Innovation Strategy in Volvo: A Case Study

This report explores the innovation strategy of Volvo, a leading company in the transportation industry. It discusses the use of design thinking, the latest innovation trends in Volvo, the link between innovation and Volvo, and the importance of innovation strategy. The report also examines the impact of innovation trends and provides recommendations for Volvo.

Running head: INNOVATION STRATEGY
INNOVATION STRATEGY
VOLVO
MGMT20132 Innovation and Sustainable Business Development
Assessment No: 1
Name of the student:
Name of the University
Author’s Note

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Executive Summary
This report is on innovation and sustainable business development. A complete introduction
is given for innovation and its uses in business. Design Thinking is taken for innovation. The
company for this report is Volvo. The company manufactures cars and trucks and innovates
new things within their products. It is leading in the transportation industry. Then the
innovation trend in Volvo is explained in details. The financial status of the company is
mentioned in this part. 360c is a new innovation done by the company. This is a fully
autonomous and electric car which is innovated for the safety of the people. The link between
Volvo and innovation is discussed which included the organisational environment, innovation
capabilities and innovation values. The strategic plan of innovation in Volvo is studied along
with its importance. Innovation impact is also seen along with a set of recommendation for
the company.
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Table of Contents
1. Introduction............................................................................................................................3
2. Description.............................................................................................................................3
2.1 Design Thinking...............................................................................................................3
2.2 Innovation Trend of Volvo...............................................................................................3
2.3 Link between innovation and Volvo................................................................................5
2.4 Innovation Strategy and the importance of it...................................................................6
2.5 Impact of an Innovation Trend.........................................................................................7
2.6 Recommendation..............................................................................................................9
3. Conclusion..............................................................................................................................9
Reference List..........................................................................................................................11
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1. Introduction
Innovation is known as the changing process that creates new ideas and products. Innovation
is an important part of any business as it can help in adding new technologies to the existing
product. It also helps in making the business successful. In a business efficiency and
productivity can be increased through innovation. The quality of the product can improve and
the business can extend their range of products. To have a sustainable business development
innovation is something which will play a major role. Competitive advantages can be gained
as the businesses will be coming up with new processes (França et al., 2017). In this report
innovation in Volvo Company will be seen.
2. Description
2.1 Design Thinking
Complex problems can be solved through the method of Design Thinking. In a business,
Design Thinking will give innovative solutions to customers. This method uses imagination,
logic, system reasoning and intuition in order to create something that will give benefits to
the customers. Design Thinking helps the employees to use the new technologies in order to
overcome the traditional methods (Liedtka& Ogilvie, 2011). This is a creative process that
can be used by everyone. Design principles are used in this process of innovation and it can
be useful for any type of business. This also helps in shaping the experience of stakeholders
and innovators. It looks after all the aspects of customer needs and the company data.
2.2 Innovation Trend of Volvo
Volvo Group believes that innovation in transports will help in reshaping the cities of
tomorrow. The company is trying to be creative and innovative for solving revolutionary
problems. The company is currently innovating automated driving, connected vehicles and
electromobility. The vision of the company is to be the successful providers of transport
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solutions worldwide. The company is Swedish Multinational and is headquartered at
Gothenburg, Sweden. It was founded in the year 1927 by Assar Gabrielsson and Gustav
Larson. The revenue according to the year 2018 is 390.834 billion and the net income is
25.363 billion. Volvo is having 94,914 employees worldwide and it comes under heavy
equipment industry (Volvogroup.com, 2019). The company is the world's second largest
manufacturers for heavy-duty trucks in the year 2016.
The latest innovation which Volvo has come up with is automatic cars. The company is
further trying to enhance and add more features to this new innovation. Volvo is taking a step
forward in advancing safety by selling automatic cars all over the world. Currently, this car is
available in limited countries but soon it will capture the markets of most famous
countries.According to the company, the automatic driving cars will be an important step for
improving the overall safety. At Volvo, the Engineers are working hard to bring new features
and fully autonomous cars (Fleiss et al., 2016). These cars are made up of Scalable Product
Architecture (SPA) and no customers will have to face any kind of injuries. The concept of
360c was revealed by the company in the year 2018. The features provided by 360c is traffic
safety, infrastructure, and city planning and environmental footprint of modern society. The
360c looks after a variety of needs of the customers. People can relax, work and sleep in such
cars. 360c is completely autonomous and electric which gives a smooth experience to the
customers (Volvocars.com, 2019). The design of the car is complete of urban style.The future
of such cars is depending on smart partnerships that are done by Volvo. The technological
developments can take place with their partner Veoneer named as Zenuity. They both are
trying to develop software of smooth driving assistance and autonomous cars. According to
customer surveys, Volvo is the best company for introducing autonomy.
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2.3 Link between innovation and Volvo
The organizational environment: The Company tries to meet the demands of the transport
industry. They have a set of cultures which are to be followed by the employees. They always
hunt for fresh talent in order to make their products more innovative. Volvo inspires its
employees and encourages them to take risks while exploring and applying new ideas
(Clarke, 2017). The environment inside the company helps the employees to deliver their
work on time. The company looks after its employees and customer needs. They develop the
organisation by introducing activities and programs. They also have an environment and
quality management system which helps in the development and brings success to the
company.
Innovation trend: Volvo is a very famous company worldwide and they always come up
with something innovative in order to attract customers (Birgersson&Kunéll, 2017). The
company is coming up with Automation and electro-mobility in trucks and cars. The CampX
of Volvo is shaping the future generation of transportation. Here Volvo is trying to explore
and create new ideas with the help of entrepreneurial mindsets.The company has also
introduced the world's full size first autonomous electric bus. This bus is of 12 meters and the
trials are taking place in Nanyang Technological University (NTU).
Innovation Strategy: Volvo is trying to bring prosperity through its innovations in the
transport industry (Svahn et al., 2017). They have set up CampX which helps in strategic
planning for their inventions in their products. They are first trying to find out new ideas
which can be applied according to the needs of the customers. Once the ideas are decided
they are solving the challenges faced during any kind of innovation. They are gathering many
employees or technical experts. They are looking for collaborations and suppliers so that they
can benefit each other. CampX is an innovation hub of Volvo which is inspiring many of its
employees worldwide.
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Innovation capabilities: Volvo is having a lot of innovation capabilities because of which
customers feel that they can produce the best autonomous cars. Volvo is trying its level best
by promoting its innovations and technologies (Svahn, Mathiassen& Lindgren, 2017). They
managing their Engineers and promoting new ideas. They are carefully analysing the
innovations and providing are the required materials. The company is keeping a track of the
ideas in order to understand the areas in which they are lacking.
Innovation value creation and capture: Volvo is always looking after the needs of their
customers (Von Krogh,Netland&Wörter, 2018). They come up with innovative products and
so customers have trust in them. The innovations created by the company is having great
value as they are looking for people’s safety. The autonomous cars and trucks firstly focus on
the safety aspect of driving. The standardised system in cars and trucks plays an important
role in road safety and user safety.
2.4 Innovation Strategy and the importance of it
In order to do an innovation, any company requires a specific set of strategies. Volvo also has
a set of strategies that are important for its innovation (Jensen et al., 2016). The main
aspiration of the company is to give customer satisfaction in each segment. They want to be
industry leaders and earn profit through their innovation. They value customer success,
passion, trust, performance and changes.Volvo has a lot of expectation from their employees
in the field of innovation (Rowledge et al., 2017). They are the ones who set strategic
priorities and work according to it. The fundamental strategies are customer focus,
empowerment, decentralization, brand organisation responsibilities, improvements in the
innovation field. The company tries to understand their mistakes and then learns from them.
The company does not have the habit of spending on any kind of technology. They are very
specific to technologies and only spend on some of them. This reduces a huge amount of
confusion within the employees of the company.Volvo looks after the needs of the employees
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for innovating new things. They look for emerging technologies and always tries to be
connected to the environment. Such things encourage communication between the employees
as they share their ideas and problems. Strategic planning leads to a competitive advantage to
the company when compared to others who are selling the same product. The overall
business model gets improved through strategic innovation (Osterwalder&Pigneur, 2010).
Long focus is given to the stakeholders and the company tries to gain profit by spending a
limited amount of money.Such management in the company makes people more inclined
towards inventing new things for customer benefits.
2.5 Impact of an Innovation Trend
There is a lot of advancement in technologies and it does have a positive impact on the
customers. However, there are negative impacts on innovation in today's world. Innovation in
Volvo is making things simple for their customers but there are chances people will take the
wrong advantage of automatic cars and trucks (Levidow et al., 2016). There might be times
when there is a failure in the system and this will cause a dis-balance which can lead to
accidents. Also while innovation such things the worker’s lives are in danger. They have to
work in an unsuitable environment. There might be complications in handling high-end
innovation which can cause problems to the customers. The positive impact of innovation
trends is increasing in productivity, efficiency and quality of the product. New innovation
tends to gain success and capture the market. High outputs are produced by the company.
Volvo always tries to be careful with their innovations and keeps the environment clean
(Husain, Dayan & Di Benedetto, 2016).
A Business Canvas Model explaining the impact of Innovation Trends.
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8
KEY
PARTNERS
 Technology
developers
 Suppliers
 Machinery
Manufacture
 Distribution
network
 Automotive
companies
CUSTOMER
RELATIONSHIP
Customer Service
Trust
Brand Awareness
CUSTOMER
SEGMENT
 EPC
Companie
s
 Equipmen
t
manufactu
rer
 Carmakers
 Building
plants
VALUE
PROPOSITION
 Diverse
prosperity
through
transportati
on
 Self-driving
vehicles
KEY
ACTIVITIES
Manufacturing
Distribution
Innovation
DISTRIBUTION
CHANNELS
 Website
 Dealers
KEY
RESOURCES
R&D Facilities
Open Innovation
COST STRUCTURE
 Taxes
 Low cost
REVENUE STREAM
 Spare Parts
 Technical Service

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2.6 Recommendation
It is the responsibility of the company to provide sustainable innovations. For this, they need
to clearly focus on their creativity and skills. The company needs to give equal opportunity to
its employees so that they can openly discuss their ideas and strategies
(Fagnant&Kockelman, 2015). This can be done through an informal meeting or a chat
discussion. It is the duty of the employees to inform about their ideas to the senior members
of their groups. The capabilities of innovation must be developed in a proper manner. Volvo
has to give equal importance to each of their products while making something new. They
should be setting up great labs for research purpose and all the materials must be available to
the technical team. It is necessary to increase the workforce so that certain changes can be
made easier and more people can focus on the innovation part. It is the duty of the company
to make its new products successful in the market. Customers should be satisfied with their
products and this will encourage Volvo to take new steps in the field of innovation.
Volvo should follow certain recommendation which will be beneficial for them in long runs.
Before bringing any new technologies or innovation they should do a proper survey of the
market and their requirements. They have to ensure that their innovation is not harmful to the
people and it is environment-friendly. They should also try to maintain healthy competition in
the market. Volvo needs to spend limited money in its innovation and should look after other
fields in the company.
3. Conclusion
This report is based on innovation and sustainable business development. The company taken
for this report was Volvo. A clear introduction is given innovation and its relation to
business. The description of design thinking is also given as it is a part of innovation. The
innovation trends in the Volvo group is seen. It consists of autonomous cars and trucks. 360c
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was the latest innovation in the company. The financial status of the company was also
mentioned in details. A link between the innovation and Volvo was studied which included
organisation environment, innovation trends, capabilities, needs and values. Strategies taken
up by Volvo for innovation is mentioned which included the importance of such strategies in
the company. Impact of innovation trend is seen which had both positive and negative on the
company. A set of recommendations is provided so that Volvo can improve themselves and
earn a bigger name in the market.
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