BMW's Open Innovation Framework Analysis

The assignment provided is an analysis of BMW's open innovation framework, which is a platform that enables consumers to provide their own ideas to the organization. The four elements of the framework are network, technology, human capital, and business model. The analysis reveals that BMW is an innovation-driven company that serves its consumers with luxury vehicles. It highlights the importance of internal factors contributing to the innovation process and suggests that the company should focus on extracting ideas externally and utilizing them in product development.

Running head: MARKETING INNOVATION
Marketing Innovation
Name of the Student
Name of the University
Author Note

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Executive Summary
The BMW Company is founded in 1916. It is a German based multinational company indulges
in the making of luxury vehicle. Bayerische Motoren Worke is usually known under the
abbreviation of BMW. Presently it is being managed by the CEO named Harald Kruger. The
framework for the company is interactive model of innovation (fig 1) which simply denotes
including the internal ideas extracted from within the company and outside the company which
mainly consist of the customers to enhance the innovation strategy of the company and along
with promote the consumer interest of development of the product. This framework includes
entire process from the beginning of generating idea till the processing to commercialization.
The two models are described in the report below which shows that behind an innovation stands
market pull and technology push which gives birth to new idea. The other model in fig 2 shows
that certain factors which are inter related to each other, helps in the development of the product.
The framework of interactive innovation describes the important elements as the external and
internal sources and the technology push and market pull which classifies the other essential
factors contribution in the innovation process. Firstly, market pull indicates the relation between
the consumers and other outside forces with the internal development labs that affect the
innovation process, which is mainly utilized as collaborative approach where all the groups of
BMW is closely connected. Second, is technology push factor that for the company involves the
highest rate of implementation in terms of its design and brand that is the significant part of the
company which serve high quality products. The innovation circle has various parts that show
the four factors contributing highly in the product development process. The four factors are
namely market transition, technology research, scientific exploration and product creation. The
report later highlights the strength of BMW which is mainly the BMW Group’s Research and

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Innovation Centre and weakness turns out to be its less concentration over the R&D networks.
Recommendations are provided to BMW as it should continue its effort in technology innovation
and contributing its time and effort in society and environment development along with focusing
on the Resources and Development networks across the world.

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Introduction
Innovation enables the firms to make profit or commercialize by utilizing internal and
external sources of ideas from the in-house and extracting the outside people. The chosen
organization for the report on which the innovation model will be studied is BMW. It is a
German based multinational company which is engaged in producing automobiles and founded
in 1916. Behind an innovation, two of the reasons can stand out namely technology push and
market pull. There are various factors that contribute while in any innovation process of the
organization that is interconnected. The factors can be market transition, product creation,
technological research and scientific exploration. The report will define the open innovation of
the chosen company BMW, in terms of its strong connectivity of its network. The second
dimension is technological innovation including internal and external idea. Human capital as its
one of the important factor that contribute to build the functional design of the product
development, and lastly the business model that shows the intellectual property are protected
under the company laws. The report also shows the strength of BMW which is its Research and
Innovation Centre at Munich and low dependency over the R&D networks is marked as its
weakness. Instead concentrating over its development channels would help to reach the
innovation pace as compared to its competitors more efficiently.
Discussion
Companies are evolving and almost several of the automotive industries have started
adopting to new frameworks and modifying their new product development (NPD) frameworks.
They mix their right proportion of virtual teams and collaborative and virtual NPD software

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support tools. Adopting and modifying the NPD frameworks is not the only solution. In addition,
a proper implementation of the process will give success is not guaranteed.
Fig 1 Interactive Model of Innovation
Source: (Innovation management and new product development, Trott)
The above figure shows that any organization indulges in innovation process consider
two possible factors while before any of its innovation. The needs of the society or the
marketplace where the organization operates to position in its target market are one of the main
factors that encourage exploiting the technology and ideas to innovate new products. The other
factor that generates within the organization and can be considered as the internal push towards
exploiting technology results into innovating products for achieving the success in the market to
gain competition.

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Technology Push: A development of a new product following the research and development in
the field of technology. It is based on the finding and research of the company itself on the new
plans and ideas to gain competitive advantage and differentiation using innovation (Choi, 2017).
Market Pull: Market pull factor indicates the need or the requirement of a new product or
solution to a problem which arises from the market demand. The need is based on the market
research regarding any improvements to existing products or a completely new product from the
potential customers (Yun et al., 2016).
Market pull and Green Technology Push: This factor indicates the need and creation of both
the market and the organization as well. It had showed that shared interest of the consumers and
the company both have a significant effect over the sales and market trends. For example, low
emissions improve environment betterment can be enforced by both the organization and
consumers.
BMW Framework
BMW has been operating in the market driving technology with successful creativity of
design in cars. The company creates ideas by various methods to collect and extract ideas on
designs, interior designs, creative ideas regarding new technological experience, and ideas
represented by customers to encourage, and promote customer needs and satisfaction. In
addition, it makes this ideas turn into real experience with the help of its resources and
development group. After the development of the product the company processes with its
marketing strategy to promote the product by advertising and promotions, in the market to reach
to its potential customers.

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The company puts its efforts to make the best resulting and attracting product which
furnishes the company goals, and vision to become leaders in technology invention of
automobiles and motorbikes. For example, the robots that is a part of the innovation of BMW.
The company takes into consideration the ideas that offer an experience of pleasure and
care for the customers in addition fulfilling their desire. For example, the BMW’s self balancing
bike is an innovative product of the company that fulfils the customers need and increases the
satisfaction level by offering quality experience. It mainly serves to those customers a chance to
enjoy bike riding without any problem and fear.
Fig 2 Innovation circle with interconnected cycles
Source: (Innovation management and new product development, Trott)

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The above figure defines the innovation circle which shows that the internal factors that
generate in putting effort in the creation of new product. It is possible by using technology and
researches of the BMW Group Research and Innovation Centre. The Group Research and
Innovation Centre is the main source of BMW to become the world leaders in producing
innovative vehicles. BMW is popularly known for its design innovation in vehicles and bikes.
BMW is completely based on its BMW Group Research and Innovation Centre (FIZ) which is
situated in Munich and act as the driving force of innovation. The collaborative approach
including the Group of BMW, the resource and development team with almost 31 productions in
41 countries (von Geibler et al., 2017).
The company focuses on the making of products that create satisfaction and value to the
customers and bring an innovation in the world where they can set the trend of technology and
sustainability with the material mix of intelligent. They believe in resource efficient product with
gaining flexibility and optimization of value chains to ensure competition. The innovation of
technology is being followed by the company since its history.
The company takes into consideration the present market research to generate its
development of new product or existing such that it can show benefit and add value to the
customers thinking. For example, the company with its efficient dynamics continuously
implements sustainable practices in its development by manufacturing low fuel consumption
and emission vehicles. The company combines product creation, scientific exploration and
market transitions to deliver customer value (Watzenig & Horn, 2016).
The company aims to become world leader in providing premium and technological
advanced products and services for individual mobility. BMW increases its level of technology

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innovation with every new product it introduces in the market. For example, the connectivity and
the digital services offered by the automaker plays an important role in delivering the customer
with integral experience and satisfaction. This is a result of scientific exploration, product
creation and technological research.
Strengths
The BMW group has a strong fix position while setting for the innovative and creativity
for is design and brand. The technology innovation is one of the important factor and as well the
strength of the organization. The quality of labor excellence contributing as a strong workforce
stands out to be another significant part of BMW’s innovation success. It has a workforce of
124,729 employees. The BMW group research and innovation centre is the main for all
development of its innovation taking place in its product.
Weaknesses
It needs to put more effort in its R&D section to gain competitive advantage in terms of
not only in internal and its manufacturing department, instead outside the organization.
Lack of appropriate approach to make adequate research from the market before
launching its product stands out to be weakness for the company.
Recommendation
In case to drive global innovation, it is important to concentrate on the resources and its
development which will make the sources emerge and spread around the world globally. The
R&D network across the globe will help to regulate various ideas and enhance the same with
each other’s influence.

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The company is recommended to continue its level of introducing the technology to its
consumers in a more effective way to attract and increase its sales revenue. BMW is innovative
oriented as compared to its competitors in the market. The step of collaboration of the external
source of technology and ideas with the internal research team will favor the innovative
decisions of the organization.
The company is recommended to fill innovation mindset in all levels of the organization.
It means that the company having a tendency to improve its innovation context will have one
common behavior that each of its company level be it either corporate or operation should
nourish innovation and new ideas from all the levels of the company. It will enable to regulate
the ideas such as cross functional design groups will be created to harvest and utilize the ideas
for the development of the new products.
The company is recommended to collaborate with the universities and institutions which
are related with the same interest and field of work. This will enable them to introduce the
entrepreneur career and set a platform to get ideas (Holzmann, Sailer & Katzy, 2014).
Framework related to the Company
BMW Company was established in the year 1916 and presently is being managed by the
CEO of named Harald Kruger. The company offers its product to the middle class and luxury
segment of consumers. It belongs to the automobile industry and it introduces best designed
vehicles with comfort and safety measures (bmw.com.au. 2018).
The new BMW i8 concept is new revolutionary product of BMW that is a creation to
drive over the future. It only consumes electricity with the power of influencing its quality
features meeting the required standards of the BMW cars.

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The NPD framework for BMW i8 concept relates to interactive model of innovation. The
interactive innovation model is framed as where at first the idea is generated, and then research
development works, then manufactures the product. After manufacturing the product, marketing
staregies are adapted to promote the product and then the product is introduced in the market
which is further termed as commercialization.
BMW generates ideas and designs by the help of extracting internal and out resources
and then adds values to it according to the organizational mission and vision that is to override
technology and stay best technology developer in the world. It focuses on the technical and
creative part of the operations. It ensures the development of logistics, engine manufacturing,
materials and resources required in future and electro-mobility technology to support the BMW
group of brand and sub brands.
As BMW has its own BMW Group’s Research and Innovation Centre at Munich which
involves all the other group of BMW namely Rolls Royce, BMW Motorrad and MINI and other
departments which work collaboratively on different parts of the car and enumerate various ideas
to make the best innovation. The interior and exterior designs are made by the research team
during this phase. The company had accepted that it designing of automobile parts are kept apart
from the functional designs concept (Salter, Criscuolo & Ter Wal, 2014).
After building the plan, designs and overall of the car, it follows the manufacturing phase
where the BMW i8 is tested in terms of behavior, electricity consumption, safety and style of the
structure. It follows the manufacturing phase where the car is designed with the technology and
new product development team to meet the quality standards (Wilhelm, Aalbers & Whelan,
2015, January).

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The R&D team of BMW ensures the quality and final testing to make the improvements
which are mainly improved on the basis of the employees and the customers to make potential
changes.
Then the marketing strategies are implemented to promote the product BMW i8 to the
customers. It includes training of the employees promotional planning and introduction to the
market showrooms and individual customers. It follows the phase of commercialization.
The strength of the product became utilization of sustainable resources which enabled the
customer attraction. The research on the customers regarding sustaining the resources which was
appropriately achieved by the BMW Group’s Research and Innovation centre, which made a car
that consumes only electricity.
However, the creation showed a negative impact which was the strength of the car as
well. The electricity consumption brought the customers a fear of riding the car.
Therefore, for this innovative BMW i8 Car it was recommended that if BMW had
alliances with solar panels that would build self sufficient power plant to produce energy for i8
consumption.

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Image: BMW i8
Source: (Authors creation)
Here, in this framework the role was played by the factor of market pull and green
technology push was implemented where the electricity consuming car was a market pull and a
green technology push product designed by the BMW Group’s design. BMW i8 had reduced the
fuel consumption and in addition lowers emission (Cini & Farrugia, 2017).
The company indulges activities that held the customers to engage in sharing and
promoting of the ideas which will be utilized by BMW Group in its ideation process. Activities
such as BMW have organized a contest where the people had to come up with their innovation
approaches by sharing their ideas and opinions about the development of the future cars. It also
includes the related products and services of the company. Hosting competitions such as the
BMW Group Interior Design Contest for extracting personalized ideas about the interior of cars
and other kind of contest. The idea adopted was ‘The BMW Urban Driving Experience’ where

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the company turned towards the crowd to ask for innovative ideas (Hofstetter, Dahl, Aryobsei &
Herrmann, 2017).
Challenges
The organization BMW is one of the leading automobile makers in the world with mixing
the right amount of innovation and quality.
The first ever challenging note that BMW faces is the competition of making the most
innovative creation to serve the customers. The company makes huge investment towards
achieving quality, safety, appearance and performance. The effort is always to provide the terms
of quality, comfortable, building fast and efficient level higher than ever (Trippner, Rude &
Schreiber, 2015).
The other challenge that was faced is they need to maintain their innovation strategy of
standing a strong position in the market. The needs and changes of technology are changing
everyday that arises innovation of new creation by the companies each time. For this BMW has
to maintain its position in the market by regulating its innovation cycle.
Conclusion
In the end it can be summarized that interactive innovation model of innovation that
enables firms to create a platform where the consumers can provide their own ideas to the
organization. It will be useful for the organization to develop new products based on the
consumers demand and interest. The open innovation framework is applied on BMW, indulge in
an automobile industry. It is a globally operating company established in 1916 in Germany. The
four elements of the framework is analyzed namely network, technology, human capital and

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business model. It was found that BMW is an innovation driven company which serve its
consumers with luxury vehicles at present and in future. The internal factors contribute together
in the innovation process. The BMW Group’s Research and Innovation Centre is one of the main
dependants of the organization for innovation development and it is its main strength situated at
Munich. The organization forms a strong collaborative network with its chain of employees and
other brands and sub brands. The company would be successful if its efficiency of introducing
new technology will be continued as it is in present times. BMW should also focus to extract
ideas externally and utilize them in the product development.

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Reference
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