Managing Innovation in Business

This report discusses the importance of managing innovation in business and focuses on the case of Marks and Spencer. It explores the history of innovation in the organization, its existing innovation performance, and the sources of innovation. The report also examines the impact of Covid-19 and Brexit on the industry and provides insights on business innovation strategies.

Managing Innovation
in Business

Executive Summary
Innovation has become an integral part of success of businesses in current business
environment. Marks and Spencer is one of the organisations who has brought several innovations
and managed them in very successful way. Among all innovations, that Marks and Spencer
brought, its innovation in clothing and textile and food business are highly successful and made
considerable impact on industry in past. Through identification of different sources and analysis
of them helps in determining that practices of innovation are still being strongly emphasised by
company. Earlier innovations were in form of products now company is focusing on practices
and processes along with digitalisation and sustainability.

Table of Contents
INTRODUCTION...........................................................................................................................4
Purpose of the report........................................................................................................................4
The organisation and industry overview......................................................................................4
Sources of innovation..................................................................................................................6
The Organisations existing Innovation Performance..................................................................7
The Industry in 2021..................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Business innovation is concerned with a process in which organisation seeks to develop
new products and services. Purpose of business innovation is to cater changing new needs and
requirements of customers and in case innovation is in form of process, it involves improving
organisation practices. Management of business innovation involves identifying and developing
innovation and ensuring that innovation in organisation can achieve objectives behind the
innovation in organisation.
Purpose of the report
This report aims at conducting innovation history of the organisation and this will done
through innovation history, present level of innovation and by identifying future innovation
requirements of the organisation. In this firstly history of organisation will be discussed and
along with overview of organisation. Followed by this, existing performance of the organisation
will also be discussed including new and previous products and lastly industry in 2021 will be
discussed in report. Industry in 2021 includes identifying impact of Brexit and Covid-19 on
performance of business organisation and their actions to overcome different obstacles that they
experienced.
The organisation and industry overview
Marks and Spencer (M&S) have been contextualised for discussion in this report. M&S is
a major British multinational organisation. It was founded in 1884 by Michael Marks and
Thomas Spencer, in Leeds, UK and is headquartered at London, England, UK. M&S operates in
retail industry, retail industry is one in which firms are engaged in offering goods and services
directly to consumers (Malar, 2019). Concerned with size of retail industry in the year 2021 total
retail sales worldwide was $25.04 trillion. This outlines that retail industry is one of the biggest
industry and M&S operates in this industry. M&S specialises in selling clothes, food products
and home products and mostly products of M&S are of its own label. Currently Marks and
Spencer operates in UK and 62 other countries and it operates through 1519 stores and 44
websites of the company. In order to complete all its activities and operate organisation
successfully in global marketplace M&S employs around 78000 employees. As of 2020 M&S
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have market capital of $2.3 billion. Competitors of M&S includes John Lewis partnership, Aldi,
Asda, Tesco, Debenhams and Next. Concerned with position of M&S, it stands at 7th position
relative to its competitors and other retail organisations in UK on the basis of total turnover of
the organisations.
Figure 1 Size of Global retail industry
Source: Total retail sales worldwide from 2018 to 2022, 2021
History of innovation in M&S is very old and it is a pioneer in textile and food
technology. Company has always used scientific developments to create products that changed
lives of its customers. Regarding innovation M&S has pioneered in several aspects of business
and it was first food retailer to hire a technical executive and chief chemist for food division and
through this M&S developed and innovated several food products (Balci and et.al., 2017). This
reflects innovative thinking of M&S in a time when innovation was not prioritised by retailers or
other organisations. Along with this, M&S was also pioneered in Cold chain distribution in
which it for the first time brought availability of chilled rather than frozen and pre-cooked
poultry. In digital age it does sound something different or special to buy fresh, unfrozen chicken
but in 1960 it was a revolution. Innovation done by M&S also includes setting up first research
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laboratory to develop new fabrics. This innovation brought significant transformation in high
street and enabled customers to have new soft textures, silky finishes and bright patterns at
affordable price. M&S was first retailer to launch seam-free, ladder resistance stockings, and this
was a very big problem that ladies were facing then. Followed by this M&S also introduced wool
garments that could be washed through machine and new finishes of cotton that minimised
requirement of ironing. This discussion outlines that M&S has a very strong history of
innovation in which it worked on solving several problems that customers used to face (Toms,
2018). This involves developing new fabric and creating new clothes and this brought a very
important change in fashion industry. Along with this, M&S also brought changes in food
industry by creating several new product offering and along with this also by developing cold
chain distribution.
Sources of innovation
Internal sources of innovation
Research and Development- Research and development within organisation is one of the very
important sources of innovation for all organisations and this was also one of the important
source for M&S.
Marketing research- Market research enables to understand requirements of customers and on
the basis of which organisation can develop new and innovative solutions for the company.
Employees- Employees of the organisation are also important internal source of innovation.
Ideas and creativity of employees in organisation can lead to valuable innovation by the
organisation.
External sources of innovation
Customers- Customers and their requirement is one of the major source of innovation for the
organisation (Demircioglu, Audretsch and Slaper, 2019). Customers’ changing requirement and
complaints and issues raised by customers become source of innovative ideas for organisations.
Competitors- Competitors of the company are also a source through which innovation can be
developed. In this activities and practices along with offerings of competitors become basis for
innovation.
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New knowledge- As the new knowledge develops and new innovation emerges it can be a
source of innovation for the organisation.
The Organisations existing Innovation Performance
Marks and Spencer is a retailer and sale variety of products, however its clothes and
clothing products are considered to be of high quality. Company brought a significant innovation
in clothing and textile products and this is why its clothing products are still successful.
However, as compared to clothing food product of the company has become more successful and
Marks and Spencer also have brought several innovation in food products (Scott and Walker,
2017). Concerned with food products Steak Pie was a product that company recently launched
and it become a very big success. This product was so successful that it became fastest selling
product Marks and Spencer and to cope with demand for the handcrafted pie supplier has to go
24 hour production to ensure optimum stock. Presently Marks and Spencer is focusing on its
expansion in strategic Markets and emerging economics. Marks and Spencer is doing this to
scale its market and in order to do this they are modernizing their estate in a way that is low cost
and can improve experience of customers. Along with this Marks and Spencer is also working on
strengthening its market on the basis of right pricing and localising its product ranges so that
they can become more competitive at international level. Along this company is continuously
working on expansion of international online channels. Concerned with expansion of business,
Marks and Spencer launched additional 5 transnational websites that include their flagship
website in India which is their key on the market and now this sale online to customers in 44
countries. Increasing and expanding online operations is also innovation for the business.
Marks and Spencer is continuously working on innovating and they have started to build
commercial pipeline of relevant innovation and increase their appeal to wider range of Shoppers
(Crosta, Castro and Glass, 2020). Innovation by Marks and Spencer include their plant kitchen
range which head organisation to attract significant number of new customers. Recently Marks
and Spencer also introduced their Cook with range of featuring simple ingredient and meal
solutions to help families cook fresh meals in less time. This reflect strong capability of Marks
and Spencer to bring variety of innovation to enhance and increase value for customers and cater
there different need and requirements.
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In order to bring innovation in organisation it is very important that organisation has
adequate resources available. This requires an organisation to have capability and ability to
manage their resources adequately. Marks and Spencer have adequate resources so that they can
continue their operations and meet their liabilities as they become due and this is it that they have
appropriately managed their resources. Concerned with the resources and their management
Marks and Spencer have also managed to attract and retain a highly competent and efficient
human resources to carry out organisational operations and ensure that it can perform smoothly
in market. Concerned with management of human resources in organisation and to engage
motivate and connect with employees of different generations and diverse workforce they
undertook different practices of engaging and motivating employees (Watson, Wilson and
Macdonald, 2018). In order to acquire and attract competent employees Marks and Spencer
make investment in external hires to address identify skill gaps. Marks and Spencer also run
leadership development program with an organisation to in health leadership capability and
engagement of employees of company. In order to manage human resources Marks and Spencer
also have a robust performance management system that measures achievement against business
objectives and behaviour and it clearly linked with reward for employees.
As discussed above about ability of Marks and Spencer to innovate and effectively
manage its resources both human resources and material resources. It is very important to outline
that in order to ensure it can take maximum advantage of innovation and to differentiate it from
its competitors Marks and Spencer sell almost percent products of its own label. This enables
Marks and Spencer to get maximum benefit of its innovation and it can achieve highest possible
revenue through its innovation (Awan, Nauman and Sroufe, 2020). This is also a very important
element that differentiates Marks and Spencer from other retailers. Marks and Spencer is looking
for digital first approach in operations and this is their priority in innovation for preparing
organisation for future. In this they are working on complete digitalization of operations of
Marks and Spencer on both channels that is in store as well as at online platform of Marks and
Spencer.
Innovation model adopted by M&S is Diamond Model of Innovation that is explained below-
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Figure 2 Diamond Model of Innovation
Above figure shows four elements and aspects of innovation and all these criteria and innovation
aspects are interconnected as well as interdependent.
Strategy- Strategy is element that provides guidance and focus for innovation and is also
element that governs creation, organization and controlling of the organization.
Demand condition- This is concerned with home market demand for product from a particular
industry.
Related support industry- This is concerned with presence of absence of supplier industry that
is internally competitive (Fang and et.al., 2018).
Factor- This is concerned with position of factors of production such as skilled labor and
infrastructure.
These are certain elements and factors considering them M&S have been able to and have
developed several innovations that caused to immense success of M&S in retail industry.
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The Industry in 2021
Industry in 2021 has been affected due to several reasons and among these reasons
Covid-19 and related restrictions for the public as well as for businesses. Marks and Spencer also
got affected because of the impact of Covid-19. Covid-19 pandemic has significantly affected
how businesses use to operate. In M&S before Covid-19 performance in womenswear and
kidswear was encouraging and Menswear also saw improving sales trends. In response of the
Covid crisis M&S took action for £1bn that included plan for cost reduction to £500m and
further actions to manage cash for planning for Covid-19 (Annual Report & Financial
Statements, 2020). In order to ensure safety during Covid-19 pandemic M&S also took extra
measures and in this first measure taken by M&S was transfer of 4600 employees from clothing
and home products to food team (Goddard, 2020). This is because only food items and necessary
items were being sold then. Along with this M&S also implemented new contactless delivery for
clothing, home, flowers, hampers and wine orders in which products will be left at doors and
ensured that there is no hand-to-hand contact. Along with this, in order to manage impact of
Covid-19 hygiene measures were also increased at store network of M&S. This means that
adequate and additional measures were taken by M&S to ensure it is able to manage and carry
out its operations successfully. Along with Covid-19 M&S was also affected because of impact
of Brexit. This is because Brexit according to which UK is not longer a member of European
Union, it added further risk for M&S. The impact of Brexit on M&S is visible through currency
movements, rate of corporate bonds, changing regulations for credit and government support for
credit market. In order to effectively and appropriately respond to crisis and difficulties emerged
for M&S as a result of Brexit, it brought different types of changes in its functioning (Faria,
2020). Transformation of M&S because of Brexit included changes and transformation in supply
chain, maintaining control over safety and quality of food and readiness of company to execute
launch of M&S products with Ocado retail. This means that M&S took different actions and
brought changes in its functioning in order to ensure that its able to cope with changing
circumstances and situations in which business is operating. This is because M&S is a
multination organisation and this is why Brexit made considerable effect on how M&S used to
operate. For future M&S is planning on reducing cost and in doing so, technology use is being
increased by M&S and this is known as their approach ‘Digital First’. In this M&S is working in
reducing cost of its stores whilst increasing and improving experience for customers. In its
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Digital First M&S is also focusing on increasing its online operations and for this new
transnational websites have been launched and further expansion may be done through this
(Bloom and et.al., 2019). Regarding finance for future, according to annual report of M&S for
2020, it has financial viability for coming three years, that it can continue to perform all its
operations through its current financial position (Annual Report & Financial Statements, 2020).
Along with this, company is also focusing on sustainability through its Plan A Strategy.
In 2021 retail industry have been significantly affected by Covid-19 pandemic and not
retail industry but all sectors of economy and population have been affected because of this. This
will lead to certain new changes in industry and these trends are-
Personalised online shopping- Personalisation has become a very important trend and in 2021
as people become more used to with online shopping this is going to significantly increase.
Expansion of online shopping- This means that all retail organisations will work on expansion
of online shopping because of measures like social distancing. In addition to this during Covid-
19 online shopping was increased and people are likely to continue shopping online.
Self-driving delivery vehicles and drone deliveries- Considering measures such as contactless
delivery self-driving vehicles and drone deliveries are likely to become a trend in 2021.
Emergence of shop local trend- This is another trend in which during Covid-19 crisis people
realised importance of local shopping and this might become a trend in 2021 in retail industry
( Michelle Carter, 2021).
It is very important that M&S consider these trends that will enable it to succeed higher
in 2021.
CONCLUSION
On the basis of above discussion it can be concluded that management of innovation is
equally important as creation of innovation. Above report discusses innovation that have been
done by M&S, M&S was started in 1884 and since then company has developed several new
products and solved many problems that customers were facing. In history, innovations of the
company were in form of its product offerings however, later company also innovated, its
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services and the way it used to sell its products. Overall discussion outlines that growth and
success of M&S can be attributed to its innovative thinking and capabilities.
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REFERENCES
Books and Journals
Toms, S., 2018. The history of an organizational innovation. The Routledge Companion to
Management Buyouts. p.40.
Scott, P. and Walker, J.T., 2017. Barriers to ‘industrialisation’for interwar British retailing? The
case of Marks & Spencer Ltd. Business History. 59(2). pp.179-201.
Watson, R., Wilson, H.N. and Macdonald, E.K., 2018. Business-nonprofit engagement in
sustainability-oriented innovation: What works for whom and why?. Journal of
Business Research.
Awan, U., Nauman, S. and Sroufe, R., 2020. Exploring the effect of buyer engagement on green
product innovation: Empirical evidence from manufacturers. Business Strategy and the
Environment.
Goddard, E., 2020. The impact of COVID‐19 on food retail and food service in Canada:
Preliminary assessment. Canadian Journal of Agricultural Economics/Revue
canadienne d'agroeconomie.
Faria, B.V.I.R.D., 2020. Potential impact of brexit in marks and spencer (Doctoral dissertation).
Bloom, N and et.al., 2019. The impact of Brexit on UK firms (No. w26218). National Bureau of
Economic Research.
Balci, O and et.al., 2017, December. The state of innovation in modeling and simulation: the last
50 years. In 2017 Winter Simulation Conference (WSC) (pp. 821-836). IEEE.
Crosta, G., Castro, A. and Glass, J., 2020, July. Why would private firms be interested in fighting
hunger? Institutional pressures leading to responsible innovation. In Proceedings of the
36th EGOS Colloquium (Vol. 36). European Group for Organization Studies (EGOS).
Malar, M.S., 2019. Industry 4.0 Transforming Global Retail Industry. Indian Journal of
Computer Science, 4(1), pp.19-25.
Fang, K and et.al., 2018. Assessing national renewable energy competitiveness of the G20: A
revised Porter's Diamond Model. Renewable and Sustainable Energy Reviews. 93,
pp.719-731.
Demircioglu, M.A., Audretsch, D.B. and Slaper, T.F., 2019. Sources of innovation and
innovation type: firm-level evidence from the United States. Industrial and Corporate
Change. 28(6), pp.1365-1379.
Online
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Total retail sales worldwide from 2018 to 2022. 2021. [Online]. Available Through:
<https://www.statista.com/statistics/443522/global-retail-sales/>.
Annual Report & Financial Statements. 2020. [Online]. Available Through:
<https://corporate.marksandspencer.com/documents/msar2020/m-and-
s_ar20_full_200528.pdf>.
Michelle Carter, 2021. 4 Retail Trends to Watch in 2021. [Online]. Available Through: <
https://www.mytotalretail.com/article/4-retail-trends-to-watch-in-2021/>.
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