators: a review, critique, and future research directions. Journal of management, 36(4), pp.857-875.
Buenstorf, G. and Geissler, M., 2012. Not invented here: Technology licensing, knowledge transfer and innovation based on public research. Journal of Evolutionary Economics, 22(3), pp.481-511.
Gawer, A. and Cusumano, M.A., 2014. Industry platforms and ecosystem innovation. Journal of Product Innovation Management, 31(3), pp.417-433.
Kedron, P. and Bagchi-Sen, S., 2017. Limits to policy-led innovation and industry development in US biofuels. Technology Analysis & Strategic Management, 29(5), pp.486-499.
Lai, Y.L., Hsu, M.S., Lin, F.J., Chen, Y.M. and Lin, Y.H., 2014. The effects of industry cluster knowledge management on innovation performance. Journal of Business Research, 67(5), pp.734-739.
Lambert, S.C. and Davidson, R.A., 2013. Applications of the business model in studies of enterprise success, innovation and classification: An analysis of empirical research from 1996 to 2010. European Management Journal, 31(6), pp.668-681.
Provasnek, A.K., Schmid, E., Geissler, B. and Steiner, G., 2017. Sustainable Corporate Entrepreneurship: Performance and Strategies Toward Innovation. Business Strategy and the Environment, 26(4), pp.521-535.
Reed, R., Storrud-Barnes, S. and Jessup, L., 2012. How open innovation affects the drivers of competitive advantage: Trading the benefits of IP creation and ownership for free invention. Management Decision, 50(1), pp.58-73.
Robinson, M.L., 2014. Brand Building at Shell Oil. In Marketing Big Oil: Brand Lessons from the World’s Largest Companies (pp. 118-128). Palgrave Macmillan US.
Rogers, E.M., 2010. Diffusion of innovations. Simon and Schuster.
Shell.com, 2017. Energy and innovation. [online] Shell.com. Available at: <https://www.shell.com/energy-and-innovation.html> [Accessed 23 Jul. 2017].
Shell.com, 2017. Innovation through R&D. [online] Shell.com. Available at: <https://www.shell.com/energy-and-innovation/overcoming-technology-challenges/innovation-through-research-and-development.html> [Accessed 23 Jul. 2017].
Van Putten, R.J., van der Waal, J.C., De Jong, E.D., Rasrendra, C.B., Heeres, H.J. and de Vries, J.G., 2013. Hydroxymethylfurfural, a versatile platform chemical made from renewable resources. Chemical reviews, 113(3), pp.1499-1597.
West, J. and Bogers, M., 2014. Leveraging external sources of innovation: a review of research on open innovation. Journal of Product Innovation Management, 31(4), pp.814-831.