Managing Innovation in Business

This report explores the concept of innovation in business and how to manage it effectively. It focuses on the innovation history of Apple Inc., analyzes its existing innovation performance and capabilities using VRIO analysis, and examines the industry trends and drivers of innovation in the consumer electronics sector.

Managing Innovation in
Business

Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................1
The Organisation and its Innovation History...............................................................................1
The Organisations existing Innovation Performance and Capabilities........................................2
The Industry.................................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

EXECUTIVE SUMMARY
Innovation is the concept associated with development of new ideas and convert them into
valuable products and services. Apple is a well-known technological company which brings
constant innovations in the market. The innovation history of company depicts its success in
market. There are several factors that drives innovation within the company. VRIO framework
helps in analysing capabilities of organisation that lead towards growth and success. In today's
competitive environment, innovation is the key to accomplish growth and sustainability in
market for long term.

INTRODUCTION
Innovation is the concept of development of new ideas with imaginations. In context of
business, creation of a new idea from which a business can gain profits is innovation. It is
important for a business organisation to manage innovation in their activities. The main aim of
this report is to build an understanding about the innovations in a business (Tidd and Bessant,
2018). For this purpose, an organisation is selected which is Apple Inc. This company is an
American multinational technology company which deals in consumer electronics, computer
software and online services. This company was established in 1976 by Steve Jobs, Steve
Wozniak and Ronald Wayne. In this report, innovation history of this company is analysed using
PESTLE framework. Furthermore, the capabilities and performance of this company is evaluated
using VRIO analysis and lastly, the industry in which this company operates is analysed using
Porter’s five forces theoretical model.
The Organisation & Industry Overview
The Organisation and its Innovation History
Apple Inc. is a large scale company which is listed at NASDAQ and it is a part of S&P
100 companies. This is one of the most growing and successful companies of all the times. The
reason behind the success of Apple Inc. is its innovation. This company is known for its every
innovating product which provides its consumers a convenience of modern lifestyle. Apple Inc.
has an innovation history which acts as its base of being successful. This innovation history is
analysed below using a theoretical framework of PESTLE analysis.
Political – This environment is related to the political stability of a nation and the policies
for trade which are developed by government. Apple Inc. operates in multiple countries. But in
its initial years, Apple Inc. was only operating in few developed countries. These countries have
stable economies and their free trade policies were continuously improving. These opportunities
from political environment influenced Apple to innovate their products and as a result in 1977,
this company came up with Apple II. This device was a full package desktop computer which an
average individual can afford (Biemans, 2018). This device still has a fan base as this is the best
PC of that time.
Economic – This environment includes economic polies such as interest rates, taxation and
growth of the economy. Apple Inc. operates in developed countries where government supports
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business which are involved in creative innovative products which can provide convenience to
people. Using this favourable economic environment, Apple created its own operating system
known as Mac OS X. This operating system was established in 1988 and resulted in being a
sensational in consumer electronics industry (Innovations of Apple Inc., 2016).
Social – This environment is based upon the preferences and choices of people. Apple Inc.
was initially operating in developed countries where this company experienced the dependency
on digital devices in the environment. This social environment provides scope of innovation to
Apple Inc. using which this company created its first ever mobile phone known as iPhone in
2007. Using this environment, Apple also innovated iPod in 2001 and iPad in 2010.
Technological – This environment is related with the technology upgradtion in the society. With
ever increasing technology requirement in developed country, Apple Inc. innovated Siri,
“personal digital assistant” in 2011 (Seebode, Jeanrenaud and Bessant, 2012).
Legal – every nation and union has its own trade laws and legislations which every
business organisation has to follow. In order to follow the law of secure the payment
transactions, Apple Inc. developed ApplePay in 2014 which brought device-based electronic
wallet payments into the mainstream.
Environmental – These factors are the influences which are brought by government for the
protection of atmospheric environment. As developed countries are facing the issue of pollution
due to industries, Apple Inc. innovated its operations and started to adopt 100% renewable
energy sources from 2014 (Apple’s Environmental Responsibility Report, 2018).
Above PESTLE analysis model is used to analyse the innovation history of Apple Inc.
The Organisations existing Innovation Performance and Capabilities
Apple Inc. is one of the most responsible companies which innovates their products
sustainably so that they can benefit its consumers. There are ample existing innovation
capabilities of Apple Inc. which are analysed using VRIO analysis.
Valuable Rare Inimitable Organised
Business process
automation
✓
Human resource
capabilities for
✓ ✓
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innovation
Product mix
diversity
✓ ✓ ✓
Ecosystem of
complementary
products
✓ ✓ ✓ ✓
Valuable:
 Business process automation – This innovation capability of Apple Inc, is valuable as it
helps in executing recurring tasks without any manual efforts by which cost is minimised
and leads to greater efficiency.
 Human resource capabilities for innovation – Any organisation require effective and
efficient employees to enhance their innovation capabilities. Considering this skilful and
talented employees of Apple Inc. are considered as their innovation capabilities which are
the resources behind operations of this company due to which they are regarded as
valuable (Prange and Schlegelmilch, 2018).
 Product mix diversity – Apple Inc. deals in consumer electronics industry due to which
they have designed their product mix in such a way that all the requirements of their
consumers can be fulfilled. Product mix diversity is the valuable innovation capability of
this company which allows them to gather consumer needs and then fulfil it with
continuous innovations.
 Ecosystem of complementary products – Apple Inc. has a valuable innovation capability
with them which is rare in consumer electronics industry. Apple Inc. provides range of
complementary goods with their main products which provides fullest satisfaction to their
consumers.
Rare:
 Human resource capabilities for innovation – The human resource or employees of Apple
Inc. are skilled and well trained (Bieraugel, 2015). Each employee of this company is
provided with an exclusive training which separates them from other candidates. Such
trained and skilled employees are rare which helps this company to continuously innovate
their products.
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 Product mix diversity – Apple has a product mix which is full of varied digital devices
that complement and supplement each other. This product mix ensures that all the
demands of consumers are fulfilled using innovative products and its capabilities. This
type of product portfolio is difficult to be maintained and it’s rare in consumer electronic
industry.
 Ecosystem of complementary products – In consumer electronic industry, Apple Inc. is
one of the well-known company which is known for its innovation capabilities. The
innovation that company brings to its products is rare which makes it differentiate from
its customers (Jaw, Chen and Chen, 2012)
Inimitable:
 Product mix diversity – The product mix of company is developed in such a manner that
cannot be imitate by its competitors. This helps in fulfilling all the needs of consumers
effectively.
 Ecosystem of complementary products – Variety of complimentary products are provided
by apple to its customers with main products which helps in satisfying needs of
consumers. This strategy of company cannot be imitable.
Organised:
 Ecosystem of complementary products – Valuable innovation capability of company is
rare in the industry. The ecosystem of complementary products of Apple Inc. makes it
difficult for rivals to get customers who already own products of Apple.
Apple is an innovative company which operate successfully in the market. The company is
operating more successfully than its competitors in introducing technological solutions and novel
features in products that make them attractive. It is listed as one of the most innovative company
that offer innovative products and technologies to customers which completely fulfil their needs
and expectations (Wu, Lii and Wang, 2015).
The Industry
With the efflux of time, each and every corporate sector tends to evolve. This happens
owing to the rapid progressions that take place within the market that put pressure upon
industries to leverage the same and attain rapid growth and stake in marketplace. In this relation,
consumer electronics is identified to be an industry which has shown massive transformation
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over the course of time. Over the course of time, the innovations such as 5G, Augmented Reality,
Virtual Reality, Cognitive Computing, Internet of Things and many more, have disrupted the
consumer electronics sector across the globe (Abouzeedan, Klofsten and Hedner, 2013).
Innovative trends are being taken up constantly by the companies operating within this industry
in order to ensure long tern sustainability at market place.
Innovation within the confines of consumer electronics industry take place in terms of
products, services, processes, techniques or features. With respect to this, some of the most
renowned examples of consumer electronics companies coming up with innovation are
acknowledged to be Courant (brought high design within wireless charge), Tile (embedded
trackers into chip, laptop, headphone etc.), Insta360 (brought 360 degree camera), Kaios
Technologies (made feature phones smarter within Asia as well as Africa), QUALCOMM
(proliferated 5G within chipset as well as modem) etc. (The 10 most innovative consumer
electronics companies in 2020, 2020). Having looked upon the examples of so many innovative
consumer electronics companies, it can be stated that innovation is the key to achieve growth and
success in today’s competitive era.
Further, the drivers of innovation are determined by way of carrying out industrial analysis
of consumer electronics sector. This has been done by making use of Porter’s Five Forces model
as presented below: -
Porters Five Force Model
This is a strategic management model which provides assistance in gaining knowledge of
the intensity of rivalry within a business sector. In addition to this, it also provides knowledge
about the ways or strategies through which the threats can be dealt with in an effective manner.
The application of this model in context of consumer electronics sector is presented beneath: -
Threat of new entrants: The power of this element in context of consumer electronics
industry is acknowledged to be low because of the high capital investment which is required
to be made. This drives the existing companies to leverage innovations to ensure long term
sustainability in market place.
Bargaining power of suppliers: The extent of this force in context of consumer electronics
industry is high as the quality requirements of companies have to be met by the vendors
(Dodgson, 2018). Suppliers can negotiate prices for providing them with resources through
which innovative offerings can be developed.
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Bargaining power of buyers: The magnitude of this element is high as they have their own
requirements in terms of features. This put pressure over the organisations to come up with
innovative offerings and appeal to public in an effective manner.
Threat of substitute products: The availability of close substitutes within the concerned
industry inflates the substitution effect (Acharya, Schaefer and Zhang, 2015). Thus it drives
consumer electronics firms to make use of innovative trends and develop market disruptive
products.
Rivalry among existing players: The power of this element is high as several companies
operate within this sector. This drives the companies to capitalise upon innovative market
trends to gain an edge over the rivals and inflate its profits.
CONCLUSION
As per the above mentioned report, it has been concluded that innovation is one of the vital
process that highly contributes in growth and success of an organisation. Constant innovations
that an organisation bring into its products and services supports it in attracting more customers
and gaining high success in market. The capabilities of organisation can be analysed through
using VRIO framework. The industry has various innovations like 5G, Virtual Reality,
Augmented Reality, Internet of Things, Cognitive Computing etc. the leads the organisations
towards success.
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REFERENCES
Books and Journals
Acharya, V. V., Schaefer, S. and Zhang, Y., 2015. Liquidity risk and correlation risk: A clinical
study of the General Motors and Ford Downgrade of May 2005. The Quarterly Journal
of Finance. 5(02). p.1550006.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge.
Tidd, J. and Bessant, J.R., 2018. Managing innovation: integrating technological, market and
organizational change. John Wiley & Sons.
Biemans, W., 2018. Managing innovation within networks (Vol. 7). Ro
Seebode, D., Jeanrenaud, S. and Bessant, J., 2012. Managing innovation for sustainability. R&D
Management. 42(3). pp.195-206.
Prange, C. and Schlegelmilch, B.B., 2018. Managing innovation dilemmas: The cube
solution. Business Horizons. 61(2). pp.309-322.
Bieraugel, M., 2015. Managing library innovation using the lean startup method. Library
Management.
Jaw, Y.L., Chen, C.L. and Chen, S., 2012. Managing innovation in the creative industries–A
cultural production innovation perspective. Innovation. 14(2). pp.256-275.
Abouzeedan, A., Klofsten, M. and Hedner, T., 2013. Internetization management as a facilitator
for managing innovation in high-technology smaller firms. Global Business
Review. 14(1). pp.121-136.
Wu, L.W., Lii, Y.S. and Wang, C.Y., 2015. Managing innovation through co-production in
interfirm partnering. Journal of Business Research. 68(11). pp.2248-2253.
Online
Innovations of Apple Inc. 2016. [Online]. Available through:
<https://www.macobserver.com/columns-opinions/editorial/apple-innovation-timeline-
revolutions-keep-turning/>
Apple’s Environmental Responsibility Report. 2018. [Online]. Available through:
<https://9to5mac.com/2018/04/19/apple-enviormental-responsibility-report-2018/>
The 10 most innovative consumer electronics companies in 2020. 2020. [Online]. Available
Through:<https://www.fastcompany.com/90457813/consumer-electronics-most-innovative-
companies-2020>.
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