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The Technical Innovation Is Just The Destination Of The Business

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Question:

How technical innovation is just the destination of the business ?
 
 

Answer:

Introduction

Business industries focus on the different strategies to strengthen the competitive edge. At the simple form, achievement of the business model does not demand the development of the new technologies or the creation of the brand new market. However, it depends on the delivery of the existing product with the help of the existing technologies in the existing market (Casadesus?Masanell & Zhu, 2013). The development and restructure of the business model fulfils such criteria and strengthens the competitive edge of these companies. The study will thus explore the ideas derived from the e-learning activities. The application of the business model innovation in the real life scenario of IKEA will also be discussed in this study. The company has recognised the possibilities of expanding the business in global market due to the strengthened brand identity and customer base. The strategies undertaken by the company for developing the business model will also be disclosed in this study.

Business Model Innovation: Key Ideas

The ideas obtained from the e-learning activities depict that the companies like Kodak or Nokia has lost their edge of competitive ground in spite of undertaking the R&D process as well as the sufficient knowledge about the market. The major reason behind such failure is they all abandoned the process of rethinking the business model in a successive way (Martins, Rindova & Greenbaum, 2015).  Majority of the companies overlook the future opportunities since they are much involved in managing the daily businesses. The key ideas derived from this e-learning activity are as follows:

  • Currently, the rapid changes in the business innovations in different industries are threatening the existence of the companies.
  • The ideas obtained from the e-learning activities implied that the innovation has two major consequences, either increasing the customer values or decreasing the costs of business operations (Spieth, Schneckenberg & Ricart, 2014). For example, Apple Inc. has been introducing the innovative market products to ensure the high customer values. On the other hand, Dell has reduced the costs of the business operations and generating the capital through the process of build-to-order.
  • The business innovation process lies upon three specific myths. The first myth depicts that the innovation appears from the unique approaches. Secondly, it is necessary to invest the bigger resources to ensure the big success (Maglio & Spohrer, 2013). Thirdly, the breakthroughs of innovations depend on the fascinating technologies. However, many successful businesses like Apple, IBM, and Amazon proved these myths wrong.
  • The businesses may fail in spite of investing the bigger resources if it lacks the proper innovative ideas.
  • The technical innovation is not just the destination of the business model development; rather it requires concentrating on the bigger picture (Souto, 2015).
  • The business model innovation is generally focusing on four major factors.
  • The first factor is the focus on the target customer for the business products or services.
  • Second, it is necessary to keep the concentration on the service or the products that are going to be offered to the target customers. It is necessary to understand the feasibility or the acceptability of these offered services or products.
  • Third, the business companies need to consider the suitable medium of creating the value propositions (Kindström, D., & Kowalkowski, 2014). The value propositions help in strengthening the brand identity.
  • Finally, it is necessary to understand the method of gathering revenues for the business development.
  • The renowned international companies, such as IKEA, Ebay, TomTom have brought revolutions in the business operations by restructuring their business model in innovative ways.
  • The implications of the business model innovation are focusing on four different steps, such as initiation, ideation, integration, and implementation (Baden-Fuller & Haefliger, 2013).
  • The initiation process determines the concentration on the current business model used by the company. Hence, it clearly identifies the target customers, offerings, value propositions, and gathering revenues.
  • The ideation process is the method of comparing the current business model with other business model innovations. The identification of the business model patterns developed by different companies is needed to be understood. It demands the basic knowledge of the business model innovations by other companies.
  • The integration process identifies the consistency of the business model. The process is necessary since it includes the detailed works that are needed to be selected as per the suitability of the organisation.
  • The final step is implementation that develops the business model in a careful way. It is necessary to establish a pilot study, testing it and designing the business model before the implementation (Casadesus?Masanell & Zhu, 2013).
  • Assimilation of the quantitative and qualitative data to verify the suitability is also necessary.
  • The implementation of the business model depends on four major rules.
  • First, it is necessary to implement one business model at the time.
  • Secondly, it is essential to communicate ne needs for change and new model development before implementing the model.
  • Third, innovations need time and the short time KPI would not help the company (Spieth, Schneckenberg & Ricart, 2014).
  • Finally, the involvement of the top management is necessary.

Therefore, it has been noted that the business model innovation does not only depend on the technological innovations, it even focuses on the rethinking of the business process. The different thinking and the bigger picture are the major requirement of developing a business model for achieving the competitive edge of the business.

 

Business Model Innovation of IKEA

The development and restructure of the business model fulfils such criteria and strengthens the competitive edge of these companies. IKEA offers the innovative and stylish furniture to the people from different income level at lower price. The company has recognised the possibilities of expanding the business in global market due to the strengthened brand identity and customer base (Kindström & Kowalkowski, 2014). Therefore, the company started focusing on restructuring the business model in an innovative way. The company has noticed that during the expansion of the market in Russia, the real estate value of the near location increased in a significant way. Therefore, the company decided to explore two major business models. The first business model is to sell the furniture through stores and the second one is to derive profitable appreciation in the real estate business. The company has paid attention towards following factors:

  • The company selected the target market of young people and the people from middle-income level (DaSilva & Trkman, 2014). These people seek the good quality and stylish furniture at lower costs.
  • The company created the new division that is known as Mega Mall. The company starts making more profits on running and developing malls in Russia.
  • Establishment of the different stores is the part of the business model. It helps the customers to visit the stores and select the preferable designs. The company even receives the chance to demonstrate the features of the furniture directly to the customers. Moreover, it is one of the helpful processes of analysing the customers’ perceptions regarding the service and products.
  • In order to establish the value proposition, the company has kept the price lower for the high quality trendy furniture.
  • The company has undertaken the high provide advertisement campaign to draw the attention of the customers.
  • The company even has introduced the online shopping sites to enhance the customer base through internet.
  • IKEA has paid attention towards the shipping process to deliver the furniture to the customers’ home.
  • IKEA has introduced the product variation through the innovative strategy implementation.
  • The trendy product features are much attractive to the customers.

            The company keeps the focus on the demands of the customers. In order to meet the needs, the company decided to keep the product quality high and price low. It is even noticed that the stylish and trendy furniture offered by the company is much demanding for the customers. Hence, it is noticed that the business model innovation of IKEA is much effective for achieving the competitive edge.

 

References

Baden-Fuller, C., & Haefliger, S. (2013). Business models and technological innovation. Long range planning, 46(6), 419-426.

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

DaSilva, C. M., & Trkman, P. (2014). Business model: What it is and what it is not. Long range planning, 47(6), 379-389.

Kindström, D., & Kowalkowski, C. (2014). Service innovation in product-centric firms: A multidimensional business model perspective. Journal of Business & Industrial Marketing, 29(2), 96-111.

Maglio, P. P., & Spohrer, J. (2013). A service science perspective on business model innovation. Industrial Marketing Management, 42(5), 665-670.

 Martins, L. L., Rindova, V. P., & Greenbaum, B. E. (2015). Unlocking the hidden value of concepts: a cognitive approach to business model innovation. Strategic Entrepreneurship Journal, 9(1), 99-117.

Souto, J. E. (2015). Business model innovation and business concept innovation as the context of incremental innovation and radical innovation. Tourism Management, 51, 142-155.

Spieth, P., Schneckenberg, D., & Ricart, J. E. (2014). Business model innovation–state of the art and future challenges for the field. R&D Management, 44(3), 237-247.

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