Asda's Innovation Strategy and Impact on Retail

This assignment examines Asda's business model and innovation strategies, highlighting the company's efforts to revamp its operations and improve customer experience. The document discusses Asda's introduction of a parcel vending machine, its emphasis on putting customers first, and the future prospects for retail in the UK. The analysis also touches on the challenges faced by Asda workers, including redundancy and reduced hours.

Managing
innovation in
business

EXECUTIVE SUMMARY
This report contains a detailed analysis on importance of bringing and managing
innovation in an business organisation. Innovation plays a very essential for a company to
achieve competitive advantage and market sustainability. This project explains about various
aspects and activities that help in developing innovational capabilities within an organisation.
This report contains an analysis of retail industry to determine the future growth opportunities for
ASDA. It describes about various aspects of retail industry as well as a scenario of increasing
demand of customers and prevailing competition in market. Apart from this, it also provide
information about various innovation and technologies which are assumed to be launched and
change the whole scenario of retail sector by year 2020.
By assessing the whole industry, ASDA is able identify various innovational
opportunities which are present at market place that can further support in future growth. The
assessment help ASDA in determining the requirement of organisational innovation. This section
explains about various innovative technologies to be introduced by year 2020 which can take the
company to new heights. Apart from this, report contains a detail description about various
approaches used by ASDA for building up future innovational capabilities within organisation.
This help in enhancing the skills and knowledge of the workforce which further help in
implementing and managing innovational plan effectively.
Innovational practices includes various types of barriers such as cultural, lack of
employees acceptance, lack of motivation, climate barriers and inadequacy in skills &
knowledge. These barrier restrict ASDA in developing innovational capabilities within an
organisation. Further, it has been found from this report that innovation plays a very essential
role in an organisational development and in achieving competitive edge. A leader plays an
essential role in building innovational capabilities within an organisation and in implementing
innovative ideas into reality. They also motivate employees by providing them proper
knowledge and training so that technologies can be adopted effectively.
From implementing innovational approach in organisational practices, it is recommended
for ASDA to analyse the market effectiveness and future demand of customers. Company must
take into consideration various factors such as organisational knowledge, Cross functional
cooperation and assessments of existing capabilities. These factors will help in developing
innovational capabilities within an organisation. Apart from this, leadership activities also plays

a crucial role in planning and implementation of innovational practices by eliminating barrier
that restrict company in developing capabilities to deal with future technologies.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................1
Future of retail industry in 2020 and beyond.........................................................................1
The organisations innovation requirements 2020 and beyond...............................................2
Building future innovation capabilities..................................................................................3
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Innovation refers to the process of converting an idea into reality which creates value for
customers. It includes deliberately applying information, imagination and bringing greater value
from resources. This report is about ASDA which is a leading British supermarket retailer,
headquartered in England. It deals in number of products such as food, grocery items, clothing,
financial and mobile services. ASDA is known for its innovational practices and is now planning
for new innovational approaches to introduce by year 2020 and beyond that time (Tidd and
Bessant, 2014). It is very essential for company to bring new methods or technologies within
their business operations so that it can achieve market sustainability. Timely adoption of changes
reduce competition from market place and support in capturing larger market share. The main
aim of this project is to identify various approaches and actions to be performed for better
implementation of innovational practices. This project also describe about number of factors that
must be take into consideration while planning for future innovational practices.
This report elaborates about the future of retail industry in term of innovational practices
by year 2020 and beyond. This further explains about requirement of implementation of
introducing new innovation for upcoming period and its benefit. Apart from this it also state
about the methods of building future innovation capabilities within an organisation. In addition
this it also explains about various barriers that may be faced by ASDA while developing and
implementing the innovational capabilities. It also defines the importance of leadership in
managing innovation in business operations.
Future of retail industry in 2020 and beyond
The retail sector is considered as an fastest growing industry which brings on regular
development and new innovation for providing their customer best shopping experience. Retail
players keep on bringing new innovation and technologies in order to deal with dynamic
environment and changing needs of customers (Brunswicker and Vanhaverbeke, 2015).
Adaptation of new technologies bring competition within the industry which make it necessary
for other player to adopt these technologies or bring new one so as to achieve market
sustainability.
Retail industry is growing faster and continuous changes bring by innovational practices
provides various opportunities to retailers. It completely transforms the way in which firms serve
its customers. With the increasing demand of customers and prevailing competition in industry,
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it become necessary for players of this sector to adopt new technologies (THE FUTURE HOLD
FOR RETAIL, 2018). Various new innovative approaches that can be seen in near future by 2020
or beyond are parcel vending machine, advanced customer support system, virtual reality, visual
search, facial recognition, 3D mirrors and personalised marketing.
These forthcoming technologies and innovations have capabilities that can change the
whole scenario of retail industries. From these innovative approaches it can be ascertained that
the future of retail store will be more focused toward providing experience rather than just
selling their stock for earning profit. For future practices, main aim of retailers is to demonstrate
a showroom concept where stores act as a front face for customers to feel, see and experience the
product. These new technologies will help in delivering better shopping experience to customer.
By taking the advantage of new technologies like Automated parcel vending machine, retailers
can offer its customers an option to collect orders online using smartphones. They can take their
ordered commodity through this machine and can return it back by simply putting it into vending
machine.
Apart from this, various other innovative techniques such as voice controlled robot
assistant will also help in transforming the customer experience. By using this, a retail company
can offer customized services to their customers. It also help in simplifying the buying process as
well as save their time (Saebi and Foss, 2015). Due to increase in competition and trend for
introducing new technologies to appeal their customers, many retailers are now opting for or
planning to adopt various new technologies of digital assistance. These approaches will help in
sorting out the need of customers and providing them better satisfaction.
The organisations innovation requirements 2020 and beyond
ASDA is known for its innovative practices which it used by them while serving to its
customers. It constantly works towards introducing and developing new techniques to perform
their operations more effectively and achieve higher customer satisfaction. It is very essential to
bring changes in business practices in order to survive in dynamic and competitive environment.
In order to deal with changing environment in retail industry, ASDA continuously tries to adopt
innovative practices for avoiding outdated technologies.
With the increasing competition in retail industry and changing demand of customers, it
become very essential for ASDA to plan for future innovation requirements i.e. for 2020 or
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beyond. Following points describe the requirement of ASDA for organisational innovation that
help in achieving sustainability in market place for future practices:
 Artificial Lighting :- ASDA is planning for employing an innovative LED light in their
grower stores. These lights help in extending the season of producing vegetables like
tomatoes. These LED lights will provide the supplements that vegetables get from
sunlight for their growth. This help in growing fresh and delicious vegetables even in off
season. It also support in minimizing the ventilation and heating energy up-to 35%
(ASDA is Cooking Up a Storm to Bring Fresh Products to Market, 2018). This
technology will help in maintaining the productivity and in achieving competitive edge in
marketplace.
 Parcel vending machine:- For providing advance services and better shopping
experience to its customers, ASDA is now planning for installing parcel vending
machine. It is about 16ft tall and 8ft wider in size and has a capacity to hold around 500
parcels at a time. This machine help customers of ASDA to order their product just by
scanning barcode provided to them over their smartphones at Parcel Tower. This will
take 60 seconds to complete an order (Asda: putting the customer first, 2018). This will
help ASDA in increasing their customer base and also provide higher competitive
advantage. Company generally aims to increase its customer up-to 40 million visitors per
day by year 2019.
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(Source: Parcel vending machine,2018)
 3D software platform:- With the increasing traffic of retailers over online platform,
ASDA is now planning to introduce new innovative technique for offering their product.
By using 3D software platform, ASDA can present their cloth categories and designs in
an effective way. This technology help in presenting the cloth design with an 3D view
that provide a feel of real world equipment (Ferreira and et. al., 2015). Introduction of
this technology will help in increasing the customer traffic over the online clothing site of
ASDA. Increase in customer base will further help in maximizing the revenue and
goodwill of the company as well as develop higher sustainability in marketplace.
Building future innovation capabilities
Innovation is very essential factor for an organisation as it help in achieving competitive
edge as well as market sustainability. Global competition, increasing demand of customers and
minimization of product life cycle are creating significant pressure for introducing innovation
and new technologies in organisational practices (Frow and et. al., 2015). Therefore, ability to
develop innovations and new ideas are the top most priority of ASDA. It is a mechanism through
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Illustration 1: Parcel vending machine

which company can produce new product, system and process which is very essential for being
adaptable to changing market, mode of competition and technologies. But being adaptable to
these challenges, it is very important for ASDA to assess and develop the capabilities for future
innovation.
Following are the factors which are to be consider for developing future innovation
capabilities:
Organisational knowledge:- One of the major factor that contribute toward building
future innovation capabilities is knowledge that an organisation have about market. It is very
essential for ASDA to have complete knowledge about the market trend, demand of their
customers and prevailing competition. ASDA must put more efforts toward market research that
further support in identifying the current need of customer. By using this information company
can predict the future demand. So that they can develop new ideas as well as innovational
methods for satisfying need of customer (Winterhalter, Zeschky and Gassmann, 2016). By using
this market knowledge, ASDA can serve their customers with some augmented product or
services that are beyond their expectation which are harder to imitate. By using information
regarding market demand and competition, ASDA can also predict the success of its future plan
of installing 'Parcel Vending Machine'. This also help in identifying the changes that =are
required to add in their future plans which bring maximum output of their efforts.
Cross-functional cooperation:- Apart from organisational knowledge, another factor
that help in building innovation capability is cross-functional cooperation. It refers to group of
people with different functional expertise that come together to form a group for accomplishing a
particular goal. ASDA currently have separate department for each functions such as IT
department, logistic and financial department. But in order to achieve success in future
innovational planning company is required to develop a cross functional team. As it plays an
important role in innovation process and in generating new ideas for offering unique product or
services. By creating this kind of team, ASDA can develop innovative capabilities as this team
consists of individuals specialised in different field and their synergy will enable knowledge
sharing.
This helps ASDA in developing new concepts and can implement those ideas into its
organisational practices that further help in maintaining its goodwill as an offerer of innovating
services (Schaltegger and Wagner, 2017). By using cross-functional approach company can
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evaluate the each negative and positive aspects of their future innovation plan using 360 degree
approach. It also help in determining the various barriers that may hinder the progress of their
plan.
Assessment of existing capabilities:- In order to develop the innovation capabilities in
organisation for future practices, it is very essential for ASDA to assess the current potentiality
that it have. ASDA is known for its skilled work force because company put more efforts toward
recruiting process by selecting few eligible individuals among number of candidates. This brings
high skilled and competent workforce. But on the other hand company has young staff members,
i.e. lack of experience which sometimes may prove to be drawback and become barrier for
implication of future innovational practices. In order to eliminate this threat ASDA is required
to assess the current capabilities of its workforce and availability of resources which are required
for adapting the changing demand in market place. It also help ASDA in identifying the area
where they need improvement and changes that are essential for developing innovation
capabilities (Forsgren and Johanson, 2014). Assessment of existing capabilities will identify the
requirement of ASDA for developing future capabilities. It includes finance, skilled workforces,
advanced physical resources and latest technologies.
By evaluating the current capabilities and skills ASDA will be able to estimate the fund
which is required to introduce and operate its new technologies such as Parcel vending machine,
3D platform software and LED lights for its vegetable growers. It also help in identifying the
availability of skills and resources as well as capabilities that are required to develop.
These all factor that are very essential for ASDA in building their potentiality and
capabilities for implementing future innovation to their organisational process (Carlborg,
Kindström and Kowalkowski, 2014). But apart from this, there are various barriers that are
present in business environment which act as a barrier and restrict company to implement or
adopt innovative approaches. Following points describe about challenges that may be face by
ASDA while implementing its innovation and unique ideas in future:
 Lack of employee acceptance:- It refers to a situation where employees refuse to accept
changes in current working environment and processes. Employees generally don't adopt
the changes in their work and processes as they find it difficult to perform tasks by
adopting new technologies. This is considered as one of major barrier that may affect the
future plans of ASDA regarding their innovational activities. Company puts less
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emphases toward organising training programs for their employees and is also follow
centralized organisation structure. Therefore employees have to wait for the approval of
top management which delays their work and workers get frustrated. Hence, employees
of ASDA hesitate to take responsibility and in adopting new changes in their current
operations.
Leadership is a solution to this problem as a leader can encourage employees of
ASDA to adopt new and innovative approaches to perform their tasks which is beneficial
for both company as well as employees (Love, Roper and Vahter, 2014). Leaders are
required to communicate and guide their employees about new technologies and benefits
of implementing them. Attractiveness of these future plans of ASDA and personal growth
opportunities will help in encouraging employees to work hard for brining changes in
current process.
 Lack of motivation:- In execution of any business activity, motivation plays a very
crucial role in developing an environment of cooperation. As it help in encouraging a
person to perform certain task and building a trust among each other which inspire them
for working as a team. Lack of motivation lead to wastage of resources which in turn will
increase the cost of company. ASDA can overcome from this barrier with leadership
activities (Altuna and et. al., 2015). There are number of factors that are present in
company which leads to lack of motivation among employees. These factors are lack of
training, staff redundancy, poor management and lack of recognition. ASDA is firing the
employees from their store for minimizing their cost (Asda workers face redundancy or
reduced hours, 2018). This leads to decrease in the morale of employees which further
restrict them to adopt new changes in their work and organisational policies.
A leaders plays an essential role in developing a trust within an individual and
motivating them toward performing their tasks effectively as well as accepting new
challenges. A leader can motivate employees of ASDA by setting up some monetary
benefits or appraisal opportunities over individual performance. This help in encouraging
workforces to work hard so that they can achieve financial benefit or appraisal by
performing their operations effectively.
 Cultural barrier:- Another major factor that may restrict ASDA in building innovation
capabilities is cultural barrier. It generally refers to a rule or expectation which impedes
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an employee from getting involved in various activities. Cultural barrier is generally
depend over the organisational structure, its size, policies and various norms (Wei and et.
al., 2014). ASDA generally recruit young employees, therefore lack of experience may
become barrier for future application of innovational approaches. Apart from this lack of
support from higher management is also one of the major barrier for implementing new
techniques in business operations.
In order to resolve this barrier and building up innovation capability in its
organisation, it is very essential for ASDA to develop a culture of innovation. This
culture involve innovation habit such as understanding customer, creating cross-
functional group for bringing innovative solution, sharing of ideas or knowledge. This
automatically will promote innovative thinking among employees. It can only be develop
through leadership activity as a leader help in motivating employees to share their
suggestion or innovative ideas for performing a task effectively. Leader can also involve
its workforce in decision making process which further help in identifying unique ideas
and in motivating employees toward their work.
 Inadequate skills and knowledge:- For implementing changes to organisation
operations, capabilities and knowledge of employees are considered as a very essential
factor. Lack of skill may act as a barrier and lead to failure in implementing innovational
approaches (Scarborough, 2016). In order to implement its future innovational plans such
as Parcel vending machine, 3D software platform etc. it is very essential for ASDA to
overcome this barrier. Company is required to develop appropriate skills and knowledge
among its workforce so that they can easily adopt changes and bring positive outcomes.
Company doesn't focus more over providing training to their employees which may
become barrier for future practices. As lack skills and knowledge may bring inefficiency
in business operations. Further lack of communication in managerial practices may also
creates barriers in application of innovational approaches and techniques.
With the help of an effective leader, ASDA can organise various training and
educational program to develop skills and capabilities of their workforce. Through these
programs, a leader can create awareness among employees about the importance of
innovational activities. They can also explain about the technologies such as Innovative
approach to manage business cost and how to use it effectively (Jansen, 2017). This
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information help in developing a skills and knowledge among employees regarding use
of technology which further motivate them and develop self confidence. Another method
to enhance the skills and knowledge of employees is to create a cross-functional group.
This group consists of number of individuals with different skills and capabilities that
work together which further support in developing capabilities among individuals.
 Climate:- It generally refers to the business environment of a company and how much it
is capable of adopting changes in its practices. Though the working climate of ASDA is
flexible and generally people work for maximum hours in a day. Still act as a barrier, as
employees get frustrated toward work and not accept new changes easily. Therefore, in
order to develop future innovative capabilities, it is very essential for leader of ASDA to
organise induction program for its employees to communicate about the importance of
innovation in running business (Gassmann and Schweitzer, 2014). They must
communicate with their employees to make them aware about ASDA's involvement in
innovative practices. Apart from this organisation knowledge is also very essential factor
that help in removing climate barrier. As with the proper utilisation of internal and
external environmental knowledge, ASDA can identify various methods to remove
barriers.
These all are the factors which act as a barrier for ASDA in building future innovational
capabilities. Leaders play an essential role in removing these barriers and help organisation in
planning for future innovation. A leader can motivate their employees to boost up their
confidence and can provide adequate training as well as learning opportunities. This help in
building innovative capabilities among workforce which further support in implement new
technologies and innovation by 2020 or beyond.
CONCLUSION
From the above given report, it can be concluded that innovation plays an very essential
role in an organisation to develop competitive edge and in achieving market sustainability. But
for implementing innovation in business practices, company is required to have adequate
knowledge regarding the market demand. Retail industry has a very wide scope in term of
innovation and new technologies. ASDA is one of the biggest player of retail industry and it
become essential for company to implement innovational approach in order to deal with market
competitions. For being adaptable to changes and building future capabilities, ASDA is required
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to consider various factors such as assessment of existing capabilities, organisational knowledge,
cross-functional cooperation. Apart from these various barriers faced by company while
implementing its future innovational plan such as inadequate skills and knowledge, cultural
barrier, lack of motivation, lack of employee acceptance and climate. But leadership activities is
consider as an most effective factor of an organisation which help in removing these barriers and
implementing their future plan effectively.
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REFERENCES
Books & Journal
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Brunswicker, S. and Vanhaverbeke, W., 2015. Open innovation in small and medium‐sized
enterprises (SMEs): External knowledge sourcing strategies and internal organizational
facilitators. Journal of Small Business Management. 53(4). pp.1241-1263.
Carlborg, P., Kindström, D. and Kowalkowski, C., 2014. The evolution of service innovation
research: a critical review and synthesis. The Service Industries Journal. 34(5). pp.373-
398.
Ferreira, J. J., and et. al., 2015. Drivers of innovation strategies: testing the Tidd and Bessant
(2009) model. Journal of Business Research. 68(7). pp.1395-1403.
Forsgren, M. and Johanson, J., 2014. Managing networks in international business. Routledge.
Frow, P. and et al., 2015. Managing co‐creation design: A strategic approach to
innovation. British Journal of Management. 26(3). pp.463-483.
Gassmann, O. and Schweitzer, F., 2014. Managing the unmanageable: the fuzzy front end of
innovation. In Management of the Fuzzy front end of innovation (pp. 3-14). Springer,
Cham.
Jansen, W., 2017. New business models for the knowledge economy. Routledge.
Love, J. H., Roper, S. and Vahter, P., 2014. Learning from openness: The dynamics of breadth in
external innovation linkages. Strategic management journal. 35(11). pp.1703-1716.
Saebi, T. and Foss, N. J., 2015. Business models for open innovation: Matching heterogeneous
open innovation strategies with business model dimensions. European Management
Journal. 33(3). pp.201-213.
Scarborough, N. M., 2016. Essentials of entrepreneurship and small business management.
Pearson.
Schaltegger, S. and Wagner, M., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge.
Tidd, J. and Bessant, J., 2014. Strategic innovation management. John Wiley & Sons.
Wei, Z., and et. al., 2014. The fit between technological innovation and business model design
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Winterhalter, S., Zeschky, M. B. and Gassmann, O., 2016. Managing dual business models in
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Online
ASDA is Cooking Up a Storm to Bring Fresh Products to Market. 2018.[Online] Available
through:<https://connectedstores.wbresearch.com/asda-innovation-chef-strategy-ty-u>.
Asda: putting the customer first. 2018. [Online] Available
through:<https://www.retailconnections.co.uk/articles/qa-hayley-tatum-senior-vp-of-
people-asda/>.
THE FUTURE HOLD FOR RETAIL. 2018.[Online] Available
through:<https://www.businessleader.co.uk/future-hold-retail-uk/41824/>.
Asda workers face redundancy or reduced hours. 2018. [Online] available through:
<https://www.theguardian.com/business/2017/aug/10/asda-workers-face-redundancy-
uk-walmart>.
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