Analysis of Business Model Innovation and Management

This assignment requires analyzing various articles and online sources to understand different aspects of business model innovation and management. The provided sources cover topics such as co-creation design, service innovation research, managing tensions between new and existing business models, product innovation processes, and the trade-off between product innovation performance and business performance. Additionally, it includes articles on managing complexity in a multi-business-model organization, knowledge-based theory of the firm, and the integration of social, environmental, and economic performance. The summary also highlights specific details such as the inclusion of case studies from emerging markets like China and the focus on future innovation plans for companies like Rolls Royce and Daimler.

Managing Innovation in
Business

EXECUTIVE SUMMARY
This project report summarises various concepts that are related to business innovation
projects. Innovation is the process of making modification in the existing products of a company
so that all the business objectives can be successfully achieved. Different types of innovation that
are going to be introduced in automotive industry in upcoming period and the innovations that
Lotus Cars is planning to launch in future have been discussed in this project report. A detailed
road map for the launching process of new carbon fiber body cars is also being formulated in this
report. The road map consist information about the suggestion for a specific innovation, reason
for the selection and impact of change that includes analysis of resources and cost. Feasibility
testing, approval process, application and review of the innovation has also been covered in this
report.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
THE FUTURE OF THE INDUSTRY 2020 AND BEYOND.........................................................1
THE ORGANISATION INNOVATION REQUIREMENT 2020 AND BEYOND......................3
BUILDING THE FUTURE INNOVATION CAPABILITIES FOR THE ORGANISATION......4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Innovation can be defined as a new idea which is used by most of the companies in order
to enhance sales and profits in upcoming period. It is not easy to manage whole process of
innovation because it requires appropriate planning and strategies. When an organisation plan for
a creation or modification in its products than proper information, sufficient funds and market
information is needed for this purpose (Tidd and Bessant, 2014). Main objective of business
entities behind the innovation is to meet customer's requirements and fulfil all their needs so that
large market share can be captured. If organisations are willing to get success by launching an
innovative product than it is essential to communicate the plan with all functional departments of
the company and allot them resources and responsibilities. Appropriate execution of plans will
help to successfully introduce the innovation products in market. Main aim of this project report
is to develop an understanding of proper management of innovation for a business. This
assignment is based on Lotus cars which is a British automotive manufacturing company and its
headquarter is in Hethel, UK. The organisation was founded in the year of 1952 by Colin
Chapman. This report consist detailed analysis of future of automotive industry, innovation
requirement of the organisation and future innovation capabilities of the company.
THE FUTURE OF THE INDUSTRY 2020 AND BEYOND
Automotive industry is the sector that deals in different types of auto mobile products
such as cars, motor vehicles etc. All the products are manufactured and developed under this
sector. This industry is continuously growing in UK and contributing a higher amount in national
income that helps to grow the economy. This industry was established in year 1860 and since
than the sector is successfully running its business. Various companies such as Aston Martin,
Daimler, Morgan, Bentley, Jaguar, Lotus, Rolls Royce are operating their business under this
sector in UK. Higher employment is generated by the commercial enterprise in UK and currently
it is offering jobs to large number of individuals (Drucker, 2014).
The companies who are a part of automotive industry continuously launching different
types of innovation that helps to enhance profitability and productivity of whole sector. One of
them is Aston Martin who is planning for electrification in upcoming period. The new car which
is going to be launched by Aston martin is RapidE and the directors have decided to launch
limited cars. This innovation will take the industry to the next level and increase competition
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among the companies. The organisation have also announced to re-engineer Lagonda as the first
electric SUV luxury car company and from year 2021 all Lagonda are going to be electric
(Innovation of Aston Martin, 2018).
Rolls Royce company is also willing to launch innovation in upcoming period. The
organisation has predicted to create tailor made cars which will target rich and famous
personalities. The cars are going to be made according to the specifications of the customers.
Directors of this organisation have said that cars will be manufactured in the supervision of our
clients. This type of innovation will help the automotive industry to grow faster. The name which
is decided for the tailor made car is 103EX which is going to allow to manufacture fully
personalised cars (Future innovation of Rolls Royce, 2017). A 3D design which is made by the
company is as follows:
Source: Future innovation of tolls Royce, 2017
Daimler is also a leading company who is executing its business operations under
automotive industry. The organisation have announced to introduce a Mercedes's automated city
bus with City Pilot in upcoming period. This concept is taken from the automated trucks that are
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Illustration 1: Future innovation of Rolls Royce, 2017

launched by the organisation in year 2014. The city bus has a City Pilot who is able to recognise
traffic lights and drive according to them (Innovation of Daimler, 2018).
All the above discussed innovations are going to be launched in future by different
automotive companies. It will help the auto mobile sector to grow faster and enhance profits. All
of them also spread the business till 2020 and beyond. The new innovations needs to be managed
appropriately by the business entities in order to successfully launch their business in the market
(Sund and et.al., 2016).
THE ORGANISATION INNOVATION REQUIREMENT 2020 AND
BEYOND
Lotus Cars is a manufacturing company who is dealing in sport cars and was established
in UK. The organisation is known for its good quality cars that are provided to different
customers all around the world. Currently the business is operated with the help of around 1500
employees. Parent company of Lotus Cars is Zhejiang Geely Holdings Group. The organisation
is willing to launch two new sport cars till year 2020. This will help to enhance profitability and
market share of the company (Innovation of Lotus Cars, 2017). It has also planned to introduce
SUV in the market till year 2022. It is the first time when the Lotus is going to introduce a SUV
car. Owner of the business entity has declared that one of the new sport car is going to be replace
an old car of Lotus Family. The other sport car will have a new carbon fiber monocoque body.
The innovations are described in detail below:
Carbon fiber monocoque body sport cars: These are the new cars that are going to be
launched by Lotus Cars till year 2020. The body of new sport cars is made from carbon fiber. It
is mainly designed to give the customers a new experience. Main purpose of the company for
these new sport cars is to get back the place in the market which was lost due to lack of
innovation since last few years. This will result in enhanced profits of the company (Spieth,
Schneckenberg and Ricart, 2014).
Electric cars: A new innovation of electronic cars has also been planned by the Lotus
Cars which is going to be launched in future. This will reduce the cost of fuel and weights of
cars. This will also contribute in the development of the economy of the country because it will
attract large number of customers. Rechargeable batteries will be added in the the cars by Lotus
(Du, Leten and Vanhaverbeke, 2014).
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Clean tech eco vehicles: Lotus has planned to launch new and innovative clean tech eco
vehicles that are very attractive and eco friendly. This innovation will reduce carbon emission
and wont affect the environment. This will help to establish a good market image because now a
days pollution is continuously increasing and government is imposing environment protection
acts. A car who is eco friendly will attract large number of customers as it is a new concept. This
will be very beneficial for Lotus due to its nature. Government will also help to promote the new
clean tech eco car because it will help to reduce pollution which in continuously increasing due
to motor vehicles (Souto, 2015).
All the above described innovations are planned by Lotus Cars that are going to be
introduced in future. The organisation is willing to attain higher success by launching all the new
cars till 2020 and beyond it. All of them will increase its market share and profitability because
the new cars are going to be introduced with new concepts that have not yet been launched in
market (Löfsten, 2014).
BUILDING THE FUTURE INNOVATION CAPABILITIES FOR THE
ORGANISATION
Lotus Cars is planning to launch new innovations that are Carbon fiber monocoque body
sport cars, Electric cars and Clean tech eco vehicles. All of them are equally capable to enhance
profitability of the company (Kindström and Kowalkowski, 2014). A roadmap for the company
which needs to be followed by the company for the implementation of the innovation is as
follows:
Suggestion: It is suggested to the company to focus on the innovation of “Carbon fiber
monocoque body sport cars” as it will be very beneficial for the company.
Reason: This innovation is selected by Lotus Cars because is a new concept which has
not yet been planned by any other company to use carbon fiber to make body of a car. Another
reason behind the selection of carbon fiber monocoque body sport cars is that it can provide an
excellent driving experience to the customers (Koen, Bertels and Kleinschmidt, 2014).
Impact of changes: For the organisation it is very important to analyse the impact of
changes that are going to be made in order to launch the new innovation in the market. Following
points should be considered while determining impacts of changes:
 Research and development: When a plan for the innovation is being prepared by the
organisation than it is very important to conduct a market research in which all the
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information of market conditions can be gathered (Spieth, Schneckenberg and Ricart,
2014). Main responsibility of research and development department is to identify that is it
the right time to introduce a new product in the market. Customer's preferences, needs,
demands are also analysed by the research and development department of the company.
Information of threats and available competition is also been determined so that an
appropriate strategy for the launching process of innovation can be formulated. Proper
research can help to successfully establish the business in market. Lotus has lost it market
image as it has not introduced any new car in the market from a long period. As the new
sport cars that are made by carbon fiber monocoque are are the innovation of Lotus Cars
and for the organisation it is very important to guide its research and development
department to collect appropriate market data (Carayannis, Sindakis and Walter, 2015).
 Required resources: All the business entities who are going to introduce new
innovations in the market it is very important to gather appropriate resources that are
needed for the innovation. There are two main type of resources that are required by
Lotus Cars in order to launch its new sport cars that are made of carbon fiber. These
resources are tangible and intangible (Chen, Jiao and Zhao, 2016). Tangible includes
skilled human resources, funds etc. and intangible includes intellectual property rights
that are copy right, patent, trademark and trade secrets. All these resources are required to
be collected to successfully launch the new innovation of Lotus Cars. Finance is the
major requirement of the company as it is not possible to manufacture new cars without
sufficient funds. Money can be raised from various sources including bank loan,
investors, business angels and venture funding (Van Lancker, Wauters and Van
Huylenbroeck, 2016).
 Requirement of technical skills: Technical skills are required to perform specific task
that can only be performed by such individuals who have appropriate knowledge and
experience in the sector. As Lotus Cars is going to introduce carbon fiber body sport cars
in market hence technical skills are required for this purpose. The main purpose of the
company behind this launch is to attract large number of customers in order to be more
successful in the market. The human department of the organisation is required recruit
and select new individuals who have knowledge and experience of automotive sector.
Technical skills are required to manufacture the cars that may fulfil all the requirements
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of the customers. The cars are able to provide impressive driving experience to the riders.
As the concept has not yet been introduced by any other company hence organisation
needs to hire new employees who have knowledge about carbon fiber so that they can
appropriately contribute in manufacturing process of cars (Schaltegger and Wagner,
2017).
 Legal aspects and compliance: All the intangible resources are considered as legal
aspect and compliance that includes copy right, patent, trademark etc. A specific act is
launched by the government for the safety of innovative ideas which is intellectual
property right act that direct companies not to copy the concept of innovation which has
already been used by other business enterprises. When a new innovation is launched by a
company than it is very important to patent the idea of innovation so that another
organisation cannot copy the concept (Talukder, 2016). As Lotus Cars is going to
introduce new sport cars in market hence it is very important for the company to follow
this act and patent the concept of carbon fiber cars so that another company may not copy
the style of Lotus Cars. This act can also make sure that Lotus is also not copying the
idea of any other company. It is very beneficial for businesses as it helps to secure the
innovative ideas of new products that are manufactured by companies in order to achieve
organisational goals.
 Cost of change: A summary of cost that may take place for innovation is as follows:
Expenses Amount
Research and development 15000
Marketing 14000
Advertising 12000
Material 180000
Human resources 16000
Total 237000
The estimated cost that may occur for the company is 237000 and it is suggested to the
directors to arrange sufficient funds for future.
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Feasibility: In this stage the research and development department of Lotus is required to
analyse that its new innovation is feasible or not. It will result in higher profitability or not and
also determine that it can survive in competitive market or fails to survive. In this step the
researchers of the company assess the practicality of new innovation or products that are going to
be introduced in market in order to achieve predetermined goals of the company. It is analysed
with the help of proper testing of cars (Saebi and Foss, 2015). Research and development
department will determine that the material which is used to manufacture the cars is able to face
all type of weather, the seats are comfortable and the price of the cars is affordable for the target
market or not. All the elements that are researched by R & D division will be recorded in a report
that carry each and every information regarding the new car. When the report is generated it is
presented in front of the board of directors for their approval.
Approval process: In this process a formal meeting is conducted in which research and
development department of Lotus Cars present the feasibility report of the innovation in front of
top executive of the organisation. For this purpose a formal board meeting is conducted in which
directors evaluate the reports that provide detailed information of new business project (Snihur
and Tarzijan, 2018). They mark their approval if report is formulated appropriately and present
proper information of future that it will result positively for the organisation. If they found that
new carbon fiber body cars are not able to be successful in the market than they reject the project
and ask the research and development department to formulate the report again. When directors
of Lotus Cars found that the project is feasible enough to generate profits leads and profits for
the organisation than they mark approval for the implementation (Frow and et.al., 2015).
Application of new innovative idea: When approval is received from top executives and
directors of Lotus Cars then new cars can be introduced in the market. A proper planning is
required for the new innovation in which marketing, advertising, promotions, launching and
distribution related activities are included. Appropriate promotions are required to aware
customers about the new cars as it will help to grab their attention to the new business idea of
carbon fiber body cars. The new cars will be launched in the market if board of directors mark
approval on the report which has been p[resented in front of them by research and development
department of Lotus Cars (Yip and McKern, 2014).
Review of the impact of innovation: Under this stage the results of implementation of
innovation is being reviewed by the managers dan directors of the organisation. They also
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analyse that the new project is able to make profits for the company or not. Directors of the
organisation evaluate overall performance of the new innovation. As the new sport cars are going
to be launched by Lotus Cars in the market for the purpose of capturing large market share.
When the new cars are being introduced in market than their impact on business will be
examined in order to analyse that it is beneficial for the organisation or not (Chiva, Ghauri and
Alegre, 2014).
All the above described steps of road map needs to be followed by the directors, research
and development departments and top executives as it can help to successfully launch the new
project and evaluate its performance in the market (Carlborg, Kindström and Kowalkowski,
2014).
CONCLUSION
From the above project report it has been concluded that innovation is the new idea
which is used by an organisation in order to make modification is its existing products so that
profits and sales and be maximised. For all the industries it is very important to make
innovations so that overall profitability of the sector can be enhanced. Managing innovation is
vital for all the business entities as it can help them to attain all their business objectives. Now a
days various innovations are introduced by the business entities who are operating business
under automotive sector. Lotus Cars is also a part of this sector and it is very important for the
company to launch a new innovative car in the market as it is loosing its place in market due to
lack of innovative products. The organisation is planning to launch new sport cars that are made
of carbon fiber and able to survive in the market. The main purpose behind the new launch is to
get back the market position of the company which has been lost few years ago. The cars that are
going to be launched by the company are made to provide an excellent experience to the rider.
For the launch a road map for the company is being generated by research and development
department in which all the activities related to marketing, research, advertisement, promotion,
planning etc. are performed. The road map directs to successfully analyse the feasibility of the
new business projects. A detailed report is formulated by the research and development
department of the company and this report is presented in front of the board of directors in a
formal business meeting. Detailed information is evaluated by board members and than approval
is market for the launch by them.
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REFERENCES
Books and Journals:
Tidd, J. and Bessant, J., 2014.Strategic innovation management. John Wiley & Sons.
Drucker, P., 2014. sInnovation and entrepreneurship. Routledge.
Du, J., Leten, B. and Vanhaverbeke, W., 2014. Managing open innovation projects with science-
based and market-based partners. Research Policy. 43(5). pp.828-840.
Kindström, D. and Kowalkowski, C., 2014. Service innovation in product-centric firms: A
multidimensional business model perspective. Journal of Business & Industrial
Marketing. 29(2). pp.96-111.
Souto, J. E., 2015. Business model innovation and business concept innovation as the context of
incremental innovation and radical innovation. Tourism Management. 51. pp.142-155.
Spieth, P., Schneckenberg, D. and Ricart, J. E., 2014. Business model innovation–state of the art
and future challenges for the field. R&d Management. 44(3). pp.237-247.
Carayannis, E. G., Sindakis, S. and Walter, C., 2015. Business model innovation as lever of
organizational sustainability. The Journal of Technology Transfer. 40(1). pp.85-104.
Van Lancker, J., Wauters, E. and Van Huylenbroeck, G., 2016. Managing innovation in the
bioeconomy: An open innovation perspective. Biomass and Bioenergy. 90. pp.60-69.
Talukder, M., 2016. Managing innovation adoption: from innovation to implementation.
Routledge.
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.
Frow, P. and et.al., 2015. Managing co‐creation design: A strategic approach to
innovation. British Journal of Management. 26(3). pp.463-483.
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.
Sund, K. J. and et.al., 2016. Managing tensions between new and existing business models. MIT
Sloan Management Review. 57(4). p.8.
Spieth, P., Schneckenberg, D. and Ricart, J. E., 2014. Business model innovation–state of the art
and future challenges for the field. R&d Management. 44(3). pp.237-247.
Löfsten, H., 2014. Product innovation processes and the trade-off between product innovation
performance and business performance. European Journal of Innovation Management.
17(1). pp.61-84.
Koen, P. A., Bertels, H. M. and Kleinschmidt, E. J., 2014. Managing the Front End of
Innovation—Part II: Results from a Three-Year Study. Research-Technology
Management. 57(3). pp.25-35.
Schaltegger, S. and Wagner, M., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge.
Yip, G. and McKern, B., 2014. Innovation in emerging markets–the case of China. International
Journal of Emerging Markets. 9(1). pp.2-10.
Chiva, R., Ghauri, P. and Alegre, J., 2014. Organizational learning, innovation and
internationalization: A complex system model. British Journal of Management. 25(4).
pp.687-705.
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Snihur, Y. and Tarzijan, J., 2018. Managing complexity in a multi-business-model
organization. Long Range Planning. 51(1). pp.50-63.
Chen, J., Jiao, H. and Zhao, X., 2016. A knowledge-based theory of the firm: managing
innovation in biotechnology. Chinese Management Studies. 10(1). pp.41-58.
Online
Innovation of Aston Martin. 2018. [Online]. Available through:
<http://www.thebuzzbusiness.com/the-future-of-aston-martin/>
Future innovation of Rolls Royce. 2017. [Online]. Available through:
<https://www.scmp.com/magazines/style/tech-design/article/2041616/rolls-royce-
predicts-it-will-create-tailor-made-car-rich>
Innovation of Daimler. 2018. [Online]. Available Through:
<https://www.daimler.com/innovation/autonomous-driving/future-bus.html>
Innovation of Lotus Cars. 2017. [Online]. Available thorugh:
<https://www.carmudi.com.ph/journal/lotus-future-plans-include-2-new-sports-cars-
2020-suv-2022/>
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