Business Innovation Report: Using Product Innovation to Increase Sales of ABC Mobile Company

This report explores the concept of business innovation considering the case of reliance that is facing a decline in the sales of its smart mobile handset and using product innovation to bring back the company to track. The report explores what kind of innovation would help the organization put the company back on track and increase its sales.

BUSINESS INNOVATION REPORT
Contents
Introduction...........................................................................................................................................1
Invention and innovation......................................................................................................................1
Value and Importance of Innovation.....................................................................................................1
Organisational leadership and culture...................................................................................................2
Managing Innovation.............................................................................................................................3
Recommended innovations...................................................................................................................4
Innovation Funnel..............................................................................................................................4
Frugal Innovation...............................................................................................................................4
Conclusions............................................................................................................................................5
References.............................................................................................................................................5
Introduction
This report explores the concept of business innovation considering the case of reliance that is facing
a decline in the sales of its smart mobile handset and using product innovation to bring back the
company to track. The ABC Mobile company is a manufacturer of the smart mobile phones that is
facing tough competitor because new players coming up mobile handsets that are sold at lesser
price because of which it is losing its market which is one of the merging markets for technology,
India. In order increase its sales, the company need to use an innovation and thus, report is going to
explore what kind of innovation would help the organization put the company back on track and
increase its sales.
Invention and innovation
Innovation and invention are seen as to phases of novelty creation and the difference is due to
differences in the qualities needed to them. Invention is an activity that does not have any economic
meaning and is only the first step of innovation. Invention involves conception of a new idea and
nurturing of its growth (George, 2010). It can be the first emergence of an idea or a product and
innovation would then become the first attempt towards making the idea a practical reality. Thus,
innovation can be seen as a process of the successful introduction of the invention to the world
(Beckenbach & Daskalakis, 2007).
The basic two-stage model of invention and innovation identifies two stages of development that
include invention that is achieved by delegating R&D agent the task of its production and is followed
by innovation which is the introduction of the idea to implement the idea in the market which is
influenced by a principal. Agent is the inventor who comes up with the idea and principal is the
person who implements the invention of the agent to bring innovation to the market (Poblete &
Splulber, 2014).

The transition from invention to innovation can be very complex as it involves participation of
multiple actors and entities such as venture capitalist, corporate managers, technologists, scholars,
entrepreneurs, private firms, and federal agencies (Evans, et al., 2002).
Value and Importance of Innovation
Innovation is important to any business as it can help an organization build sustainability, gain
productivity and maintain a competitive edge. It serves as a foundation for the economic growth of
an organization. There are several factors that drive innovation such as increase in demand, social
changes, economic forces, demographics, and competition among external drivers and need to
enhance profitability, improve ROI, increase cashflow and improve product quality as internal drivers
(Paunov, 2012). Innovation can enhance the competitiveness of an organization and its economic
performance. However, innovation can be costly to achieve and can also face risks. Thus, it is
important to achieve a collaborative environment between communities, research institutes,
businesses, and government if it has to be sustained ( Canadian Dairy Commission, 2010).
Innovation has some core values that include capability, inclusivity, possibility, opportunity,
sustainability, and responsibility. Capability refers to the capacities of an organisation to bring
innovation and it involves a strategic and disciplined approach. Inclusivity is about having a
technological value that enable open participation through collaboration. Any innovation comes with
a possibilities of success as well as failure (Townsend, 2010). At the same time, there are also
opportunities resulting from application of knowledge and experience from innovation. An
innovation that would sustain itself for longer than its production would bring sustainability value.
Responsibility is another critical element which seeks commitment from leaders of innovation in an
organization (Cagna, 2006).
Organisational leadership and culture
Corporate culture is a kind of internal system of an organization that shapes its working environment
and gives the personality of he company some distinguishing features or characteristics. It consists of
a set of symbols, assumptions, and practices that are followed throughout an organization and
create a generic code for the conduct for the company employees. Culture shaped the fundamentals
on the basis of which people in an organization invent and thus, the decision on how to innovate
would be influenced by the culture of an organization (Bruton, 2012). The ABC Mobile Company has
a culture of people thinking penetration such that the new market is required to be captured at any
cost by comping up with products that are most affordable to people in emerging markets. Thus,
considering the culture of the company, the most appropriate strategy that people would choose to
built would be product innovation through reduction of the prices of the product to make it most
affordable (Epstein, et al., 2010).

Figure 1: Dimensions of innovation culture (Szczepańska-Woszczyna, 2014)
Leaders can help enhance or strengthen the culture in an organization so that it is followed by
everyone working in the organization making it a unique practice that is followed throughout the
company. There are some cultural dimensions that are commonly observed in innovative
organizations that can be shaped by the leaders. These include goals, knowledge, resources, risk
taking, relationships, tools, and rewards. Along each dimension, a leader can help team take
decisions and form a culture of innovation and growth (Percival & Sheldon, 2013).
Employees in an organization can use different ideas to bring innovation. however, not all ideas work
and there can be a point of failure. Organizations with innovative culture have leaders who do not
punish employees for mistakes but encourage as mistakes gives them learning which can be used for
for further growth and generation of new ideas for innovation. If employees have the support of
their superiors, the chances of getting them to innovate is higher. Knowledge makes the primary
resource for any organisation that is innovating such that the information that exits inside as well as
outside the organisation can help shape ideas on innovation. In the case of the mobile company, the
information about the consumers buying cheaper phones can be used to drive the innovation by
producing mobile phones that are more affordable for these price conscious buyers (Sharma &
Sharma, 2010).
Leaders supporting innovation are needed to promote innovation and keep on identifying the
potential for innovation among people and systems. They must work to build the capabilities in the
employees for innovation by training them on how the think creative and implement new ideas. The
relationship dimension also carries a great importance in shaping an innovative culture as it helps in
building a collaborative atmosphere that supports the growth of innovation (Głód & Wronka-
Pośpiech, 2015).

Managing Innovation
4Ps model of innovation states that success in innovation comes with a positive change that can
happen in four categories that include product, process, position or paradigm. When the change
happens in the product or the service of a company then it is called product innovation. Process
innovation involves the change in the way products or services are created or are delivered. Position
innovation is the change in the context which the project or service is communicated to the market.
Paradigm innovation comes with the change in the mental methods that shape an organization.
These categories are not tight but there can be overlaps and a real innovation can be a combination
of a few. However, the 4 P framework can help in providing a structured way to create innovation
(Lux & Rorke, 2000).
For product innovation, there can eb certain criteria for differentiation such as platform, derivatives,
introduction frequency, relationships with the strategy, or modularity. Innovation in products can be
influenced by the maturity of the industry. Young industries can bring about platform products with
incremental changes as innovation. Product innovation needs significant resources and much efforts
are needed t be put for a long time. An organization may need to plan for the complete product life
cycle that would go on for generations to come. Installation of jackpot machines in Boeing 747 upper
decks to relieve boredom of travellers was a product innovation. A common theme of product
innovation is finding out a superior functionality for the market with an acceptable margin
(Branscomb & Auerswald, 2000).
Processes are the sequence of different activities that are involved in operations and when these
processes are modified in a way that they can bring a transformation in an organisation, it is called
process innovation. Typical ways process innovation is brought about in an organisation include
optimization for high performance, increase in conformance to quality, reduction in waste, and
improvement in operations. Shifting of product methods from batch processing to continuous
processing in the manufacturing industry was an example of process innovation. Innovation in
processes would not be a coherent thing to do as it would involve a number of different agents
playing different roles that would affect the course of action. Ownership of innovation would be
complex and a very systematic approach is required to manage such an innovation. There are
multiple actors including those close to process and they would make the best people to identify the
scope for innovation. Business process engineering is a form of process innovation which involves
identification of core processes and weaknesses to guide development for improvement. Process
innovation can also happen at the supply chain level such as ’Quick Response Program’ which was
launched by Australian government in response to threat posed by foreign suppliers to local textile
industry which facilitated the speed to market (Miguel, 2007).
Position innovation works on the meaning people have in their mind about the product or service.
The idea is to bring up the appeal for a product or a service in the market through innovation. There
have been several cases of positioning and repositioning done by companies through innovation
such as BBC that repositioned itself during 1990s as a global media corporation and Manchester
United FC that positioned itself as a fashion brand in 1994. The core of position innovation is
management of the brand identity through marketing, advertising, promotion, packaging and other
forms of market communications (Moiseev & Koroleva, 2012).
Paradigm innovation is a breakthrough and controversial expression that believes in possibility of
changing traditional beliefs to bring a paradigm shift in the people’s way of thinking. It needs the
actors of the innovation result to look into themselves and reflect to discover realty. Paradigm
innovation can change the mental models of people. Such innovation works on the idea of having a

driving force that can bring change in the society or in the people working in an organization. A
business model can be reconfigured as a part of this innovation such as done when a company
enters into an alliance like a merger or joint venture (Mayorov, 2013).
Recommended innovations
Innovation Funnel
An innovation funnel defines how conceptualization of ideas can bring innovation. It begins with
identification of opportunities from which are generated ideas. Further comes the technology in the
funnel that are used to bring about innovation through the creation of a new product. Each stage in
this funnel would have different development cycle such that innovation can enter at different times
in each of these funnel stages. The innovation that goes through this funnel has to be managed from
end to end if success has to be achieved in bringing innovation (Maidique & Zirger, 200).
The ABC mobile company has smart phones that are not selling much in the market and thus,
company can use product innovation to bring a mobile in the market that targets the masses such
that the sales of the company can be increased. Thus, the company would come up with a new
model of mobile that would target the masses. With this, the company not just be using product
innovation but would have a overlap of process and position innovation as the company would,
have to modify its processes so as to reduce cost of production and reposition its brand from being a
premium mobile handset seller to affordable mobile manufacturer (Liua, 2012).
Frugal Innovation
Frugal innovation is defined as the process which can reduce the complexity of product and cost of
goods through elimination of features that are not essential in a product ,service or process. Most of
the innovation models have emerged from the west and thus, have assumptions based on the
regional perspectives when considering predictability, abundance and affluence. However, many
markets still have demands unmet by innovation practices such that companies need to take a
deeper look into the approach they use to bring innovation. A number of challenges exist in
innovation such as resource constraints, variation in these constraints, and institutional voids.
Western innovation models are complex and costly to implement and can bring premium products
that suffer from sustainability and affordability issues. Thus, new innovation models have been
devised in the emerging markets like India. These include jugaad, BOP, inclusive, value, ghandian, re-
source constrained, bricolage, and frugal innovation. Frugal innovation has become a popular
concept which suggests integration of different types of innovation into a single umbrella. Frugal
innovation is often used for low cost products or toned down versions. Frugal innovation can build
more inclusive markets for more sustainability.
Figure 2: Value Chain Model of Frugal Innovation (Hamacher, 2014)
India being an emerging market, the concept of frugal innovation can also be applied such that the
mobile company would developed a toned down version of the mobile handset to target the masses

in India which would increase the sales for the company and get it more revenues. For this, the
company would, need upstream inputs including the capital for product that it already has, the skills
and labour which is already working for the company to produce high end version of the mobile
phones. Contracts and rules are already set in the organisation. In order bring this innovation to the
market, the company would use the downstream output including middle class and lower middle
class customers as the buyers who can purchase low affordable handsets. The distribution of the
mobile phones can be done through the supply chain that would consist of the retailers and dealers
who would sell to the end customer in the market.
Conclusions
This repot explore the concept of invention and innovation to understand how innovation is
different and how it works in practice. It was found that invention takes the first step in which a new
product idea is conceived while the actual execution of the idea to give it a shape is called
innovation. Innovation can be related to product, process, position or paradigm. Not a single type of
innovation could be a possibility as there are overlaps such that a combination of innovation can
occur. It was also found that there exist many models of how to bring innovation that are used for
emerging markets which can be confusing and thus, a unified model called frugal innovation hat can
explain these multiple models have ben device which is called frugal innovation. Frugal innovation is
about eliminating the parts or features that are not required in order to reduce the cost and produce
a product that is desirable to the market. It is a from of product innovation and was recommended
for the mobile device manufacturing firm that is facing a decline in sales. With elimination of the
unnecessary features on a mobile phone, the company could come up with a bare minimum
requirement device that can sell to the masses at lower prices and thus, the sales can be increased
for the company.
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