Managing Innovation and Open Innovation Strategies

The assignment provided is a comprehensive study on managing innovation and open innovation strategies. It begins with a detailed discussion on the importance of innovation management, including its benefits and challenges. The document then explores various innovation management frameworks, such as the Pentathlon Framework and the Strategic Innovation Process, to guide businesses in implementing successful innovation initiatives. A case study on Volkswagen is also presented, highlighting the company's approach to managing innovation and open innovation strategies. Additionally, the assignment discusses key concepts related to innovation management, including product development, service business model innovation, and cultural values and trust for innovation. The document concludes by emphasizing the importance of effective innovation management in driving business success and sustainability.

MANAGING INNOVATION IN
BUSINESS

EXECUTIVE SUMMARY
Volkswagen is an automotive industry founded in 28th May 1937 by German Labor Front
Headquartered in Wolfsburg, Germany. Automobile is a huge industry across the world with
continuous innovation. There are so many models available in Volkswagen company which is
doing a great job in the market and serving a quality product to the customers, such as, Polo,
Vento, Passat, Volkswagen, etc.
This report will include the detailed description of the Volkswagen company and its
future innovation plans which will be implemented in the organization's management system in
order to expand their business worldwide. By implementing these innovations in management
method into the organization it will help them to increase their sales and productions in the
market. It concluded that Volkswagen company has planned a strategy known as TRANSFORM
2025+, in which they are planning to introduce some new cars with improved technologies
which can gain customer's attention ti but them. These cars includes, automated cars, electrical
cars, etc. In this strategy, Volkswagen will complete it in 2 phases. In phase 1, which will be
completed in 2020 includes entirely reconstruction of its core business and complete an overall
transformation of the organization.
In phase 2, it will try to capture the e-mobility on the basis of its regained strength as a
leading, profitable volume manufacturer in the market till 2025. “TRANSFORM 2025+” will
help the company to enhance the positioning of the Volkswagen brands and optimize the vehicle
portfolio to focus on the most attractive and fastest-growing market segments. As per the finding
from the coursework, For the future innovation capabilities of Volkswagen, it is focusing on the
4 key elements, such as, customer satisfaction, increase sales production, enhance overall
revenue, and to become top supplier in the industry.
This is the main objective of the organization to achieve in the future is to bring
innovation in the organization. Volkswagen tries to focus on the current trends in the target
market which is helping them to bring change in their vehicles according to their customer's
preference. By adopting various technologies into the management system helps to improve
their manufacturing skills. As per the outcomes of coursework, They are recruiting skilled
employees which helps them increase their work efficiency. They are trying to implement
changes such as electrification of the vehicle, improving autonomous driving system in the
vehicle and launching new crossover vehicle in the market.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................5
The Future of Automotive Industry.................................................................................................5
Volkswagen Company's Innovation Requirements.......................................................................10
Future Innovation Capabilities For Volkswagen...........................................................................13
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................19

Illustration Index
Illustration 1: Crowdsourcing Method.............................................................................................6
Illustration 2: Pentathlon Framework..............................................................................................7
Illustration 3: Strategic Innovation Process.....................................................................................8
Illustration 4: Simplified Model of the Innovation Process.............................................................9
Illustration 5: Volkswagen GTI.....................................................................................................12
Illustration 6: Volkswagen Passat..................................................................................................12
Illustration 7: Current Strategy of 2018 of Volkswagen................................................................14

INTRODUCTION
Innovation management is a process which combines both the factors that is innovation
process of the management and the change in management. It includes various factors which
helps the organization in the process of innovating new things. It allows the manager and the
engineering team to work together in understanding the processes and objectives. It also helps in
responding to the internal and external opportunities which can be beneficial for the
organization.
With this innovation management method, it increases the creativity skills to produce
new process, ideas or product which can be used in innovating. The purpose of this report is to
help in building an innovative road map for Volkswagen Company. A road map is a plan or
process which is used to make strategies that are represented graphically along a time axis
(DeBarro and et.al., 2015).
Volkswagen is an automotive industry founded in 28th May 1937 by German Labor Front
Headquartered in Wolfsburg, Germany. This report will include various factors which help in
building the road map for the company such as, current trends in the market, newly introduced
technologies, rise in competition to deliver the best product, etc. All these elements will be
explained in detail to understand the process of innovation being used by the Volkswagen
enhance their sales production and increase their profit revenue. Volkswagen is having sufficient
presence of its brand globally. Due to this, customers can easily identify the brand. Besides this,
it is having a variety of products available for different customers. On the other hand, scandal of
Volkswagen that highly affected its brand image.
The Future of Automotive Industry
Automobile is a huge industry across the world with continuous innovation. In the past
year, a French engineer named Nicolas J. Cugnot invented the very first automobile in the year
1769. It was a self-powered, three-wheeled, military tractor that uses a steam engine to start. In
1914, the automobile industry came into progress with bulk production of the cars in the market
by Henry Ford. This lead to the increase of development of this industry.
From that time to the current trends of the Automobile Industry reveal that these are
rapidly developing industry in the market. With the increased interest of people into cars has
helped a lot. Developing countries like India and Brazil, has reported a higher growth rates in
automobile industry (Ahmed, F., and et.al. 2018).

There are various methods or models which can be used by the organization to bring
Innovation in their products, for example,
 Crowdsourcing Method : An important method through which the organization can
enhance their innovation process in the system known as Crowdsourcing Method. It is a
process in which they invite ideas from different groups and companies to solve their
issues. It can be a great idea to implement, as this will give them a variety of innovation
ideas to try. Foe example,
1. Engage people across the enterprise : It will help to get more ideas.
2. Cultivate a culture of innovation : Will bring some innovative ideas to implement.
3. Combat disruption with employee brainpower,
4. Invite customers to contribute ideas,
5. Revamp new products for development, and
6. Embrace new methods of driving growth through innovation.
Illustration 1: Crowd sourcing Method
Source : Crowd sourcing Method. 2016

 The Pentathlon Framework : At the very beginning of the innovation process a creative
approach should be encouraged by the organization to explore new ideas and a structured
process should be employed by them to reduce the risk of failure as the cost and business
implications become progressively greater.
This can be captured in the Pentathlon Framework model. It is a high performance
pentathlon method which used 5 key elements to innovative companies optimum performance.
For example,
 It will provide methods for idea generation in response to problems and challenges
arising in the innovation process.
 It will also help in the process for selection and prioritization of ideas with incomplete
information which is required for the process.
 Strong project management skills to move the idea through implementation in the market
in an environment of high uncertainty.
 An innovation strategy is required to identify where innovation is most needed in order to
guide and influence ideas selection and implementation. Senior management buy-in is
required as implementation may involve acquisition, a new supply chain or new skills.
 An enterprise culture which includes people and organisations that can manage the
tension between taking risks and the business imperative to minimise failure as products
and services near market.

 Strategic Innovation Process : Strategic Innovation Process Framework is a systematic
process for strategy formulation and implementation that will allow us to profit from
innovation. There are various factors which are included in this framework,
1. The Volkswagen should have a mission and goals to achieve.
2. Volkswagen has to analyze the environment to identify opportunities and threats which
are available in the market.
3. Volkswagen has to evaluate the capabilities which they have to required to implement the
innovation.
4. Then the business strategy is decided by the Volkswagen, for example, low cost or
differentiated.
5. The innovation strategy should involves decisions like whether the Volkswagen will be a
leader or follower with the innovation.
Illustration 2: Pentathlon Framework

 Innovation as an Integrated Process : In this method, the Volkswagen is supposed to
work in a strategy which consist of 4 basic steps which is, search, select, implement and
capture. They have to first find the opportunities which is available in the market in
which they can bring change. After finding the respective area, they have to select an
appropriate method to implement which can help in the innovation process. In the last,
they have to evaluate the overall process and conclude the outcomes from the whole
process.
Illustration 3: Strategic Innovation Process

The world’s automotive industry faces challenges for tougher regulation, shifting
consumer demand and technological changes happening in the world which can be useful in
bringing positive change in these industries. In coming 10 years, the automotive industry will
change in everything that is from the car-buying experience to the features drivers. In present
day, these industries are proving carts with various functions like, auto-gear system, auto-lock,
electric cars, etc. these changes help them to innovate more new ideas to adapt which helps to
make a good future for automobile industry. Technologies such as automated and autonomous
driving system, smart infotainment, and lightweight design of cars are some very fundamental
trends that are influencing this industry.
With the constant increase in the preferences of the customer's thinking and requirements,
the industry witnesses changes with five important technology driven trends in the future, such
as electrification, connectivity, autonomous driving, customer oriented and shared mobility
(Ausloos, M., and et.al.2018).
 Electrifying: Introduction of electric cars is great invention in this industry. These cars
will reduce the cost of vehicle as it will run on batteries which are rechargeable. It will
gain popularity in coming years as it helps to protect the environment.
 Autonomous Driving System: These are the vehicle which can run without the guidance
of human instruction. These vehicles will be able to sense its surroundings and can
Illustration 4: Simplified Model of the Innovation Process

operate the functions of the vehicle according to it. In today's time, these vehicles are not
allowed to run on road without a driver, who can take control of the vehicle at a
moment’s notice.
 Crossover Vehicles: With an increase in the luxury of vehicles, customers are expecting
the comfort of luxury cars with an option of fuel and operational cost-effectiveness.
Crossover vehicles will help to reach their expectation. These vehicles with combination
of Sedans and SUVs have emerged as the most practical way to deal with comfort and
style of vehicle without compromising in luxury of vehicle.
These are some innovation which the automobile industry is experimenting on their vehicles to
increase their sales and production in the market keeping in minds the needs and requirements of
their customers to make them satisfy (Biemans, W., 2018).
Volkswagen Company's Innovation Requirements
Since 1937, Volkswagen has been providing the world with new and innovative ideas on
a regular basis. Volkswagen works on the principal of bringing continuous change in their
vehicle providing better service and comfort compared to the past. They are constantly working
on the innovation process which helps the company to upgrade their existing and coming vehicle
in the market. In order to increase their sales production and to come up with innovative ideas
and vehicles, company needs to work on several factors such as,
 Knowledge: Proper knowledge of market is very important for the company to
implement any idea into the management. They must be aware of all the new coming
technologies coming into the market which can be used by them to build ideas which can
be beneficial for them in manufacturing of their vehicle (Möller, K. and Halinen, A.,
2017).
 Current Trends: Following the current trends existing in the market will help them to
understand the places where they need to implement change into their vehicle. It will also
help to build new vehicles which follow that trend. These practices will the customers to
buy their products. For example, nowadays crossover or hybrid cars are so much in trend
and people preferring them more compared to normal cars. Introducing a new hybrid car
will be a great milestone for company to achieve.
Technologies: Technologies plays an important role in the automobile industry. It is a strong
pillar in building an effective vehicle which can satisfy customers needs and requirements.

Talking about the current technologies which is being applied in this industry is the connectivity
with the vehicle which helps to enjoy high quality entertainment and information at the touch of
a button. For example, customers can connect their mobile to their vehicles and operate them.
They can play music, use it for navigation or even they can answer their phone calls and text
messages as well. It is hands-free which helps them to enjoy their ride with a great driving
experience. It helps them to stay connected (Ng, B. K. and Kanagasundaram, T., 2017).
There are so many models available in Volkswagen company which is doing a great job
in the market and serving a quality product to the customers. Some successful models of
Volkswagen company are as follows,
 Polo,
 Vento,
 Ameo,
 Volkswagen GTI
 Tiguan
 Passat

 Skilled employees: It’s very important for any organization to have skilled employees in
their workstation. Large number of work is done my machines in these industries, so to
understand that machines the employees working on, should have a sound knowledge of
that equipment. This will help them to manage work more effectively.
 Availability of Resources: To do innovation, resources play a crucial role in the
company (Stamp, D., 2017).
Illustration 5: Volkswagen GTI
Source : Volkswagen Cars. 2017
Illustration 6: Volkswagen Passat
Source : Volkswagen Cars. 2017

Future Innovation Capabilities For Volkswagen
To bring or implement any innovation in the organization, its very important for them to
understand their overall strength and weakness which can help them to make an effective
measures and strategies. The main strength of Volkswagen is the popularity of the brand in the
market. They have variety of products to satisfy their customers for example, cars, sports cars,
buses, etc. The most important weakness of Volkswagen is their new in the market which affects
its brand name and popularity. One more weakness which can be seen in the organization is the
weal marketing strategies in some countries which affects their sales.
There are so many opportunities for Volkswagen to capture. Rise in hybrid and fuel
efficient cars has provided platform for Volkswagen to grow in the market. There are so many
competitors of Volkswagen in the market, such as, Toyota, Ford, etc, which gives them a strong
competition. Apart from this, increase in pollution level is a major concern for this sector. This
forces the organization to come up with new and innovative ideas which can attract customers
toward them. Sustainable innovation has occupied a top‐ranking position on the agenda of many
firms. Sustainable innovation can be broadly defined as an innovation that has to consider
environmental and social issues as well as the needs of future generations (Ayuso et al., 2006).
There is a huge scope of innovation in Volkswagen which they can implement in their
management system. Doing a research and development in the field of automobile industry.
There are several strategies which the company has prepared to achieve their future innovation
goals (Visnjic, I., Wiengarten, F. and Neely, A., 2016). Current strategies which the company is
focusing includes 4 key elements in it. Innovation is the multi-stage process whereby
organizations transform ideas into new/improved products, service or processes, in order to
advance, compete and differentiate themselves successfully in their marketplace (Bessant and
Phillips, 2013).
1. Customer satisfaction,
2. Increase sales production,
3. Enhance overall revenue, and
4. To become top supplier in the industry.

Five key factors which can help Volkswagen company to increase their growth rate in the
market. Its very important for the company to understand the end-to-end services of the value
chain to deliver the best services to the customers (Talukder, M., 2016). These includes,
 Research and development : These R&D technologies helps to understand new
emerging techniques in the respective industry, which can be used in the innovation
process of the company. Marketing research is very important before implementing any
innovative process into the system. This will lead to understand all the needs and
requirements of what their customers are expecting from them.
 Manufacturing : For manufacturing any vehicle, its very important to understand its
operational management. The vehicle should be cost efficient in the market. It should be
done with proper guidance of the senior to reduce the effect of damage in the process of
manufacturing the vehicle.
 Marketing : It should be done properly to increase the sale pf their production. There are
many options available in the market which helps in promotional activities. Company can
choose social media, advertisement, campaigning, etc to introduce their products in the
Illustration 7: Current Strategy of 2018 of Volkswagen
Source : Shaping the Future of the Volkswagen Group

market. It is the best and easy idea any company can apply ti increase there sales
production (Tidd, J. and Bessant, J., 2014).
 Sales and Distribution : In this section. Company should make sure that the delivered
product is best of its quality. In current year, it is highly distributed in countries like,
America, China, India, etc. Chine is there most important customer in recent years. As
there is huge demand of Volkswagen cars in China.
 Services : After sale services of the company also helps to make a brand name in the
market. It should be done effectively in order to satisfy the customer. Giving services on
time to the customers will give a positive impact of them on their mind (Volkswagen,
A.G., 2017).
Strategies which they can opt to build the future innovation capabilities can include various
factors, such as,
 Grow profitability which includes, streamline modular architectures, increase the position
of the brand, doing partnership with regional distributors to gain economic growth.
 Developing strategic capabilities of the company which helps to develop self driving
autonomous vehicles in the market, introduce battery vehicles, increase best-in-class
experience across different brands and customers, improve digital transformation,
develop and expand attractive and profitable smart mobility offering (Westerlund, A.,
2016).
 The initiation of the electric cars by Volkswagen company is to promote it as an Eco
friendly vehicle. There aim is to produce more new pure-electric vehicles which includes

annual unit sale of 2 to 3 million e-cars which is equivalent to 25 percent of the total sale
in 2025.
 Volkswagen company is implementing the model line organization in its four core
brands: VW, Audi, SKODA and SEAT. This will help them to enable Volkswagen to
improve cross-divisional project work, accelerate their decision-making tecniques and
cement the focus on results in the projects (Wong, C.Y and et.al.2018).
 For Volkswagen company China is very important as they handed 3.2 million vehicles
over to customers in China, reaching a market share of more than 13 percent. This makes
Volkswagen a clear market leader in the world's. By 2020, the product range is to be
entirely renewed and expanded. With its strategy TRANSFORM 2025+, the brand
intends to further strengthen its leading position.
 The innovative and creative power of Volkswagen is to be presented to the public in a
broad-based holistic communications campaign. Under the motto of “Move Forward”,
the brand will provide comprehensive information on products, technologies and future
plans (Zhu, B., Habisch, A. and Thøgersen, J., 2018.).
 Volkswagen is comprehensively re-positioning itself. The Board of Management of the
Volkswagen brand has decided on the TRANSFORM 2025+ program which will set the
course for the brand over the next decade and beyond.
 The new strategy focuses on clearer brand positioning across the various regions and
segments, backed by significant improvements in efficiency and productivity. At the
same time, the brand will be making massive investments in e-mobility and connectivity.
 Volkswagen company has launched a strategic plan known as “TRANSFORM 2025+”
which helps to provide a complete frame work of the company. This strategy will be
completed in two phases (Skilton, P.F., Wiseman, R.M. and Glick, W.H., 2018).
1. Phase 1 : In phase of this plan, up to 2020, the company will be entirely reconstruct its
core business and complete an overall transformation. At the same time, the company
will develop new competences with in the organization (Managing innovations in
business. 2018).
2. Phase 2 : In this phase, up to 2025, company will try to capture the e-mobility on the
basis of its regained strength as a leading, profitable volume manufacturer in the market.
Transformation of the core business

Transforming the core business of the Volkswagen company by applying or
implementing all the strategies which are included in their plan “TRANSFORM 2025+”, it will
help the company to enhance the positioning of the Volkswagen brands and optimize the vehicle
and drive train portfolio to focus on the most attractive and fastest-growing market segments.
The Volkswagen company is affirming its expansion and investment plans already announced
for North America and its continued expansion program in China (Shaping the Future of the
Volkswagen Group. 2016).
CONCLUSION
From the above we conclude that the future of the automobile industry is all about the
electric cars or automobiles. The new technology will come named semi autonomous safety. Its
characteristics are : it will prevent from the accidents, look after the steering of the vehicle. It
will help the consumers to look after their safety. In the probable future all the cars will run on
the road will be the automated with the safety features in it. There will be the one day that all
cars are connected to the internet. The core thing is all about the making advancement in the
technology with taking the responsibility of the environment as well. The main thing is pollution
which are created by the environment. In future all cars will run through the batteries so that the
chance of the pollution will be low. This will increase the hybrid vehicles.
The Volkswagen is planning to increase its profit by five to six percent up-to 2025. It is
the strategy of the company is fulfilling the responsibility about the environment. The work of
the company is to make the electric cars which is the future. They are now trying to make the car
which are prone to damage and will be more friendly towards the environment. They are
planning to increase the investment by 2025. Now they are making the plan which will more
encourage in the cleaning technologies for Volkswagen. They are making to introduce the 50
new fully electric cars up to 2025. There major innovation is to make 30 plug – in hybrid models
in the market for the consumers that will all run on the electricity. The company is saying that
for making the usual cars in electrifying it will need 150 gigawatt hours. The company is
concentrating on future demand of the mobility solutions. The new or the additional features will
include the autonomous driving, advance human interface etc. From this we conclude the
strategies of Volkswagen. From this report it can be recommended that innovation management
can help ti increase the overall growth of the Volkswagen company in the market. It will also
increase the positive impact on the customers mind. Innovation management helps to apply new

technologies which can be beneficial for the company to implement in their system to gain
popularity among their customers. This assignment will help the to develop high skills of
creative thinking that helps to make more innovation in the business.

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