Analyzing "The 12 Different Ways For Companies To Innovate" Essay.

Background of the Article and its Significance

Question:

Read the attached article "The 12 Different Ways for Companies to Innovate" by M. Sawhney, R.C. Wolcott and I. Arroniz, published in the MIT Sloan Management Review, Vol 47, No. 3 (Spring 2006) issue. Critically evaluate the recommendations and conclusions made by the authors. Compare and contrast with other concepts associated with innovation.

This report is composed with the aim of analyzing the article "The 12 Different Ways for Companies to Innovate" by M. Sawhney, R.C. Wolcott and I. Arroniz, published in the MIT Sloan Management Review, Vol 47, No. 3 (Spring 2006) issue. More specifically, the report would be analysing and evaluating recommendations and conclusions drawn in the article. Based on the analysis comparing and contrasting would be done with other concepts related with innovation. Innovation is something that is agreed by every leader to be important. Innovation is mostly about having an idea about something new, executing it, while it is addressing any real challenge and simultaneously adding value to the company and the customers (Drucker 2014). The article describes innovation as something that acts as the compass by which the organisation sets their direction. Many organisations see innovation as something that is synonymous with new product development or conventional research and development.

Evaluation of article

The article by Mohanbir Sawhney, Robert C. Wolcott and Inigo Arroniz has helped develop innovation radar basing it on the interviews they took of the managers who are responsible for all the innovation-related activities at different large organizations across a range of industries. The participants that were included are Boeing, Chamberlain Group, ConocoPhillips, DuPont, eBay, FedEx, Microsoft, Motorola and Sony. The authors even reviewed a lot of academic literature on innovation for helping in identifying and defining the twelve dimensions of the radar. For identifying the dimensions a broad set of questions were used, that followed well-accepted best practices in metrics and questionnaire design. For each of the dimensions two distinct sets of measures were built – reflective measures for obtaining a complete metric for the real level of innovativeness at every dimension and formative measures for gaining insight onto actions or elements that contribute towards the observed level of innovativeness. From the results it was seen that the reflective measures displayed extreme levels of internal consistency, the formative measures defined a huge portion of the variance for the dimension they were connected with and all the different coefficients in the nomological network had the expect signs. For further assessing the validity of the dimensions, the profiles that came out from the innovation radar were offered to the managers that participated in the surveys (Sawhney, Wolcott and Arroniz 2006).

As per the articles, business innovation has been defined as the building of substantial new value for customers and the organization by creatively changing one or multiple dimensions of the business system. This definition leads to three important characterizations of business innovation (Sawhney, Wolcott and Arroniz 2006).

Business innovation is all about new value and not something new: Innovation is relevant if it only is creating any value for the customers and simultaneously for the firm. Therefore, creation of anything new is neither important or enough for business innovation. Customers are the only ones who make sure of the importance of any innovation by contributing to it. There is no difference made by an organization’s thought process regarding it. What actually matters is if the customers will at all pay or not (Parmar et al. 2014).

Business Innovation and its Characteristics

Business innovation comes in different forms: Innovation can happen on any dimension inside a business system. As an instance, the Home Depot Inc., innovated by targeting those people who are dependent upon themselves, but are most of the time underserved as a consumer segment. JetBlue Airways Corp. has managed to succeed in the US domestic aircraft industry by providing the customers with a better experience that counts in leather seats live satellite television, and smartly dressed flight attendants. Cisco Systems Inc. has managed improving their margins with the help of process innovations like the organization’s capability of closing their quarterly financial accounts on the day when the quarter is ending (Pisano 2015).

Business innovation is methodical in nature: Any successful business innovation asks for very minute deliberation from all elements of a business. A good product having a bad distribution channel would be failing in a similar extreme manner like a great new technology that is lacking a valued end-user application. Therefore, at the time of innovating, an organization must take into consideration all the dimensions of their business system (Smith 2013).

From the article it could be comprehended that the four main dimensions inside the business innovation radar serving like business anchors are the offerings the organization is producing, the consumers they are serving, the procedures they are employing and the points of presence they are using for taking their offerings to the market. The authors in their research investigated the way organizations would be able to put to use the innovation radar for constructing a strategic approach towards innovation. More specifically, the radar can assist an organization in determining the way their present innovation strategy stacks up in opposition to their competitors. Putting to use this information, the organization can recognize the opportunities and prioritize their efforts accordingly on the dimensions. The authors have workers with a large global bank for benchmarking their innovation profile in opposition to that of their top three contenders in a leading Latin American country. These analyses helped revealing the strengths and weaknesses of each of the organization alongside any good promising opportunities, especially those ignored by the industry as a whole (Debreczeny et al. 2016).

From the research the authors were able to come to the understanding that majority of the innovation strategies of organizations are the outcome of simple inertia or industry tradition. However, if an organization recognizes and follows abandoned innovation dimensions it has the capability of changing the base of the competition and leaving other organizations at a clear disadvantage due to every dimension asking for a separate set of capabilities that would not be possible to be developed or procured overnight. Moreover, innovating along a single dimension most of the tine impacts choices regarding the other dimensions. As the authors carry on expanding their database of the radar profiles, they hoped to be able to assess a wider range of hypotheses. Their research to date backed the idea of successful innovation strategies tending to be focusing on a couple of high-impact dimensions instead of trying a shotgun method along many dimensions at once. Finally, the innovation radar is possibly a solution for guiding the way the organizations can handle the rising complicated business systems via which they have the option of adding value, making sure innovation happens beyond products and technologies. In the process, the framework can go on to become a significant tool for the corporate executives, venture capitalists, entrepreneurs or anyone who is looking for growth with the help of innovation (Tikhvinskiy et al. 2016).

The Four Main Dimensions of the Business Innovation Radar

Apart from the innovation radar, there already exist some innovation concepts and methodologies that can be used by organizations can embrace while dealing with key challenges.

Business model innovation: This is generally referred to the creation or the reinvention of the whole business itself. Where innovation is considered something more generally seen in the form of any new product or service, business innovation provides the outcome in a completely new and different form of organization that has the capability of competing not just with the help of the value proposition of their offerings but even aligns their profit formula, processes and resources for enhancing that value proposition, capturing new market share and removing competition. Organizations must have a more holistic method for innovation that extends beyond products and technologies (Casadesus?Masanell and Zhu 2013).

Open innovation: It is a philosophy that every organization must embrace inside them. In a more practical manner open innovation is related to the bridging of internal and external resources and acting on those chances. The companies that get this right receive a value proposition that is too good to be missed. It is generally viewed as an umbrella term that contains user-driven innovation, crowd sourcing and co-creation (West and Bogers 2014).  

Lean startup methodology: This is a revolution that is changing the way new products are getting built and launched. The main idea behind this methodology is failing fast but failing cheap and at the same time developing a minimum viable product for beginning the procedure of learning as fast as possible (Blank 2013).

Reverse innovation: This concept assists in understanding what is the meaning behind developing in the emerging markets in the first place rather than scaling down on rich world products for unlocking a whole new world of business opportunities (Zedtwitz et al. 2015).

Disruptive innovation: This concept comes across a bigger business audience, which is a result of the rising speed of globalization and change. With time, it has become easier pursuing radical or disruptive innovation, but it has become harder to be defending any existing business against disruptive innovation. This form of innovation created a new market and value network, which it eventually disrupts, replacing any established market leading organization, products or partnerships (Christensen, Raynor and McDonald 2015).

Blue ocean strategy: This is a systematic method of changing the status of any competition to irrelevant and outlining principles and tools of any organization that can be used for creating and capturing their own blue oceans. This strategy is mostly involved with the search for any business where very few other businesses operate and there exists no price pressure. This model can be applied across businesses and sectors, not getting limited to just any business. The idea of “Blue Ocean” is basically the market share that businesses attempt and search for in verticals or avenues for any new business in which they would not receive any contest of any kind. The strategy is majorly aimed at capturing new demands and making competition irrelevant by means of introduction of a product with superior features (Mebert and Lowe 2017).

Conclusion

This report was composed with the aim of analyzing the article "The 12 Different Ways for Companies to Innovate" by M. Sawhney, R.C. Wolcott and I. Arroniz, published in the MIT Sloan Management Review, Vol 47, No. 3 (Spring 2006) issue. From the article it was understood that innovation is related to new value, comes in different forms, and is methodical in nature. It was also understood that the business radar has four dimensions which helps it determine the manner current innovation strategy helps tackle competitors. Some of the different concepts related with innovation are business model innovation, open innovation, lean start up methodology, disruptive innovation, blue ocean strategy, open innovation, and reverse innovation. The article has described innovation as something that acts as the compass by which the organisation sets their direction, and based on this description, the report was structured.

References

Blank, S., 2013. Why the lean start-up changes everything. Harvard business review, 91(5), pp.63-72.

Casadesus?Masanell, R. and Zhu, F., 2013. Business model innovation and competitive imitation: The case of sponsor?based business models. Strategic management journal, 34(4), pp.464-482.

Christensen, C.M., Raynor, M.E. and McDonald, R., 2015. Disruptive innovation. Harvard Business Review, 93(12), pp.44-53.

Debreczeny, C., Uwe-Meyers, J., Schwarz, K. and Katsikis, N., 2016, March. Challenges of Introducing Innovation Measurement at Businesses Serving Matured Markets. In ISPIM Innovation Symposium (p. 1). The International Society for Professional Innovation Management (ISPIM).

Drucker, P., 2014. Innovation and entrepreneurship. Routledge.

Mebert, A. and Lowe, S., 2017. Blue Ocean Strategy. CRC Press.

Parmar, R., Mackenzie, I., Cohn, D. and Gann, D., 2014. The new patterns of innovation. Harvard Business Review, 92(1), p.2.

Pisano, G.P., 2015. You need an innovation strategy. Harvard Business Review, 93(6), pp.44-54.

Sawhney, M., Wolcott, R.C. and Arroniz, I., 2006. The 12 different ways for companies to innovate. MIT Sloan Management Review, 47(3), p.75.

Smith, M.H., 2013. The natural advantage of nations: business opportunities, innovation and governance in the 21st century. Earthscan.

Tikhvinskiy, V., Bochechka, G., Minov, A. and Gryazev, A., 2016, September. Innovation Radar as a Tool of 5G Development Analysis. In International Conference on Next Generation Wired/Wireless Networking (pp. 383-394). Springer International Publishing.

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.

Zedtwitz, M., Corsi, S., Søberg, P.V. and Frega, R., 2015. A typology of reverse innovation. Journal of Product Innovation Management, 32(1), pp.12-28.