Managing Innovation Assessment

This assessment explores the theories of innovation and their application in Spotify. It discusses the diffusion theory of innovation and the freemium model. It also analyzes how Spotify has implemented these theories to bring innovation in the music industry.

Managing Innovation
Assessment

Table of Contents
Summary of original feedback.....................................................................................................3
Reflective account........................................................................................................................3
INTRODUCTION...........................................................................................................................5
MAIN BODY...................................................................................................................................5
1. Theories of innovation.............................................................................................................5
2. Application of innovation theories in Spotify..........................................................................8
3. Theory to recommend future development pathways of Spotify...........................................10
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

Summary of original feedback
As per original feedback there is lack of advantages as well as limitation of the concerned
innovation theory. It also contains a comment that there is less evidence regarding the company
in terms of implication of innovation technique. In addition, of this there is no link in the
historical development section was found that will connect the company with innovation. In the
same way in future development section also less evidence of the company regarding the use of
innovation technique is seen. However, as per the last section of imagination no evidence is
found in the report.
Reflective account
While making the changes I came to know that what was my mistake in the original
project and how could I correct those mistake. The feedback provides me a way to correct my
mistake and make the report appropriate and adequate. When changes was made as per the first
section of feedback comment then the original work become more informative and fruitful.
Through these changes the content in original report was glorified. It raises the actual meaning of
the section. And when information regarding the advantages and adverse impact in the context of
company was implemented as per the suggested feedback then it gives more clear and detailed
clarification about the concept. Similarly, when changes as per feedback comments in the second
section was implemented I saw that the content that was given in original report was not linked
to innovation. But after making the changes as per feedback it has not only given a new direction
to link the section with the innovation but it has deepened its meaning and make it more
meaningful. Through committing the feedback of this section the historical development and
innovation got fully justified. Along with implication of innovation in the historical background,
the original content of the section got detailed explanation along with justification.
As per the third comment of feedback it was found that the original report was not that
much linked with future and the theory of diffusion was not being implemented in detail. But
when the third section of feedback is being incorporated the actual and practical implication of
diffusion theory has been performed. The third comment made the original report more justified
and raise its meaning in the form of actual implement-ion of diffusion theory. At last after
inducing the last comment related to feedback it makes the whole report correct and relevant. As
that comment was related to imagination session so after adding that part the actual meaning of
the report was highlighted.

Since, this feedback identified the main mistake that was being committed at the time of
submission of original report and when every comment of the feedback is being addressed then it
ultimately raises the meaning of the project and make it complete.
Thus, it would not be wrong to said that this feedback provides a direction to make the
original project more informative and fruitful. In addition, of that, inculcation of feedback in the
original report has raised its meaning along with justifying the concept to be more clear and
under-stable.

INTRODUCTION
Innovation or binging something new is the main requirement or trend of today's world.
The companies which adopt such changes or bring innovation can only survive in the
competitive market and able to meet the needs of the people. There are various theories including
the diffusion theory which companies can adopt and bring new or innovative for their customers
which again helps the companies to raise their sale as well as achievement of their objectives.
This project will study about the concept of innovation along with the explanation of different
theories of innovation. The application or role of innovation theories in the development of the
services of the company along with its role in future development of the service or products are
also discussed under this project.
MAIN BODY
1. Theories of innovation
Innovation:
The simple meaning of innovation is to bring something new from the existing which
may includes implementing changes as per the need and create new product. Innovation can be
done by bringing completely new product or make the changes in the existing product to make it
completely new (Edwards-Schachter, 2018).
Theories of innovation:
Diffusion theory of innovation:
Diffusion theory said that how with the passage of time the main idea or product will
spread over the population or society which means that theory works on the principle that with
the passage of time or passing of time the need or actual wants of the people related to the
product grow or changes which creates demand for new or innovative product, and as a result of
that demand and due to this theory that innovative product will be accepted by the people
(García‐Avilés, 2020). However, the adoption of that innovative product is not sudden which
means some people adopt that innovation at a very early stage while some people adopt that a
later stage.
There is usually a requirement of time to bring that innovative product among all the
people. It is dependent upon the characteristics or attraction of people regarding that product

which means some attract early while some not. This theory basically divides the adoption of
innovation or innovative product into five parts which are explained with the help of diagram as
below:
Source: Beever, 2018
Innovators:
These are those people who are eager to adopt the innovation or innovative products.
These people are ready to take risk in addition to adopting the new idea and always welcome the
innovations. These, people are the first adaptor of innovation. There is nothing special or
important is required to be done to convince these segment of people.
Early adopters:
These people are representative of leaders which means they like leader role, and they
already know in advance regarding the requirement of change. Thus, very fewer efforts are
required to convince these people because of their own self awareness. These group of people are
also early adaptors of changes or innovations thus, there is no such requirement to create the
awareness or knowledge regarding the importance of innovation.
Early majority:
These people are not fully leaders, but they are early adaptor of change or innovation in
comparison of normal average person. The only thing by which they are convinced, and they
want is, that they want to see the effect of innovation before adoption which means that they
want to see the effect which innovation will bring in their existing life (Nam, Lee and Lee,
2019). The strategy that work to influence these segment of people are to show the success of the
innovation in the contrast of adopters or creating the effectiveness regarding the innovation.
Late majority:
Illustration 1: Diffusion theory

As per the name suggest that these people are late adopter of change or innovation which
means that these people will adopt that change or innovation only after the majority of people's
adoption. These people are slow adopter of change. The strategy that work here is to show that
how successful the impact of innovation has done over the majority of adopters.
Laggards:
These people are strictly bound with their tradition and culture, and they usually don't
ready to adopt the change or innovation. It is very difficult to convince these group of people to
adopt the innovation. The only strategy that work to make ready to these group of people to
adopt innovations is using of fear, pressure from other group or peoples.
Advantages and adverse impact of this theory in the concept of Spotify:
As per this theory it requires a long time to bring innovation by company so sometime it
will lead to bad impact in the form of availing benefits of products which will be required to
meet the emergency situation.
However, the main advantage for the adoption of this theory is its long term effect. As
nothing can be accepted and adopted in the short span of time. This means everything requires
time. So adoption of this theory by Spotify will lead to bring innovation along with long term
customer grabbing because with the passage of time customer will understand the innovation and
slowly accept it in their life. This will help Spotify in terms of creating long term impact over its
customers.
Freemium model:
It is also one of the important model under which some services including the basic
services regarding the product are given free of cost then extra charges will be levied by the
companies for availing the premium or extra special services. This model is one of the main
model which bring innovation along with demand among the people so that not only the
innovation but the business of the company will also grow. The name also define its meaning
that under this model the services are divided into two parts which means free services or
premium services. This is one of the innovative step or model which not only brings new or
innovative product among the customers but also helps the companies to achieve the objective in
the form of growth of the company or earning profit by the company.

By using this innovative model the company would be able to provide both
complementary and extra add on services to its customers. This model allows the company to use
the basic services or provide the basic services to their customers at free of cost so that company
can build the high percentage of customers or able to attract the high proportion of customers and
in case of fulfilment of the special demand regarding the premium services or early access to
services, company also provide an additional mode of services in the form of premium category
which can be availed by the customers on the payment of some extra amount (Gu, Kannan and
Ma, 2018). Thus, it would be right to said that Freemium model is one of the best innovative
as well as business model which helps the companies in grabbing the future opportunities and
increase the customers share by bringing something new in regard to the fulfilment of interest of
the customers so that, the objective along with bringing innovativeness is accomplished by the
companies.
2. Application of innovation theories in Spotify
Spotify which is one of the best provider of music services among its customers, with the
help of digital or online mode which is one of the innovative step taken by Spotify in order to
meet the needs of the people ruling the entire market of music. Since, the need of people
regarding the listening of music is changed over a time which means that earlier people use to
hear music by the old mode of listening devices including the radios or frequency modulation
device but with the change in time the need or requirement of the people also changed.
Spotify being a music service provider company, identify such need of the people. And
on the proper research and analysis of the needs of people and with the adoption of diffusion
theory of innovation which includes bringing new or innovative services or products for the
people which can meet their growing need, Spotify adopt the innovation or innovation theories
and introduce a new mode or definition of music among the people (Kahn, 2018). And according
to that definition or new concept of music, now the people can listen the music at any place or at
any moment with the new technique or idea of Spotify which means offering the same music or
the same services but by different mode or in new form through the use of digital channel in the
form of mobile application. Spotify provides the online or digital platform to the customers
which allows them to listen their favourite music at point or at any time. Thus, it would not be

wrong to said that there is a great need of some innovation and innovative model that could
resolve the issue of people and avail them a wide range of music.
However, there are still some person who didn't accept this kind of change which is
brought by Spotify in the form of online music but with the growing need or requirement or due
to the trend of digitalization the innovative concept of music by Spotify has grown at a great
height and now the people are very fond or use too regarding the listening of music by Spotify
which provides the broad category of music on a single click.
However, it would be right to said that the concept regarding the providing of music
service was remains same but the mode or the form of providing music changes, in terms of
digital or online mode which would be treated as an innovative step or innovative need which
was properly analysed or taken by the Spotify which not only helps Spotify in the expansion of
business but it also gives a global appearance or presence to the company (Serdyukov, 2017).
As it is seen that people in the old time also are very found of music which is yet also
being observed. And this fondness can easily be meet by Spotify's innovation theory of freemium
where it will avail a wide range of music to its customers at free of cost. Along with free music it
can also meet the need of young generation who have interest in listening new music through th
another category of its theory that includes premium subscription by which early access can be
grabbed by customers in terms of listening new music.
Through this innovative step of Spotify in terms of digital music, not only widen its
coverage but it also leads to the improvement in the level or quality of services with more
customer satisfaction in terms of better fulfilment of need through better quality and experience
of music.
The application of Freemium theory in Spotify is that it provides the premium plans and
the free plans in context of listening to music for the customers. As Spotify has now created a
large base for the customers to listen to music according to their requirements and moods,
customers are also more inclined towards the setting their playlists on their own with their
favourite songs. The Freemium plans helps in the promotion of advertisements and generate
more revenues with respect to the concept of the advertisement that is being played on the
Spotify app.
Spotify provides three plans to its customers in US which is -

The free version gives the customers unlimited ad – supported streaming meaning that it shuffles
on the playback of songs on mobile, and gives its access to podcast and videos.
The premium version for $9.99 in which it adds offline listening, removes ads and on – demand
mobile access.
The family version for $14.99 gives its customers six accounts effectively and efficiently making
it $2.5 per account.
The technology and trends which are developed through the Freemium model helps
Spotify to analyse the key areas where they can increase their customer base so that the operation
of the application which has been made according to the easy and accessible usage helps the
customers to learn more about the other facilities that are been provided to them. This model is
helpful to Spotify as the services of this model offers the users all the basic features of the
platform but without a monthly charge.
The model build library of the songs, sharing content related to the songs, viewing lyrics
and using Spotify radio already installed in the application. The model help in the remuneration
of various artist. In this, the company pays royalties based on the number of artists that stream.
Spotify values its customers and the music industry the most as the music generated helps
Spotify to release it on their own application and the customer base is engaged by this process.
Thus, this model provides various applications and usage which demonstrates the
business and marketing of the organization as whole as Spotify has been more on the social
grounds for the promotion and strategies that it frames. The model helps in evaluating the key
areas and the characteristics that Spotify hold in the growth and development of the company to
make its future more effective and efficient on business generating terms for the processing and
generating more customer engagement so that the operation of the company runs smooth and is
not varied or differentiated in the loss and only upgrades to create more revenue and sales in the
organization to become more future driven.
3. Theory to recommend future development pathways of Spotify
Through Diffusion Theory – This theory helps in recommending future developmental
pathways for the services that are rendered by Spotify company by fulfilling the needs and wants
of its customers.

Diffusion theory aims to explain how, why and the rate at which a product, service or
process spreads through a population or social system. The diffusion theory helps in the overall
growth of the services that Spotify delivers to its customers whether it be old songs, new songs,
to create own playlist on the app etc (Gruber, 2020). These services facilitate the customers and
engage more customers as they subscribe to such channels which provides them enjoyment and
they are find the app fascinating overall. Spotify has been one of the social application for the
people who listen to music and has created wide market area for listening to the songs.
Through diffusion theory which is applied for the development of services by Spotify
helps marketers understand what are the new trends which occur daily in the market structure
and this is analysed by viewing the customers opinion of what they require in the app. The
customers lead to new trends and technology that helps to focus on what customers need or want.
Likewise, Spotify through the implementation of Diffusion theory can also evolve its
existing process. As it is providing a wide range of music services to its customers so along with
implement-ion of Diffusion theory it can also bring more innovation into its business. Spotify
will plan to develop Artificial Intelligence in its working practice. This will not only boost up its
business but it will also meet the need of its customers very closely. Through this innovation it
can by capturing the moods of people play the songs. To bring this innovation, it will definitely
require time but it will give long term impact over its customers as it is the outcome of diffusion
theory.
By utilizing the services which Spotify provide to its customers, the company is able to
identify its target customers who are willing to purchase their services (Nam, Lee and Lee,
2019). Different marketing strategies are also help the marketers access the new ideas and
innovation techniques which are to be provided to the customers resulting in making a customer
base for the services being offered.
The persuasion power of the company should be strong enough so that they are able to
engage the customers to listen or hear anything new that has been an invention in the Spotify
app. For this, the company must accumulate knowledge of the services which they will offer to
its customers. More upside the company conveys about its services in launching anything new to
increase its listeners, better will be the odds of a sale. And more number of subscribers will find
it easy and accessible to create their account on the app provided by Spotify (Dearing and Cox,
2018).

Once the customer decides to continue with the services it engages them more to use the
application provided that the outcome of it is increase in more customer base in the market
structure and this creates an advantage for Spotify to manage the engagement process by
fulfilling customer needs and wants effectively and efficiently.
Thus, these developmental pathways and recommendations for Spotify will help in the
new ideology of inventing something different in correspondence to the customers needs and
wants and will lead to increase the sales and expand its online market.
Through Freemium Model – Spotify runs on Freemium model in which the company
makes money from subscription and advertisements that the app serves. Recommendations for
its future development is -
Spotify can make more of its revenue from subscriptions and adventurism by engaging
more customers and providing them the benefits of using the app (Voigt, Buliga and Michl,
2017). The revenue of Spotify can be generated more in order to create a customer base as this
can be made possible by splitting the amount between licensing, music deals and artists. By
generating different premium plans, the customers will take more interest as per their
requirements. As premium and family plans support for extreme quality soundtrack this enables
customers to know and acknowledge more about the app and this plan service by Spotify is also
a future generation step in the process of leading more revenue and sales as the customer base
will increase along.
As Spotify already features these characteristics like branded moments, sponsored
playlist, sponsored sessions, video takeover everywhere, overlay, leader board, branded playlist,
advertiser page (Holm and Günzel-Jensen, 2017). All the important points and operations which
the company follows can help it in future growth of what their purpose of service delivery is for
the customers. This will help to know more of the customers and their ideas of what they seek
from the company. As Spotify is very quick in recovering its customers by generating this
model to expand their business, customers have also put in the effort in generating the sales and
revenue of the company.
Spotify at this stage of growth and for the future must consider the loopholes of where
their customer base is lost and should regain them by reaching to their ideas, needs and wants.

Various opportunities creates engagement 148 mins per day which can be helpful for the
company to manage its financial and revenue position in the market as this will make more
money to the company and will expand the customer base which will be in favour of the
organization (Mäntymäki, Islam and Benbasat, 2020).
Advertising can be beneficial on this platform as it will help in the process of money
abstraction from the the advertisements. The advertisements will pay the company to endorse its
products before listening to any song which is what exactly happens and this can be beneficial in
the step towards the growth and development of the company or organization as whole.
Thus, this theory helps in development of the company and increases its value in future
by the app that is used by the company through this model. These recommendations also helps to
analyse the future base and identify various opportunities which are to be provided to the
customers resulting in generation of more money for Spotify company.
Imagination:
In order to meet the high degree of competition Spotify can also adopt various technologies in its
working culture. Implementation of technology usually includes use of more innovativeness and
creativity in the existing technology. For that Spotify can make some changes in its existing
technology in the form of making it more attractive through the inculcation of an option that will
avail its customers to listen the song along with its video. In addition, of this it will also give
them an advancement by which its customer can bookmark their favourite songs and listen them
anytime. This changes in technology will help Spotify to meet market competition along with
leading the market.
CONCLUSION
Thus, it is concluded from the above report that the innovation theories helps in the
development and growth of the Spotify company which leads to more customer involvement and
generates a base for the listeners along with the subscription in the application. The theories
defines the key areas and the important aspects in reference to what is called as the innovation of
new ideas and knowledge. Spotify itself being more creative on the social grounds enable
listeners by maintaining continuous interaction with the trends and technologies that are
upgraded in the market structure. Along with these theories that are the Diffusion theory and the
Freemium theory Spotify developed a growth stage and the base with these theories to be link up

and was explained with all the factors of the theories which consisted of the recommendations
for the future developmental growth aspect of the company to work effectively and efficiently.

REFERENCES
Books and journals
Dearing, J.W. and Cox, J.G., 2018. Diffusion of innovations theory, principles, and practice.
Health Affairs.37(2). pp.183-190.
Edwards-Schachter, M., 2018. The nature and variety of innovation. International Journal of
Innovation Studies.2(2). pp.65-79.
García‐Avilés, J.A., 2020. Diffusion of Innovation. The International Encyclopedia of Media
Psychology, pp.1-8.
Gruber, M., 2020. An evolutionary perspective on adoption-diffusion theory. Journal of Business
Research.
Gu, X., Kannan, P.K. and Ma, L., 2018. Selling the premium in freemium. Journal of
Marketing.82(6). pp.10-27.
Holm, A.B. and Günzel-Jensen, F., 2017. Succeeding with freemium: strategies for
implementation. Journal of Business Strategy.
Kahn, K.B., 2018. Understanding innovation. Business Horizons.61(3). pp.453-460.
Mäntymäki, M., Islam, A.N. and Benbasat, I., 2020. What drives subscribing to premium in
freemium services? A consumer value-based view of differences between upgrading to
and staying with premium. Information Systems Journal.30(2).pp.295-333.
Nam, D., Lee, J. and Lee, H., 2019. Business analytics adoption process: An innovation diffusion
perspective. International Journal of Information Management.49. pp.411-423.
Nam, D., Lee, J. and Lee, H., 2019. Business analytics adoption process: An innovation diffusion
perspective. International Journal of Information Management.49.pp.411-423.
Serdyukov, P., 2017. Innovation in education: what works, what doesn’t, and what to do about
it?. Journal of Research in Innovative Teaching & Learning.
Voigt, K.I., Buliga, O. and Michl, K., 2017. Passion for Music: The Case of Spotify. In Business
Model Pioneers (pp. 143-155). Springer, Cham.
Online references
Beever.G.,2018 Diffusion of Innovations Theory.[Online]. available
through:<https://extensionaus.com.au/extension-practice/diffusion-of-innovations-
theory-case-studies-and-discussion/>
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