Managing Innovation - individual report

This report discusses the Blue Ocean Strategy Innovation Theory and its application in managing innovation. It covers the advantages and disadvantages of the theory, its historical development context, and its future development context. The report also includes a case study on Amazon and its use of the Blue Ocean Strategy Innovation Theory.

Managing Innovation

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
Blue Ocean Strategy Innovation Theory................................................................................1
Application of the Blue Ocean Innovation Theory in the Historical Development Context. 5
Application of the Blue Ocean Innovation Theory in the Future Development Context.......6
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Innovation is the capability to apply creativity and new ideas in a current business plan to
identify new opportunities for revenue generation in order to gain competitive advantage. It can
be implemented either by enhancing improvement in current business model or adopting new
methods for the purpose of value addition. Innovation is important in a business to differentiate
their ideas from that of others. Amazon serves as a top leading technology industry of e-
commerce and it aims to fulfil maximum areas of requirements of people by excelling in mostly
every important field. In context with Amazon, it follows a continuous innovative approach for
the growth and expansion of its operations by constant addition as well as enhancement of goods
and services. The company keeps introducing new ideas and inventions that has leads to its
success and progress. It has invented a new addition through designing a online gaming platform
through collaborating with game developers. The launching of this innovation will help the
company to widen its scope of growth and expansion magnitudes and will allow the company to
enhance its reach to the audience.
MAIN BODY
Blue Ocean Strategy Innovation Theory
This strategy implies market development where the existence of competitors is very low
indicating high potential for earning profits (Attri and Bohler-Mulleris eds., 2018). This term
explains a vast empty ocean full of opportunities that can be utilised to extending markets. This
strategy focus on mainly four principles for the execution of blue ocean which is explained in
detail below.
How to create uncontested market space by reconstructing market boundaries
This principle suggests that a company needs to observe and analyse the conditions
prevailing in a market and create strategies that implies differentiation. This principle focus on
the creation of uncontested market beyond the existence of current market boundaries. In context
of amazon, the company is one of the biggest technology oriented e-commerce industry. The
company will gain competitive advantage by extending its dimensions into online gaming
platforms (Cabezas-Rabadán and et.al., 2019). The company maintains high brand image and
reputation which makes other gaming industries difficult to compete with it. The app has been
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designed ensuring high creativity which is capable of grabbing maximum attention of the
audience.
Focusing on the big picture
Strategy formulation while executing Blue ocean pays attention on the conditions of
market instead of the requirements of the audience. Generally before implementing a new
strategy, the managers and leaders of a company performs data analysis and thoroughly evaluate
statistics regarding past experiences (Dodds and Holmes, 2020). This principle focus on the idea
of exploring the bigger picture rather than just sticking to its conventional methods. Evaluating
numbers is not the area of emphasis here, it encourages concepts different from old conventions.
Amazon is focusing on devising strong strategies by designing the app in a way that allows
people to connect across different boundaries. It offers a virtual touch of playing in person where
the fantasy scenarios seems absolutely real.
Reaching beyond existing demand and supply in new market spaces
This principle suggests the identification and analysis of customers preferences or
behaviour patterns and decide the scope of market accordingly (Kerr, Epps and Abolhasani,
2019). It focus on the evaluation of factors which is keeping the potential customers away from
the market. This allows the company to figure out the methods of grabbing more audience in
their market through value addition. Through this launch, Amazon is ensuring high value
addition by expanding its dimensions for a greater advancement. This invention will boost the
youth and teenagers to further enhance their engagement in Amazon provided services.
Getting the strategic sequence right
The blue ocean is a systematic process created including proper implementation of steps
and procedures. The establishment of blue print containing four necessary components is
essential to properly apply the blue ocean strategy. These are buyer utility, price, cost and
adoption. The buyer utility refers to the process of creating exciting offers that is capable of
generating maximum value and satisfaction to the consumer. Price refers to determination of
accessibility of a product while cost is the evaluation of expenses incurred in creation of a value.
Adoption implies the process of addressing the issues in order to implementing the business plan.
Analysis of these four elements is crucial for this strategy. If one factor is not favourable then
reorganising and rethinking is required for the execution.
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In order to effectively execute blue ocean strategy, a company is required to consider the
four actions framework to evaluate value addition. These four actions includes: Raise: it involves the factors that needs to be raised above the company's standard.
Amazon is focusing on maximum differentiation and advancement that it can create in its
new innovation. Eliminate: this includes the factors that a company requires to eliminate in order to
explore new opportunities and avoid the use of old conventional methods (Mokos, and
et.al., 2021). Reduce: these include the factors that needs to reduced below the company's standard.
The company is attempting at reducing its prices involved in different levels of the game
so that it is easily accessible by the people of every age.
 Create: these are the components that needs to be created in order to grab the audience's
attention and allow the company to enhance its services.
The five step process of blue ocean strategy Selecting the correct position to initiate and creating the right blue ocean team for the
new plan: this focus on choosing the areas where the company is looking for expansion.
In context to amazon, the company has done detailed research before introducing new
scope of dimensions and has selected the best team of professionals to execute the
project. Clear mind regarding the current state of play: this implies having a clear mindset
about the ideas and plans that needs to be executed. Amazon stays very clear about its
innovation and new additions that it offers to the audience. It indicates the clarity of
ideas and strategies that one is planning to implement. Exploring opportunities that are serving as hurdles: this step suggests the identification
of constraints that can be turned into opportunities to solve issues. This step includes the
vision of the position that a company wants to attain (Sarker and et.al., 2018). In context
with amazon, the company is removing hurdles through proper utilisation of resources
and taking advantage of opportunities. Systematic reconstruction of market boundaries and designing alternative blue ocean
possibilities: this step defines the options that focus on low cost strategies and
differentiation. Both of these factors explains the possibilities of success of a new plan or
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an already existing idea. Amazon is making maximum possible efforts to ensure low cost
strategy and bring differentiation in its executing project.
 Launching the final suitable blue ocean move: this step ensures the proper selection
and execution of your ideas of blue ocean strategy through conducting testing in market
and finalizing planned actions.
Blue ocean allow companies to exit out of ocean full of high competition by developing markets
which are free from rivalry and thus induce growth of a business idea. Blue ocean strategy is
being evaluated by understanding its advantages and disadvantages.
Advantages of Blue Ocean Low Competition: The first and most important advantage of this strategy is less
competition. It target markets where it is easy to maintain dominance as there are no
competitors prevailing in the current scenario. In context to amazon, the company face
less rivalry from its major competitors in this segment. High Margin: Another merit of this strategy is high margin as due to lack of competition
high prices are charged from the customers. This improves profitability of the company
by generation of high revenues and improves the status of an organisation (Thrassou,
Vrontis, and Bresciani, 2018).
 Low Stress Level: The other advantage of this strategy is reduced level of stress due to
low competition. In context of Amazon, it face no competition from its relevant
competitors while introducing this plan. The company deals with no stress levels as it
does not have to worry about constant analysis of statistics and formulation of strategies
to reduce the threat of competition.
Disadvantages of Blue Ocean Difficulty in Identifying Markets: the major demerit of this strategy is the problem
arising in search of markets with absolutely no competition. With growing advancements,
every field or sector is emerging and making progress and it becomes very difficult to
select markets where competition is very low. Low Success Rate: this strategy includes testing and experimenting with goods and
services. It involves constant research and there is always possibility of failure while
experimenting in completely different segments (Werning and Spinler, 2020).
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 Competition During Later Stages: initially, there is low competition under this strategy
but as the project grow and expands, other companies starts imitating your ideas and give
rise to competition during later stages.
Application of the Blue Ocean Innovation Theory in the Historical Development Context
When the Amazon launched itself in 1995, the term e-commerce wasn't even visible yet,
and not involved in the everyday customer lexicon. There was no such thing as digital
commerce, consumers knew precisely what they wanted and the nearby shop from where they
could obtain them (John and Ross, 2021). Blue Ocean Strategy is a strategy which combines
product differentiation and price advantage to open entirely new markets and new demands. The
Amazon started as an online book-store 22 years earlier and since then it had achieved
undisputed growth and became the largest internet or online bookseller, a global media company
and the most successful IT service provider. In past decade, the business expanded to brick-and-
mortar retail business, launching books across the US and beta testing Amazon Go in Seattle. As
the company needed the multi-faceted growth it adopted to countless strategic moves of which
few became failure and most of them a success.
Amazon has 45% of e-commerce total market sales being approx 235 billion dollars.
They disrupted the retail industry and the company keeps finding paths to disrupt their own
business model. The company values are described by their customer orientation, innovations,
long term thinking, passion to enhance experience and long term thinking (Belmonte-Ureña and
et. al., 2021). These values can be observed in Amazon's history. Amazon was established in the
year 1994 by Jeff Bezos who is a challenge seeker. With a initial investment of $250 thousand he
formed the roots of Amazon which now stand with approx 859 billion dollars. The company
started with the objective to eliminate the need for physical stores in order to eliminate high
investments and expansive stores costs and provide 24/7 access to their customers. The biggest
challenge of the e-commerce is the delivery time, which was reduced with the going in opposite
direction of the market by which Amazon was able to reduce the delivery time and can purchase
a product and delivered in only two days. The Amazon achieved this fast customer delivery by
Amazon Prime, which is a premium subscription service, started in 2005 and charges minimum
amount for yearly subscription to its members.
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According to Jeff Bezos, on the yearly investor letter of 2018, they had more than 100
million members, which is almost 12 billion dollars of inflows that Amazon can invest in supply
chain. Amazon rose customer satisfaction to a new standard, pioneered with one click shopping,
customer reviews and feedbacks, fast receipt verification on mail etc. (Lohrke And et. al., 2021).
Amazon is more convenient than Alibaba and easier to use than other applications. The company
clearly defines about the quantities and prices of products coming from China which takes longer
duration to reach the country for distribution. This had made Amazon the market leader in online
and e-commerce trade. The infection point was hit in the year 2018 from now on the yearly
operations can break even. For instance, Amazon Web Service (AWS), is a marketable product
with high demand and amazon can supply it at one-tenth of the cost of competition.
The successful strategic moves that were adopted by Amazon includes Marketplace,
Prime, Amazon Web Services, Kindle and the company failed in Auctions, A9 Search Engine,
Endless and Fire Phone. The company analysed commonalities and differences among them, to
understand the roots of company's high and poor performance. Blue Ocean Strategy concepts
were applied by Amazon to analyse its market-creating strategic logic for future growth. In this
context the Amazon is an internet business with the purpose to generate real value for the
customers and that they began serving them books. That's an important word 'began' because
they were constantly looking for creating higher efforts to rise profits based on large customers.
In the Year 2019 Amazon gained the profits of the business and its operations of physical
and digital markets of more than $87 billion which was 5% of the US retail spendings. They did
so by recognising unexplored potential, recognising that risks leads to transformation (Peralta
and Gismera, 2021). transforming innovation into value, developing new model of consumer
retail engagement, presenting a higher cost advantage, creating demand, defining boundaries of
that demand and creating model for customer experience.
Amazon continuously looks to create and implement Blue ocean strategies. Strategies
such as their Kindle E-books solution, drone delivery, cloud based computing, amazon prime or
one hour delivery are the examples of Amazon creating uncontested space free of competition.
Application of the Blue Ocean Innovation Theory in the Future Development Context
The company is looking to enter game development and online gaming industry where its
projections are to grow net sales at half of the growth rate at the previous year and roll it until the
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year 2025, it is expected to result the benefits of approx 50 million. This would be an incredible
pay off for the Amazon stakeholders, and many more for investments in the database network,
without compromising the cash flow of Amazon. Amazon continuously looks to create and
implement Blue ocean strategies. Strategies such as their kindle e-books that eliminated the
needs for buying the books physically and carry multiple hard copies raised by the quality of
reading on hand held devices which are light weight, comfortable and cheap. This not just
reduced the heavy pays for the books and needs to buy subsidiaries and complementaries to read
them also hosting digital activities on the go (Kennard, 2021).
The future game development trends are being driven by channel mitigation, big data,
consumer attraction, etc. Amazon is among the fastest growing company still it covers a huge
area of the online retail business. The company could expand to new areas such as game
development and online gaming to expand in the areas where competition is at marginal
(Benraouane and Harrington, 2021). Amazon could be using the gaming and online game
development to cover the areas of interests for the kids and teenagers which would make it above
any competition in the market. The gaming services is better to exploit the market in favour to
the company and make money through selling game development and online gaming platforms.
Amazon games and gaming will be hugely beneficial to the marketeers and content providers to
sell their offerings easily to the target customers with specific offerings, to interact and
understand the consumer behaviour through this.
The company has its opportunities in the online game development as the world is
moving digital and the competitiveness of company should expand vitally therefore it should
expand its activities in all fields (Graham, 2021). This would boost the revenues of the company
and also help it to increase its market share and capture other online extensions. The game
development is expected to boost the revenues of the company and become the developer of
games on digital platform. The online gaming will help the company to expand the sale of its
services across the other dimensions of the consumer groups. This is expected to increase the
revenues of the company by the sales of its online games and development of games for other
gaming companies. The company could utilise Blue Action Strategy four actions framework
EERC grid for future development:
Eliminate
The company should focus on eliminating the
Raise
Amazon could rise the use f moral obligations
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excessive use of non player characters (NPC),
graphic decoding, environment framing etc.
and knowledge development in the gaming
platforms and its games.
Reduce
The company should reduce the size of its
gadgets and storage capacities and utilise cloud
storage and enhance the performance.
Create
Gaming of the company should create game
online, streamable, DRM free and cloud
storage to enhance experience.
The company can jump-start on facing an opportunity by paying attention to something
new they observe and do come research (Sharma, and et. al., 2021). This could be done by going
to new places in order to observe people and like malls, universities, airports, superstores,
cinema halls, etc. Look at the habits of the people of all groups and what they are interested in
and what are the products in which they are interested in. Amazon could literally feel the trend of
kids and teenagers in the gaming sector. The same can be done by Amazon to gain the
opportunities through the Blue ocean strategy framework to raise, reduce, eliminate and create.
CONCLUSION
The above report had been explaining about the Blue Ocean Strategy Innovation Theory
which helps a business to cover the market with very low competition. There had been a
introduction to the Blue ocean strategy its principles and process to achieve growth and what are
the limitations and benefits of using the Blue Ocean Innovation theory. Further, the report had
been identifying about the historical growth of the company with its many products and services
since its start from the online sales of books to becoming online superstore. The report had been
explaining the use of Blue ocean theory in the future growth and development of the company.
The company could utilise many undisputed ideas and plans to apply this theory to their use and
achieve very high goals.
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REFERENCES
Books and Journals
Attri, V. N. and Bohler-Mulleris, N. eds., 2018. The blue economy handbook of the Indian Ocean
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Belmonte-Ureña, L. J. and et. al., 2021. Circular economy, degrowth and green growth as
pathways for research on sustainable development goals: A global analysis and future
agenda. Ecological Economics, 185. p.107050.
Benraouane, S. A. and Harrington, H.J ., 2021. Using the ISO 56002 Innovation Management
System: A Practical Guide for Implementation and Building a Culture of Innovation.
CRC Press.
Cabezas-Rabadán, C. and et.al., 2019. Assessing users’ expectations and perceptions on different
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Graham, J. D., 2021. The Global Rise of the Modern Plug-In Electric Vehicle: Public Policy,
Innovation and Strategy. Edward Elgar Publishing.
John, K. and Ross, D., 2021. How a Firm’s Value Capture Affects Value Creation in Its
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Kennard, M., 2021. Innovation and Entrepreneurship. Routledge.
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Mokos, M. and et.al., 2021. The Importance of Ocean Literacy in the Mediterranean Region—
Steps Towards Blue Sustainability. In Ocean Literacy: Understanding the Ocean (pp.
197-240). Springer, Cham.
Peralta, A. and Gismera, L., 2021. Sustainable business model innovation and ethics: a
conceptual review from the institutional theory addressing (un)
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pp.397-415.
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Thrassou, A., Vrontis, D. and Bresciani, S., 2018. The agile innovation pendulum: A strategic
marketing multicultural model for family businesses. International Studies of
Management & Organization, 48(1), pp.105-120.
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Werning, J.P. and Spinler, S., 2020. Transition to circular economy on firm level: Barrier
identification and prioritization along the value chain. Journal of Cleaner
Production, 245, p.118609.
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