Innovation Management: A Case Study of Amazon

This assignment discusses the process of innovation in an organisation with a case study of Amazon. It covers the impact of innovation management on Amazon, innovation management networks, and innovation culture in Amazon. The article also talks about the types of innovation and the challenges faced by the company. The article is relevant for students studying innovation management or business management.

Running head: INNOVATION MANAGEMENT
Innovation Management
Name of the Student
Name of the University
Author’s note

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Executive Summary
The purpose of the assignment is to demonstrate the process of innovation in an organisation.
The concepts related to innovation have been clearly stated with the help of the case study of
Amazon. The company is known to be setting benchmarking examples for the companies in the
industry and has taken an edge over the competition in the retail market. The process and product
innovations have been discussed in the assignment. With a plethora of innovative products and
services the company has been listed as one of the largest companies in the world.

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Contents
Introduction......................................................................................................................................3
Innovation management...................................................................................................................5
Innovation Management as a Core Business Process of Amazon...................................................6
Impact of innovation management on Amazon...............................................................................8
Innovation management networks.................................................................................................10
Innovation culture in Amazon.......................................................................................................13
Conclusion.....................................................................................................................................15
Reference.......................................................................................................................................16

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Introduction
Innovation is the process by which an existing idea is developed in a unique way in order
to improve the features and the characteristics of the original idea. Invention and innovation are
the terms which are often confused with one another, where invention is the process by which a
new idea or concepts are developed on the other hand innovation is the further extension of the
invention. Any business organisation operates under micro and macro environment, the factors
that make up this environment keep changing and evolving with time and hence the companies
also have to change and innovate in the process, operation, product or service etc with the
dynamics of the factors that make up the internal and external business environment. Innovation
is important as it ensures that there is continuous development process in the dynamics of the
international market (Nambisan et al. 2017). Innovation management is the strategic decisions
and policies that are formulated by the company in order to encourage and motivate the process
of innovation among the employees. It is the culmination of the process of innovation and
management of a business organisation; it brings about changes which highly impacts the
operations of the business. Innovation helps the organisation in achieving the goals and
objectives it also helps in making the business more attractive for the shareholders. Innovation
also helps the employees of the organisation scope to change the process (Tidd and Bessant
2015).
In this assignment the organisation that is going to be studied in order to understand the
concept of Innovation and innovation management is Amazon Inc. it is one of the leading
multinational company with a plethora of products and services, the organisation runs on a
business model that revolves around the consumers and in order to cater to the needs and

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requirement of the consumers the company incorporates innovation in the products or services
(Amazon.com 2018).

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Innovation management
With the changes and the dynamic nature of the business environments, it is essential for
organisations to keep up with the changes in order to make a mark in the industry. Innovation is
important in this case as the organisations are expected to evolve with time and trend depending
upon the need and requirement of the customers. Innovation management is the process by
which a company uses innovation to achieve the strategic objectives of the company. Form the
management perspective the company can involve innovation in the process or in the product or
service. A change or innovation in the policies or decisions of the company would mean that
there is process innovation in the company. For example if the company has come up with an
idea of employee engagement then this would be a process innovation. On the other hand,
product or service innovation is the approach which helps the company upgrade and improve the
products and services that are already in the market or come up with products or services which
is new for the company but is based on an innovative concept.
Impact of the innovation depends on the nature and the type of decisions that are taken
and how effectively they are implemented. Innovation management helps in identifying the
advantages and the barriers that are on the way of implementation of an innovation. Recognizing
the aspects that promote and those that challenge the innovations undertaken by the company
helps in analyzing the process and devising the decisions and policies.
Amazon is an innovation driven company and the management of the organisation not
only includes innovation in the products and services but also in the process of management. The
role of the management is to encourage the employees in thinking innovatively, the company
strategically invests capital in products and services which are innovative in nature for example:

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Amazon Go is one of the latest offering of the company. This is the most technologically
advanced retail grocery store which cuts all the hassle of billing and standing in a long queue.
The company has established itself several times as a consumer-centric organisation and this
why it is also driven by innovation. As mentioned above in order to keep up with the changing
trends and requirements of the customers, organisations have to change and innovate.
Based on the impact and the implementation process, innovation can be segmented in two
types: radical and incremental. A radical innovation also known as disruptive is the process that
has a important impact on the industry of operation as well as on the financial aspect of the
company in that industry. As the process may cause disruptive changes in the industry it has
given the name. On the other hand incremental innovation is the process in which the changes
occur slowly and the impact is not as drastic as the radical innovation. This is mostly concerned
with the products which already exist in the line of products and changes are made in these in
order to develop, Improve or upgrade the situation. Innovation management decides on the type
of innovation which is required by the company in order to achieve its goals and objectives.
Innovation Management as a Core Business Process of Amazon
A business model is like a guideline or an action plan for the business organisation in
order to help the management focused on the objectives of the organisation. Amazon is an
organisation which has evolved to cater to the requirements of the customers. The business
strategy of the company is well planned and well-designed. The company has multiple and
independent revenue sources which are connected by technology and innovation. The company
started off as a place where book lovers could find their choice of books and order them with the
help of an internet platform and a device that supported the connection. Amazon now has come a

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long way in the business and has established some important benchmark in the e-commerce
business model as well as in the retail industry. Innovation is in the core of the business model as
any of the services that the company has in the product line is innovative in nature. And there is a
continuous process of upgrade to improve the existing line of products to meet the evolving
needs of the customers. The company has established itself to be a consumer oriented
organisation. CEO of Amazon Inc Jeff Bezos say that the customers of the company are loyal to
the extent where the company provides the best possible service in the market, hence the
importance of innovation is essentials and forms the core of the business model.
Some of the challenges faced by the company are as follows:
One of the biggest challenges that the company has faced so far is as that the concept and
the service are innovative in nature the customers is apprehensive of availing them or accepting
them at the beginning. In this case it is important to have strategic communication plans ready in
order to make the target market realize the value of the service and the potential it has. Theories
related to the innovation dynamics state that when a new product idea is implemented there is an
initial stage of uncertainty during this time number of experiments and researchers take place.
But then a 'dominant design' or 'technological trajectory' becomes recognized and the importance
changes to become incremental development and variations on this basic theme.
Innovation is a time consuming process and the company has to make sure that they do
not let the customers know about an innovation before it has been released or is ready and set to
release. This is important in order to build a motivated innovation culture in the organization.
Innovations can be sometimes non-profitable and can be not effective as anticipated in
that case the company has to face loss.

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Impact of innovation management on Amazon
Amazon is a company that has reached its heights but has opened the ways of new
companies to achieve the same in the industry. The e-commerce platform is something that is
now a very competitive market on the international platform. Hence, in order to keep an edge
over the competition new or existing Amazon not only innovated in the process of management
but also in the services. The company is slowly moving from being entirely e-commerce based
business model to a company that is also focusing on physical retail business. The organisation is
aware that the retail industry is already crowded hence they include their innovation in the
process of the services they offer so that the company can stand out from the rest of the
competition (Frank 2017).
Process innovation has allowed the company to not only stick to one industry; the
company has services in several markets such as retail, entertainment, technology etc. When the
company had started Jeff ran his online book services from his garage in Seattle in 22 years, he
has been awarded the title of the richest man (Frank 2017).
Innovation also helps the company always build a buzz around the media and the
customers, the company stays in the focus because of its innovations, for example the company
is coming up with the Amazon Go project and all the leading news papers and other publishing
institutions are writing and discussing about it.
Innovation has helped the company gain goodwill in the industry and has helped the
company make a name for it. The company is kwon by the customers and the target market to
produce provisions of services that has premium quality therefore this has helped the company to
build a good reputation in the market.

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Innovation has helped the company to diversify the services according to requirement of
the people of the country of operation. In turn it has provided opportunity for the company to
build valuable relation with the customers on a global level (Frank 2017).

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Innovation management networks
Managing innovation involves risk mitigation as one of the major aspects. Market
research is also one of the most important aspects of the innovation process. With the help of
market research the company finds out the about the needs and requirements of the target market.
Accordingly an organisation invests in the idea and products (Sven Heidenreich et al. 2016). The
networks that the company builds in the process depend upon the logistics that are required by
the company. Amazon is an organisation that invests considerable amount in the process of
research and development. The management process interconnects the networks which are
included in the organization to finally bring out a product or a service which is aligned with the
requirement of the customers. According to the spaghetti model the process of innovation results
in an innovative process or product but on the other hand the company has to go through a
complicated web of networks in order to have an appropriate outcome (Sven Heidenreich et al.
2016).

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Figure: Innovation Network Model
Source: (Sven Heidenreich et al. 2016)
The innovation network model is an integrated management process which includes all
the steps in the above figure. The management of Amazon comes up with an innovation concept
or an idea that may prove to be helpful for the customers and can also get the company revenue.
This is the shared vision after the idea has been developed the first most important network is to
ensure the funding is on track. Funding is for the purpose of the basic operations of innovation

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network this including the research and development as well as tactical shifts along with the
meetings. Next, it is essential to outline the structure of the innovation in order to ensure
performance, support and guidance along with accountability (Sven Heidenreich et al. 2016).
The structure of networks in Amazon includes the research team, context and content
professionals, design department etc. it is essential for each of these departments to know all
their responsibilities and job roles clearly in order to execute the process of innovation
seamlessly. To streamline the process even further the company should encourages the
employees to have engage in other activities as well. Process of innovation involves clarity,
engagement and equity among all the above stated departments of the structure. Communication
is also one of the major aspects in the process of innovation strategic organisation of
communication can make or break. People or the human resources who are associated with the
innovation are one of the most important aspects of the network, any ideation or effort of the
operation in the process (Sven Heidenreich et al. 2016). The commitment among the people of
the organization can ensure success or failure of the idea as it is essential to have the interest of
the employees of the organisation aligned with the objectives of the company in order to ensure
efficiency in performance. Strategy is the approach that the management of the company take in
order to initiate the plan of innovation, strategic analysis and implementation of decisions are
important in the process of innovation. Lastly, while ensuring the process of innovation it is
important to have a clear goal and accordingly set short term objectives which will help in
identifying the responsibilities of the people associated with the innovation better (Sven
Heidenreich et al. 2016).

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Innovation culture in Amazon
With time there has been changes adopted by business organisations world-wide in the
way they operate. Values and principles have taken precedence over profitability and sales
objectives of the company, but innovation has been the age old strategy for many organisations
to survive the dynamics of the industry of operation (Matos da Silva et al. 2016). It has been one
of the most widely used strategies to gain competitive advantage for the companies. Amazon has
been based on innovation and the business model of the company has been surrounding
innovation. In a span of 22 years of operation the organisation has come up with a plethora of
products and services which are technologically driven advanced innovative concepts (Kratzer et
al. 2016). Some of which have been an instant success where as some has been not but the
company has grown and expanded. Amazon operates in several countries and Jeff Bezos quickly
realized that language is one of the major barriers in communication hence he had launched the
retail website in many languages as well in order to cater to a larger group of people. The
website Amazon.com began its operations just with book and then diversified into music and
entertainment. Quickly Bezos learnt about the potential of the platform and included a number of
items to the list of products that was made available. This innovation in the business model has
helped the company expand the target market and cater to a wider group of people. The company
strives to achieve a valuable relation with the customers in order to create loyalty (Matos da
Silva et al. 2016).
Effective innovation management practices in Amazon
The company operates on the needs and requirements of the clients and the customers,
which keeps changing with the changing trends in the business environment like lifestyle
changes, social changes, economic changes, political changes, environmental as well as legal

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changes etc. in order to expand and grow the company took the opportunity of the change and
listed household items to the most advanced technologies on the website (Galloway et al. 2017).
Apart from this the company worked upon more services like could infrastructure services like
LAAS and PAAS. Over the years the company has invested in products and services in the
entertainment industry as well like Kindle Fire tablets e-readers, Echo devices, Fire TV etc and
in services the company came up with services like Amazon Prime, Amazon videos, music etc
(Amazon.com 2018). Amazon Prime is itself a unique concept as the other services of the
company are linked with this subscription which condenses the loyalty of the user with the
brand. For example: if a customer has Amazon prime subscription then he or she can easily avail
the services of Amazon prime videos, music, shopping in the retail units etc. Another most
interesting innovation of the organisation is Amazon Go stores; this concept has been given
shape in the early 2017 when the company launched the first grocery retail physical store. The
innovative part of the concept is both in the process as well as in the product (Galloway et al.
2017). Process innovation as the company is mostly known for using internet as the platform for
operation but with the strategy of opening a retail grocery store in the physical store business
model ensures that the company is thinking ahead. In the product innovation the company has
incorporate a series of technological advances which has made the project one of its kind, the
customers can easily set up the account with Amazon prime and pick up things form the store
and just walk out without any payment or hassle of lining up in a queue. This has again helped
the company gain an edge over the competitors in the retail industries like Walmart, target and
other grocery stores. This is a difficult industry to set a foot upon as there is intense competition
from large organisation which has been operating the market for long. In such a case Amazon

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has leaped in to the industry with the help of technological innovations which has set the
company apart (Gouvêa de Oliveira et al. 2016).
Innovation plays a large role in the organisation process as well because in In 2017,
Amazon acquired Whole Foods Market which is a physical retail store as a mark of setting a foot
in the brick and motor industry. The deal was settled for $13.4 billion, which vastly increased the
presence of Amazon in the industry. The acquisition was interpreted by some as a direct attempt
to challenge Walmart's traditional retail stores (Stevens and Gasparro 2018).
Conclusion
It can be concluded form the above discussion that Amazon is an organisation that has
already set revolutionary example in the retail industry both in the online as well as in the offline
industry. The company uses both process and product innovation in the operations of the
business to ensure growth and expansion.

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Reference
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https://www.amazon.com/b?ie=UTF8&node=16008589011 [Accessed 29 Mar. 2018].
Amazon.com., 2018. Our Innovations. [online] amazon.com. Available at:
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Frank, R.G., 2017. Hither and Thither: How Do We Innovate? Rehabilitation Psychology
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innovation strategy, Journal of Business Research. Vol 71. PP. 55-65
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