Innovation and Commercialisation in Tesco and Sainsbury’s

This report explores the ways of sourcing and supporting innovation in different organizations, types of innovation and their processes. It analyzes the innovation development and how it is embedded in different organizational contexts in Tesco and Sainsbury’s. The report also includes a detailed business case for innovation, adding risks, benefits and ways to access funding, and evaluation of different tools that can be used to protect, develop and retain the intellectual property and knowledge of organization.

Unit 8 Innovation and
Commercialisation
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Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Part-1 Explore existing cases of innovation.....................................................................................3
P1 Elaborate the ways by which innovation in different organization can be sourced and
fostered by giving examples...................................................................................................3
M1 Analyse the ways of sourcing and supporting the innovation within different
environments and cultures of organisation.............................................................................5
P2 Different types of innovation and process of innovation..................................................5
M2 Derive how different types of innovation are processed in organization........................7
D1 Analysis of innovation development and how it is embedded in different organisational
contexts...................................................................................................................................8
Part-2 Innovation business case.......................................................................................................8
P3 Detailed business case for innovation for an organisation, adding risks, benefits and ways
to access funding....................................................................................................................8
M3 Analysis of evidence based business case for innovation focusing on the business value
for potential investment........................................................................................................11
P4 Different types of tools that organizations can use to develop, retain and protect
intellectual property and knowledge of company................................................................11
M4 Evaluation of different tools that can be used to protect, develop and retain the intellectual
property and knowledge of organization..............................................................................13
D2 Produce a business case for innovation, including an action plan for development and
methods for its successful protection in the context of the wider business environment.....13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
Innovation refers to the process of introducing and implementing new ideas, methodologies,
techniques, workflows and products or services. The term innovation does not necessarily relate
to scientific research for product development, rather, it is a repetitive process of both fulfilling
market requirement to technological capabilities and organizing research in order to fill cavities
of knowledge, whether during product design and conception, manufacturing, or other stages of
innovation process (Baker, 2017). After facing a global economic crisis due to corona virus
pandemic, almost all companies are seeking growth and to accomplish this companies are
focusing on introducing innovative ways and techniques in their business operation. In this
report, Tesco and Sainsbury’s are taken into consideration. These both companies hold major
share of UK’s online grocery market. With over 3400 stores worldwide, Tesco is not only
Britain’s largest supermarket chain, but also one of the largest grocery chain at global level.
Sainsbury’s is the second largest supermarket chain in UK. This report will study the innovations
implemented by these companies and will suggest funding channels, tools and techniques and the
action plan to develop, retain and protect the intellectual property and knowledge of
organization.
MAIN BODY
Part-1 Explore existing cases of innovation
P1 Elaborate the ways by which innovation in different organization can be sourced and fostered
by giving examples.
Innovation signifies the introduction and implementation of original goods or services to
the market. It takes place when new products or services find their way into the market in order
to satisfy the consumers’ ever changing needs. The process of innovation involves introducing
creative procedures, new activities, techniques, strategies, etc. that helps in lowering the
manufacturing cost or raising the pace of production and quality of services and products
(Herrera, 2016). Innovation in business operations allow organizations to enhance their product
line and providing superior and affordable services.
Innovation introduced by Tesco
Tesco is the largest supermarket chain of Britain with over 5000 stores worldwide
(Number of Tesco stores in the United Kingdom, 2022). The company majorly deals in general
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merchandise and groceries. While dealing in a complex and competitive business environment
the company faces various challenges and difficulties in delivering innovative products or
services to its huge consumer base. Tesco has exhibit its capabilities to adopt new innovative
strategies that are important for re-inventing company’s operation.
For instance, in the year 2014, the company encountered various challenges when it reported a
decline of 3 percent in its overall international sales. This resulted that the company was out of
top ten list of same industry’s dealer (Global Analysis Report, 2016). However, to combat this
and getting its operation back on track, the company decided to adopt an innovative strategy. It
introduced its own “broadband and phone services, non-retail subsidiaries blink box”. Apart
from this, the company also decides to sell off of its data mining auxiliary firm “Dunnhumby”.
The money generated by selling these assets was reinvested by company in its current stores
located in UK and other parts of the globe. This helped the company in getting back on track and
to be one of the most profitable company of UK.
The company later introduced complete check out free stores known as “Tesco Get Go” in
several regions where shoppers can pick their items and can walk through the door without
concerning for bills and standing in que for checkout (Tesco opens new checkout-free store,
‘GetGo’, 2021). This innovative approach uses cameras in place of checkout counter. The
advance cameras track the items as shopper put them in basket and generates bill that is
forwarded to users using mails or any other channels, and user can make payment digitally. This
innovative approach by Tesco received lot of praise as it increases convenience of its consumers.
Innovation introduced by Sainsbury’s
Sainsbury’s is the second biggest supermarket chain of UK, offering groceries, clothing
and general merchandise products. With a share of around 15% in UK market, company is
continuously striving to introduce or adopt innovative ways that help the company in increasing
the satisfaction of its clients. The company is increasing its speed of innovation and is planning
to introduce more price cuts in its product line as part of its commitment to provide reasonable
price quality products to increase value for customers. Similar to Tesco, Sainsbury’s is also
adopting smart store technology as a part of its innovation strategy. The technology is currently
being tested in Sainsbury’s store at Holborn Circus. Just Walk Out technology of company
eliminates checkout lanes, tills, self-service scanners and will help in providing fast, efficient and
seamless shopping experience (Sainsbury’s introduces contactless, checkout-free shopping with
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SmartShop Pick & Go, 2021). The company always keeps applying various innovative
techniques and initiative in its business like My Nectar Prices that gives selected prime
customers all-year-round discounts, same day home delivery, Click & Collect service, etc.
Sources of Innovation
The sources of innovation can be explained using Peter Drucker Sources of Innovation.
According to Peter Drucker innovation can be sources from unexpected success and failure, the
incongruity between the desired and the actual, deficiencies in a process, demographic changes,
change in knowledge and changes in market and industry structure (Lee and Lim, 2018).
Advancement in technology is the major factor driving the need of innovation for any company.
In such a high competitive environment, all companies seek to gain competitive edge over their
competitors, and adopting innovation leads to increase in consumers’ convenience resulting in
more productivity and profitability. Innovation can be fostered if organization gives employees
chance to keep their innovative thoughts in front of management and their ideas should be
considered important. Rewarding innovation can also help in fostering the innovation. The
companies should create a reward system for employees who come up with innovative thoughts
and ideas to improve productivity, solve problems or to enhance internal processes.
M1 Analyse the ways of sourcing and supporting the innovation within different environments
and cultures of organisation.
Innovation help organizations in introducing novelty to the current product line or business
processes, which can lead to increase in market share, profitability, and consumer satisfaction.
Advancement in technology is the major factor driving the need of innovation in an organization,
to get competitive edge and reducing the operating source companies have to adopt various
technological measures and innovative techniques. Other than this, innovative ideas can be
sourced from a wide variety of different factors like increase in competition, change in market
trends, change in consumer’s preferences, market requirements, unexpected situations etc.
Companies like Tesco and Sainsbury’s have adopted various technological innovations. Both
companies are focusing on improving consumers’ shopping experiences by introducing smart
stores innovation. Both companies are moving forward as per the requirement of digital age and
competitive environment.
P2 Different types of innovation and process of innovation.
There are majorly four types of innovation:
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1. Radical Innovation: This type of innovation leads to complete change in the way
through which an organization interacts with the marketplace. It is one of the rarest type
of innovation a company can use (Philipson, 2016). Radical innovation involves creation
of new industries, new technologies, services, and business models that leads to open up
a complete new market. This type of innovation is not preferred by companies dealing in
grocery and merchandise product, as they are barely active in production and acts as a
mediator between brands and customers. Thus, neither Tesco nor Sainsbury’s had
adopted any innovation that falls under this category.
2. Incremental Innovation: This is observed as the most common type of innovation a
company can use. It involves using or enhancing the existing technologies or techniques
in the same market (Ghosh, Kato and Morita, 2017). In context to Tesco and Sainsbury’s,
the companies are working on improving the home delivery speed so that their consumers
can get their products more quickly. Both the companies are also working on same day
delivery facility. Tesco is also increasing variety in its product line by focusing especially
on providing vegan or vegetarian products These all innovative plans fall under this
category.
3. Disruptive Innovation: Disruptive Innovation is also known as stealth innovation. This
type of innovation involves application of new advance technology or processes in
company’s current market (Gobble, 2016). Companies like Tesco and Sainsbury’s are
adopting this type of innovation by introducing the smart store which will help the
shoppers by eliminating the tills, checkout ques and physical payment. Tesco has also
launched a service named as “Tesco Red Door” by which company is inviting those who
have ideas for new products, emerging technologies, and other innovative ideas to work
with company’s innovation team. This innovation is targeting the same market but with
more advanced technology.
4. Architectural Innovation: Architectural Innovation also known as “re-combinative
innovation” involves use of existing technology by new products or services to create a
new market or new segment of such customers who have never purchased those products
or services before. In this type of innovation an approach, techniques or methodology of
one field is taken into another field. In context to Tesco and Sainsbury’s, earlier these
companies were only operating through their stores. Later, both companies adopted
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innovation of online stores and facilities such as one-day delivery. The combination of
these innovations create a new digital market and the reach of companies also increased.
These are the main categories of innovation which help companies in growth. To process these
innovations in company’s operation there are certain steps to be followed by company. There are
mainly five stages involved in innovation process:
1. Idea Generation and Mobilization: This step of innovation process involves creation of
new ideas fuelled by the pressure to compete and freedom to explore. Once a new idea is
generated, it is passed to mobilization stage, where the idea is transferred to a different
physical and logical location.
2. Advocacy and Screening: In this step the pros and cons of the generated idea of
innovation is analysed. This step helps in weeding out the ideas that lack potential to
succeed. Tesco and Sainsbury’s ensures that the idea of innovation supports their desired
objectives and helps the consumers to make their shopping experience more convenient.
3. Experimentation: At this stage, the sustainability of the screened idea is tested. The
stage of experimentation generates new ideas through the gathered information of the
results derived from original idea.
4. Commercialization: This stage develops market values of an idea by analysing its
impacts (Sløk-Madsen, Ritter and Sornn-Friese, 2017). Companies such as Tesco and
Sainsbury’s at this stage tests the innovation idea in real world using a prototype or pilot
project. It helps in testing the suitability of the idea for organization at a particular time.
5. Diffusion and Implementation: It is the final stage of innovation process. Diffusion
means acceptance of innovation by entire organization. Implementation means setting up
everything needed to develop and efficiently utilize or produce the innovation.
M2 Derive how different types of innovation are processed in organization.
The innovation can be categorised in several types such as Radical, Incremental,
Disruptive and Architectural innovation. Tesco and Sainsbury’s are continuously striving to
adopt new innovative ideas to improve the experience of their clients. To successfully process an
innovation idea into business, company have to follow certain steps of innovation process. These
steps will help the company in generating new ideas of innovation, analysing the pros and cons
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related to the idea, experimenting and implementing the idea into real business world to know
the impacts and last by appropriate implementation of the desired ideas into whole company.
D1 Analysis of innovation development and how it is embedded in different organisational
contexts.
In current competitive world, organizations heavily rely on innovation to gain competitive
edge over their competitors. The management leaders of company should constantly look for
new innovative ways to ease the operation and improve the productivity. Innovation is developed
by mainly emphasising on fulfilling the requirements of customers and needs of market. A
change in customers’ mind-set, market trends, competition, any uncertainty etc. can lead to rise
in need for new innovative methodologies and techniques in business operation. There are
various categories of innovation such as Radical, Incremental, Disruptive and Architectural. To
successfully process these innovations in organization’s operation company should follow a
proper process for innovation which include step by step procedures to successfully implement
the innovation. It helps the company in generating new ideas, assessing the negatives and
positives of innovation idea, testing them in real world, implementing the innovation and last
ensuring that the innovation is accepted and followed by entire organization.
Part-2 Innovation business case
P3 Detailed business case for innovation for an organisation, adding risks, benefits and ways to
access funding.
Business cases are important tools that helps a business by convincing its key decision
makers that a specific course of action will provide best result for an organization. A business
plan includes several information related to the business objectives and performance. It helps in
outlining a business problem and providing options to solve it (Lüdeke-Freund, Schaltegger and
Dembek, 2019). After analysing the innovation plan of companies such as Tesco and
Sainsbury’s, it is derived that these companies are focusing on making their store experience
more convenient for shoppers with the help of technological innovation like self-checkout or
smart store facilities. Likewise, to target UK’s online grocery market the company should also
come up with such innovation. The management of the company have come up with an idea that
they will start delivering the products using drones to nearby places of their warehouses. This
will also help the company in gaining attention of customers. Before entering in this business,
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the company have to identify the target audience segment, and design the product line
accordingly. A proper research of the target market will help the company is assessing
information like size of the market, competition, consumer trends and needs, etc. After
considering all this, the management have to determine the amount and type of financing
required to support the desired objectives. A proper business plan that can help the company in
achieving the target of entering online grocery market of UK with innovation of self-checkout
store is discussed below:
Executive Summary
The company is focused on online grocery retail business and planning to improve the
shopping experience of shoppers in UK. The company is coming up with an innovative way of
using drones for delivering the products. This project is in trial stage and the initial stage will
cover nearby areas of company’s warehouses. The company is determined to provide a
convenient experience of shopping to the shoppers.
Company Description
The company is an online grocery retail business working with a 24x7 online portal. It is
an online digital market place where internet friendly users can easily buy and sell groceries and
other merchandise products. The company is working to tap the growing grocery market of UK
using innovative techniques, products and processes to facilitate the shopping experience of
users.
Objectives
The following are the business objectives of company’s innovation
 Introduce a new revolution in products delivery
 To establish a network, to provide the needed products and services on time to meet the
consumers demand and ensuring their satisfaction.
 Attract new consumers using innovative techniques and methodologies.
 To create a positive and reliable image to place itself above other competitors
 Achieve a new market or new segment of consumer base
 To be a sustainable and environment friendly organization
Mission Statement
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The company aims to be the nation’s leading choice for online grocery shopping. The
company is focusing on dominating the market by connecting local vendors through B2B and
B2C engagements. The company’s mission is to provide fast and convenient delivery to the
customers without ever having to leave the home.
Innovation
The company is planning to adopt innovative technology by using drones in their
delivery services. At initial stage, the drones will be tested in areas nearby to the company’s
warehouses. Using drone will help the company in offering faster and more efficient way of
delivering goods. Drones will also ensure autonomous and safer delivery of goods to the user.
This will also benefit the company in adhering the environmental concern as this will reduce use
of fuel and carbon emission.
Risks
There are various risks involved in adopting drone delivery. Some of the major risks are:
 Failure of gearbox, motors, battery could cause the drone to fall from sky and can cause
damage to products or can possibly strike someone.
 A drone can be an obstacle in an urban area airspace, as they are already crowded.
 Drones can be victim of hacking, hijacking or any other malicious attacks, which can lead
to control disruption.
 Extreme weather can be a disruption for drone delivery.
 Adopting drone delivery system can be very costly for company, as it is very costly to set
up appropriate infrastructure required for smoother operation.
 The rules and regulation of government can also be a challenge in adopting this
innovation, as there are certain areas where flying drones is prohibited. Also, drones use
camera and sensors which can raise concern regarding public privacy.
Benefits
Using drones can be very beneficial for company in various ways:
 Using drones can improve the company’s logistics efficiency as it will shorten the
delivery time. There will be no issues regarding traffic and congestion as the flight of
drone is completely autonomous.
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 With accurate GPS and advanced tracking or navigation system will lead to autonomous
and safer delivery. The package will be delivered at the address the consumer has
provides where they can collect the package by verifying themselves.
 Using drones can also be good for environment as it will reduce use of fuel and also the
carbon emission.
 Consumers in current digital world prefers those company which is technology friendly.
Using such an innovative method, company can lure new customers.
Financing Sources
The main sources of funding for company to adopt the desired innovation can be:
 Retained Earnings: The profit earned in past by the company can be used for the
project.
 Debt Capital: Company can obtain funds by financing its project through bank loans or
by issuing debt to public.
 Angel Investor: Angels are those wealthy people who invest directly in company
(Mason and Botelho, 2018). In turn, they reserve the right to supervise the project.
M3 Analysis of evidence based business case for innovation focusing on the business value for
potential investment.
While adopting an innovative technique, a business plan can be critical tool to help guiding
the decisions. An effective business plan provides a blueprint for success, and provides clarity on
all stages of innovation process. The plan consists elements like mission and vision, objectives,
description of company, risk and benefits, etc. It helps the company in setting clear objectives by
assessing the risks and benefits involved in it. A business plan also emphasises on deciding the
source for funding the innovation project and preparing budget as per the project requirement.
P4 Different types of tools that organizations can use to develop, retain and protect intellectual
property and knowledge of company.
Intellectual property of an organization is a set of intangible assets which needs to be legally
protected from outside use or application without the consent of owner (Sherwood, 2019). These
intangible assets can help the business to become more competitive and enhancing the
company’s market value. There are various tools that can help the company in developing,
retaining and protecting the knowledge and intellectual property (IP) of company:
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 Applying for Trademarks, Patents and Copyright: Copyright, Patents and
Trademarks are three most important IPs for a business. These three helps the business
by granting exclusive rights to the company’s creation and assets, especially when it
comes to use those for commercial purpose. Copyrights are those intellectual properties
that protects the tangible and intangible creative works. It can be licensed for texts,
drawings, artworks or combination of all these created by an organization (Bettig, 2018).
Patents are those IPs which are used for protecting or registering the unique inventions.
After patenting an invention, information related to the invention must be shared to
public though a patent application. Trademarks are the brand names, logos or symbols
that represent a company and are used to distinguish the products of the company from
others. A trademark can be name, signature, text, painting, figure, photograph, words or
advertising used to spot groups of products or services as owned by a company or
originating from a source.
 Registering names of Company, Products and Domain: The name of company, its
products and its domain are part of company’s brand. It is essential for a company to
own these names in planning stage of before others come up with the same idea or name.
Having same name of two businesses or products can cause confusion among customers
as well as the management. The registration of domain name also need to be quickly
done.
 Implement Cyber Security Measures: In current digital world, almost all businesses
are conducted using internet or any other technology (Edgar and Manz, 2017). The IP of
companies are somehow connected to the internet and may be vulnerable to hacking or
corruption of file. So, company need to implement robust security measure to protect its
IP like setting strong passwords, encrypting data, using virtual private network and
establishing WPAs.
 Avoiding Joint Ownership: Joint IP ownership allows more than one party to control
the copyright, trademarks and patents of the company. Thus, such businesses operate
with the risk of IP exploitation and in the long run it can lead to confusion and legal
issues which can cause harm to the IP as well as to the parties involved in it. It is better
for a firm to retain the IP rights in single hand even if the product is being developed in
collaborative effort.
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 Keeping Record of Everything Connected with IP: In order to protect the IP from
threats like theft or any other unwanted loss, company must have to timely record the
performance and progress made. Everything starting from the planning process, idea
conception, number of meetings conducted, name of the person involved, needs to be
recorded and maintained. Keeping proper records of all these may help the company by
providing sound evidences to prove the ownership of company’s products or ideas.
M4 Evaluation of different tools that can be used to protect, develop and retain the intellectual
property and knowledge of organization.
The Intellectual Property of the business provides a company competitiveness and
uniqueness in industry. IP are intangible assets of company and requires same level of legal
protection as the tangible property (Drahos, 2016). It is critical for an organization to recognize
the need of retaining, developing and protecting the IP. There are various effective ways to
protect the IP against possible violations. Applying for patents, copyrights and trademarks can be
the best way to protect the IP. Other ways include adoption of robust cyber security measures,
registering the name of company and its products, getting a unique domain name, maintaining
proper record etc.
D2 Produce a business case for innovation, including an action plan for development and
methods for its successful protection in the context of the wider business environment.
A proper business plan may help the company in attaining innovation in its operation. The
company is introducing an innovative and futuristic approach to deliver the products using
drones. Business plan helps the company in evaluating this innovation project by emphasising on
the innovation objectives, risks and benefits associated with it, budget planning and source of
funding required for the project. Protecting and retaining the IP of the business is also very
critical for the organization as these helps the business to be competitive and unique from others
in industry. There are various tools like patents, copyrights, trademarks, cyber security, data
recording etc. which can help in legally protecting the IP to be used by outsiders.
CONCLUSION
From the above stated report, it can be concluded that innovation and its
commercialization can play a critical role for an organization in providing competitive advantage
and increasing the productivity by easing the operation. Advancement in technology is driving
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the companies to adopt innovative ideas that enhances the consumers’ experience as well as ease
the business operations. It has been observed that a proper business plan can help the company in
attaining the innovation plan as it includes parameters like objectives, risks and benefits, budget
and source to access the required funds. It has also been derived that it is essential for a business
to develop, retain and protect its IP, and this can be done through various tools like trademarks,
copyrights, patents etc.
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REFERENCES
Books and Journals
Baker, A., 2017. Innovation 1.
Bettig, R.V., 2018. Copyrighting culture: The political economy of intellectual property.
Routledge.
Drahos, P., 2016. A philosophy of intellectual property. Routledge.
Edgar, T. and Manz, D., 2017. Research methods for cyber security. Syngress.
Ghosh, A., Kato, T. and Morita, H., 2017. Incremental innovation and competitive pressure in
the presence of discrete innovation. Journal of Economic Behavior &
Organization, 135, pp.1-14.
Global Analysis Report 2016, Retail innovation: Tesco in the United Kingdom, Web
Gobble, M.M., 2016. Defining disruptive innovation. Research-Technology Management, 59(4),
pp.66-71.
Herrera, M.E.B., 2016. Innovation for impact: Business innovation for inclusive growth. Journal
of Business Research, 69(5), pp.1725-1730.
Lee, S.M. and Lim, S., 2018. Sources of Innovation: Past, Present, and Future. In Living
Innovation (pp. 31-39). Emerald Publishing Limited.
Lüdeke-Freund, F., Schaltegger, S. and Dembek, K., 2019. Strategies and drivers of sustainable
business model innovation. In Handbook of sustainable innovation (pp. 101-123).
Edward Elgar Publishing.
Mason, C. and Botelho, T., 2018. Early sources of funding (2): business angels.
In Entrepreneurial finance: The art and science of growing ventures (pp. 60-96).
Cambridge University Press.
Philipson, S., 2016. Radical innovation of a business model: is business modelling a key to
understand the essence of doing business?. Competitiveness Review.
Sherwood, R.M., 2019. Intellectual property and economic development. Routledge.
Sløk-Madsen, S.K., Ritter, T. and Sornn-Friese, H., 2017. Commercialization in Innovation
Management: Defining the Concept and a Research Agenda. In 77th Annual meeting of
the Academy of Management: At the Interface.
(Online)
Number of Tesco stores in the United Kingdom (UK), 2022. [online] Available Through:
https://www.statista.com/statistics/490947/tesco-group-stores-united-kingdom-uk/
#:~:text=Tesco%20operates%20almost%205%2C000%20stores%20around%20the
%20world
Tesco opens new checkout-free store, ‘GetGo’, 2021. [online] Available Through:
https://www.tescoplc.com/news/2021/tesco-opens-new-checkout-free-store-getgo/
Sainsbury’s introduces contactless, checkout-free shopping with SmartShop Pick & Go, 2021.
[online] Available Through:
https://www.about.sainsburys.co.uk/news/latest-news/2021/29-11-21-smartshop-pick-
and-go
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