Business Model Innovation and Its Impact

This assignment delves into the concept of business model innovation, analyzing its significance in contemporary business environments. It examines different frameworks and perspectives on business model innovation, exploring factors influencing its adoption and implementation. The assignment also investigates the impact of business model innovation on various aspects of organizations, including competitiveness, profitability, and growth.

Running head: INNOVATION AND COMMERCIALIZATION UNIT 8
Innovation and Commercialization Unit 8
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
Innovation and commercialization is the way of implementing new business ideas for adding
unique value to the business model. This study has assessed the innovation and
commercialization of Amazon through its cashless store Amazon Go. The study has evaluated
the importance of innovation over invention through its less investment opportunity. Apart from
that, the creative thinking ability of Amazon’s CEO has made the company capable of
developing innovative cashless store Amazon Go. The discussion of innovation 4p’s has
demonstrated that the cashless store Amazon Go meets the unique need of customers towards
avoiding the long waiting time of cash counter without checkout process. Innovation funnel and
fugal innovation has facilitated Amazon toward developing innovating Amazon Go.

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Table of Contents
Introduction......................................................................................................................................3
1.1 Differences between Invention and Innovation at Amazon Go.................................................3
1.2 Importance of Innovation in Comparison to Invention at Amazon Go.....................................4
2.1 Impact of organizational vision, leadership, culture and teamwork on innovation and
commercialization............................................................................................................................5
3.1 4 P’s of Innovation and Innovation Funnel for Amazon Go.....................................................7
3.1.1 4 P’s of Innovation..............................................................................................................7
3.1.2 Innovation Funnel...............................................................................................................9
4.1 Role of Frugal Innovation in the development of Amazon Go...............................................12
Conclusion.....................................................................................................................................13
Reference List................................................................................................................................14

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Introduction
Innovation and Commercialization is the way of developing new products and services
for creating unique values of the customers (Visnjic, Wiengarten and Neely 2016). Innovation
and commercialization facilitates an organization towards bringing competitive advantage over
the rival organization. This study will evaluate the innovation and commercialization of Amazon
through its new Amazon Go store. The study will explain the difference between the invention
and innovation of Amazon. Moreover, the study will assess the value of innovation over
invention through Amazon Go store. On the other hand, the study will also assess the importance
of organizational vision, leadership, culture and teamwork for developing innovation and
commercialization. An explanation of innovation 4p’s and application innovation funnel for
Amazon Go will be discussed in this study. Furthermore, the study will critically evaluate the
role of frugal innovation in the development of Amazon Go.
1.1 Differences between Invention and Innovation at Amazon Go
Invention is the act of inventing something, which is typically a product or service.
According to Prajogo (2016), invention is the occurrence of idea for product and process, which
has never been made before. It is completely new concept, which often strikes a scientist. On the
other hand, Gundry, Ofstein and Kickul (2014) opined that innovation is the implementation of
ideas for products and process for the very first time. Unlike, invention, innovation requires set
of technical, marketing and strategic skills. Moreover, invention is the creation of products for
the first time, but innovation is significant to the existing products and services for their
improvement. In case of Amazon Go, the concept of check-out free grocery store is not new to
the market. Such concept has already been invented by other organizations like Kit and Ace,

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Waitrose and others. However, the concept is just new and implemented in Amazon for the very
first time. Hence, Amazon Go is an innovation to Amazon.
According to Bessant and Tidd (2015), invention is related to the creation of new
product, whereas innovation is all about adding value to something already existing. Innovation
is always related to the practical implementation of new ideas. Moreover, invention can be
concerned single process or product. However, the innovation is concerned with combination of
various process and products. In case of Amazon Go, the organization use to sell the same
product, which are usually sold from the Amazon online. The customers pay for their products
through online mediums same like the existing Amazon online process. However, this time,
unlike online stores, the customers can go on to the physical stores of Amazon and buy their own
products. Hence, it is a slight modification of the process through innovation, which adds value
to the customers (Pilav-Velić and Marjanovic 2016). Invention of is just related to research and
development department of the organization. However, the innovation of Amazon Go has spread
across the organization.
1.2 Importance of Innovation in Comparison to Invention at Amazon Go
Innovation is extremely important for beating the increasing competition from the
competitors. Govindarajan and Desai (2013) pointed out that innovation provides extra value to
the customers over the competitors, which enhances the loyalty level of the customers. Likewise,
Amazon has fostered its innovation through Amazon Go, where the customers can go to the
physical store, pick up their required groceries and walk out without paying at the checkout
(Amazon.com 2018). The organization fostered innovation its process, which signifies
modification of the existing online delivery of the products. Such modification of process does

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not require much investment and research. However, Laužikas and Dailydaitė (2015) invention
requires huge investment to launch completely new products and services. It can be extremely
costly for Amazon. Hence, innovation of cashless store can be quite advantageous for Amazon
over invention, as it requires much less investment.
Ostendorf, Mouzas and Chakrabarti (2014) pointed out that innovation meets the
customized customer expectation properly towards gaining high level of customer loyalty.
Innovation is always personalized towards the core needs of the customers. Likewise, Amazon
Go also meets the core needs of the customers through offerings new ways of picking up the
products by the customers themselves from the physical stores. Additionally, the customers need
not also to pay in the checkout, as they are allowed to pay online like the existing process.
Hence, such slight modification of process can enhance the trust of the customers on the products
of Amazon, as they can pick up their products physically. The organization has not changed the
grocery products and it just modifies the ways of purchase. Hence, the emotional attachment of
the customers with the products will remain the same. However, Yun, Yang and Park (2016)
opined that invention is related to discovering new products and process, where it will be
completely new concept to the customers. Hence, customers can have very less emotional
attachment with the invented products, which can prove to be risky for the organization.
Moreover, it can be said that innovation is advantageous for Amazon than invention.
2.1 Impact of organizational vision, leadership, culture and teamwork on innovation and
commercialization
Vision is the starting point for strategic objectives, plans and metrics for achieving
organizational goals. According to Matthews and Bruggemann (2015), organizational vision

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identifies positive new direction for the organizations and guides them to follow along the path
for achieving the future goals. Vision is informed strategy development, which communicate the
purpose organization to the stakeholders. In case of Amazon Go, vision is extremely important
for developing innovation and commercialization through inspiring the employees towards
adapting new changes and giving them confidence to break the challenges. On the other hand,
Foss and Saebi (2017) opined that vision of an organization guides it towards implementing the
new ideas and create creative environment in the workplace for fostering innovation and
commercialization. In case of Amazon Go, proper vision has helped Amazon towards
commercializing the cashless grocery stores through properly guiding it towards innovation.
According to Saebi and Foss (2015), effective leaders are always willing to find
innovative ways for gaining competitive advantage over the rivals. Leaders have the courage to
accept the risk associated with innovation and commercialization to explore the new
opportunities. In this way, the experimentation of Jeff Bezos, the CEO of Amazon has explored
the new opportunities associated with innovative cash less grocery stores Amazon Go
(Amazon.com 2018). On the other hand, Martins, Rindova and Greenbaum (2015) opined that
innovative and open organizational culture is extremely important for developing innovation and
commercialization. In an open and risk taking organizational culture, the employees are always
willing to accept the new ways for developing innovation and commercialization for gaining
competitive advantage. Moreover, the in open and innovative organizational culture, the
employees frequently come up with new business ideas for furthering business development. The
employees of Amazon have the ability to spot the unique opportunities. Such ability of the
employees helped Amazon to developed innovative cashless store Amazon Go (Foss and Saebi
2017). Carayannis, Sindakis and Walter (2015) pointed out that teamwork fosters cooperation of

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individual team members across the range of disciplines towards innovation. In a teamwork
organizational culture, different innovative ideas are collaborated and harmonized towards
commercialization of new products and service. Likewise, the mutual support and effort of the
team members east out the ways of innovation and commercial of Amazon Go.
3.1 4 P’s of Innovation and Innovation Funnel for Amazon Go.
3.1.1 4 P’s of Innovation
Product
Product factor in innovation refers to the improvement in the product category for fostering
unique product characteristics. Valikangas and Gibbert (2015) opined that Amazon Go will not
change the product completely, but it will just make an improvement over its product range.
Moreover, the store will offer delicious ready-to-eat breakfast, lunch, dinner and snacks, which
will be made by the chefs of the stores, favorite local bakeries and kitchens. On the other hand,
Foss and Saebi (2017) opined the Amazon Go will also offer grocery essentials, which are ranges
from staples like milk and bread to locally made chocolates and artisan cheese. Apart from that,
the store will also offer quick home cooked dinner.
Paradigm
Paradigm is the way in which an organization improves its ways of business towards
bringing business innovation. In case of Amazon Go, the store will be a new and innovative kind
of store, where the customers need not require check out. The customers just need an Amazon
account, free Amazon app and a new generation iPhone or Android phone. Customers just need
to go the store and use this app to enter the store. Chesbrough (2017) pointed out that the
Amazon account of the customers will automatically be charged for what they would take out of

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the store. In this way, the customers will be able to pay for their shopping through online
channels and do not need to pay at the store counter.
Process
The process factor of innovation 4 P’s depicts the ways improved offerings are created to
the customers. Linder and Williander (2017) stated that the products of the Amazon Go stores
will be supplied from existing Amazon suppliers and also from some local suppliers. Apart from
that, there will be some employees in the store, who will guide the customers in seeking their
required product section. The store will have automation in the warehouse. On the other hand,
Clauss (2017) opined that the chefs will be preparing the foods within the store and some
employees will be sitting at the wine and beer section for checking the I.Ds of the customers
before they take the alcohol off the shelf.
Position
Position in Innovation 4P’s depicts the way or the changing context, where the improved
offerings are targeted. In case of Amazon Go, the store is a unique attraction to the customers,
where they can pick up their required products physically like many other stores, but they do not
have to waste time by waiting the counter queue for making payment (Amazon.com 2018). The
customers can just pay their bill through their Amazon account. On the other hand, Chesbrough
(2017) pointed out that such store has also reduced the work pressure of the employees, as they
do not need to take pressure of the work in the counter. The customers will also have fewer
claims about the products, as they get option to pick up their required products only by
themselves.

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Figure 1: Innovation 4p’s
(Source: Prajogo 2016)
3.1.2 Innovation Funnel
Opportunity Assessment (Wide Segment of Funnel)
In the wider segment of Innovation funnel, an organization analyzes the opportunity of
innovative product or service line extension. Likewise, Amazon also assessed the opportunity of
their new cashless store Amazon Go towards bringing business innovation. Moreover, Yun,
Yang and Park (2016) opined that Amazon has assessed the opportunity through market data,
customer knowledge and other sources of information. As per Foss and Saebi (2017), Amazon
has assessed that many customers are disappointed with the long waiting time in the queue of
retail counters for paying their bill. Furthermore, the organization also examined that there are
some customers in the market, who are still scared about ordering their products online, as they

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cannot view their product physically during purchasing. In such extent, the organization has
found an opportunity to meet these two gaps of the customers through innovative business ideas.
Insight-Based Ideation (Narrowing Segment of Funnel)
In this segment of innovation funnel, organizations ideate different types of products and
offerings, which could capitalize the market opportunity. Hence, Amazon has innovated Amazon
Go by meeting these two gaps of the customers, where they can pick up their product physically
by themselves from the physical stores and can walk out without requiring any check out. There
were also some alternate ideas, which also required the insights from the customers, market and
online communities.
Conceptualization (Narrowing Segment of Funnel)
In this narrowing segment of Innovation funnel, the innovation team actually designs
concepts for the top ideas coming from the ideation stage. According to Clauss (2017), the
innovation team has conceptualized different configuration of new cashless store features.
Moreover, the configuration of new cashless store has been conceptualized with meeting the
checkout free purchasing needs of the customers.
Evaluation and Benchmarking (Narrowing Segment of Funnel)
In this narrowing segment, organizations go back to the customers for testing the
different concepts generated from the previous stage. According to Pilav-Velić and Marjanovic
(2016), Amazon has initiated actual user testing for getting feedback from the customers on their
new innovative concept of cashless store. On the other hand, Prajogo (2016) opined that based

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on the feedback, the organization has also retested the cashless stores for its effectiveness
towards business innovation.
Go/No Go and Launch (Narrowed Segment of Funnel)
After getting the feedback on iteration, Amazon has selected the best concept as cashless
store Amazon Go for fostering risk free and profitable business innovation. Visnjic, Wiengarten
and Neely (2016) pointed out that the executive team of Amazon assessed Amazon Go for taking
go or not go decision towards launching in the market. Moreover, the executive team has taken
the decision based on its margin cost, risk and profitability. On the other hand, Amazon.com
(2018) opined that the executive has finally launched their cashless store Amazon store in 2018
after assessing its huge profitability and uniqueness.
Figure 2: Innovation Funnel
(Source: Laužikas and Dailydaitė 2015)

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4.1 Role of Frugal Innovation in the development of Amazon Go
According to Saebi and Foss (2015), frugal innovation is the process of reducing the cost
and complexity of goods or production of an organization through innovation. It is all about the
way of selling products through unconventional distribution channels for reducing overall cost of
products and production. Frugal innovation has an important role in the development of Amazon
Go. Frugal innovation has reduced the complexity of product delivery to the customers through
opening Amazon store, where the customers can pick up and purchase their own products from
the physical stores. Linder and Williander (2017) opined that frugal innovation reduced the
complexity of the customers through smooth purchasing system. Likewise, the frugal innovation
has facilitated Amazon to innovate Amazon Go, where the customers need not to wait at the
checkout for paying their bill. They can smoothly pay their bill through online app, which is a
smooth process for them.
According to Foss and Saebi (2017), frugal innovation minimizes the use of resources for
the development, production and delivery of products to the customers. Moreover, such
innovation allows the organizations in leveraging the resources in new ways for resulting
dramatically low cost product and services. Likewise, in Amazon Go, Amazon does not require
employing many employees at the store for operating it. Moreover, being a cashless store,
Amazon Go requires no employees at the cash counter, which reduces overall operating cost of
the store and products (Amazon.com 2018). On the other hand, Chesbrough (2017) opined that
frugal innovation also removes the added value from the products and services for reducing the
product cost. Likewise, Amazon has opened its physical store Amazon, which is not of big sized
and just about 1800 square feet. On the other, the customers will not get any shopping cart and
basket in the store and they will have to carry everything around whatever bag they take it home

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in (Linder and Williander 2017). In this way, the store will reduce the overall cost of store
operation for reducing overall product cost.
Conclusion
While concluding the study, it can be said that innovation is more important than
invention in Amazon. Amazon Go is an innovation for Amazon over invention, where it is a
practical implementation of new ideas. Innovative Amazon Go provides extra added value to the
customers, where the customers can purchase their required products from physical store and
walk out from the store without requiring checkout. Innovation also requires quite less
investment than invention, which is quite advantageous for organizational profitability. Proper
vision and innovative work culture of Amazon has facilitated it towards fostering innovative
Amazon Go store. Moreover, the teamwork working culture has facilitated in mutual support of
the employees towards implementing the new ideas of cashless store. The paradigm of
Innovation 4P’s has facilitated in initiating new cashless store system. Such store will meet the
need of the customers for avoiding long waiting time required at the cash counter. Frugal
innovation has facilitated in developing innovative and low cost cashless store Amazon Go.

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