Managing Innovation: Theory, Application, and Evaluation

This document discusses the concept of managing innovation, including its definition, theory, application, and evaluation. It explores the case study of Made.com and its use of the Blue Ocean strategy. The document also highlights the benefits and limitations of managing innovation.

Managing Innovation

Table of Contents
INTRODUCTION...........................................................................................................................3
2. THEORY.....................................................................................................................................3
2.1 Definition of theory...............................................................................................................3
2.2 Evaluation of theory..............................................................................................................4
3. APPLICATION OF THE THEORY...........................................................................................6
3.1 Company Background...........................................................................................................6
3.2 Application in historical development..................................................................................7
3.3 Application in future development........................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Managing innovation is referred to as the combination of various innovation processes
and also results as change in the management (Agnihotri, 2016). Innovation management in the
field of organizational innovation, business processes, marketing, product, etc. Managing
innovation helps in encouraging and supporting innovation which results in incremental
improvement associated with existing product. Managing innovation is considered to be a
systematic process which helps in generating, evaluating, prioritizing and validating the idea by
effectively putting them into the practice. Innovation has become the new imperative of the
management (Aithal and Kumar, 2015). The key three pillars associated with the innovation are
competency, management and strategy. This leads to higher operational growth and also helps in
realizing the various benefits which leads to higher sustainable growth. Innovation tends to focus
on creating increasing likelihood of the business getting succeeded. This helps in motivating the
team and also helps in creating the value to the product. This helps in realizing commercial
benefit and leads to better productivity. Innovation of new idea within the organization context
helps in effectively carrying several business activities. This study will highlight on principals,
processes advantages and limitation of the Blue ocean strategy. Blue ocean strategy is an
effective pursuit to create new demand by opening a new market space. Furthermore, this study
will highlight on the application of the historical development and future development of this
theory.
2. THEORY
2.1 Definition of theory
Illustration 1: Blue ocean strategy.
2019.

Blue ocean strategy refers to the extension of the market where competition is less or there
is no competition. In current time period competition is very high and due to this reason firms
focus on either low cost or product differentiation. Problem become more worst when market is
saturated in nature and firms have to serve same sort of product to the target audience. Under this
strategy company believed that there is not border of industry and company within which it must
operate (Definition of Blue Ocean strategy., 2019). Firm break boundaries and develop products
that meet unsatisfied needs of the people. Apart from this, many times business firm also create
needs for the people and satisfy it and by doing so capture market share in the industry. Blue
ocean industry can be applied in any industry and company. Blue ocean strategy is completely
different from red ocean strategy. In the saturated market where there is less space firm try to
identify a new market and it is known as Blue Ocean. Main aim of this strategy is to create
demand and to make competition irrelevant by producing and making available product of
superior quality. One of the best example is Apple that follow Blue Ocean strategy in proper
manner. Apple commence digital music service in 2003 where online user can search music and
download its original version by paying price (Mi, 2015). iTunes app was developed by Apple
from where one can download music. This make traditional sources of distribution irrelevant.
Earlier CD/DVD was used to view movies and listen songs but now due to advent of iTunes
demand of CD/DVD comes to end. Hence, it can be said that Apple within same industry create
a new market and make competition irrelevant. This is one of the classic examples of Blue
Ocean strategy.
2.2 Evaluation of theory
In order to evaluate theory its positive and negative sides need to be taken into account. In
order to identify positive points of theory case of Cirque du Soleil is taken into account. Circus in
the year 1980 was dominated by the Ringling Bros and Barnum & Bailey. Both these circus
operators demonstrate ring circus, clowns and animal acts. Children were there primary target
customers. In other words, it can be said that focus was only on Children’s. Cost of circus was
very high as they need to carry animals from one place to another which was very costly. At that
time TV and Video games also comes in the market and children were more attracting towards
such kind of things. Hence, Circus operators earn less revenue and less profit in the business. In
such situation Cirque du Soleil combine circus with the adult theatre and show things differently.
They stop use of animals in circus as at that time many videos were circulating and social

organizations were against use of animals in circus (Agnihotri, 2016). Many innovation Cirque
du Soleil do in its business and under this instead of three rings they show features on one stage
which required less number of performers. Hence, cost decline. Music, artist and lighting were
used at stage which give different feeling to the viewers. Comfortable seats were provided to the
people in theatre. Tickets of premium price were charged because every age people were
admiring this innovation and on other hand, cost cutting was also done. Thus, profit increase at
rapid rate. Opponent of Circus de Soleil failed to earn profit equal to mentioned firm even in
hundred years.
This reflect that one of the major advantage of the Blue Ocean strategy is that company can
create new market and at same time can do cost cutting and earn maximum profit
simultaneously. In today time period most of business firms pay due attention on cost control and
in this regard take number of steps but do not try to break already drawn industry boundaries.
Hence, they consistently feel cost pressure (Aithal, 2016). On other hand, many companies
identify new market and explore it and earn huge amount of profit in the business. This is the one
of the major benefit of following Blue Ocean strategy.
One of the main limitation of the Blue Ocean strategy is that many times in order to create
new market firm enter too early. For example, Amiga computer was far ahead of the PC and Mac
and it was a technological marvel, and it died because the World was not ready for it. The Apple
Newton and the first Microsoft Tablet PCs, were the right ideas, just a couple years too early. On
advent of new product customers failed to understand what firm is trying to sell them. Hence, on
right time firm must try to explore new market. If time will not be right then firm may fail in its
business (Thompson, Strickland and Gamble, 2015).
Other limitation is that Blue Ocean strategy just talk about creation of new market but it
does not state mindset that company must have about new market. When any company enter into
new market it need to know about its target audience and their preferences as well as way in
which product people can find appropriate for them. In case people do not find product
trustworthy or appropriate they do not use it even it is innovative in nature. Tassimo had better
product then Keurig when both enter into market of new single pod coffee market. Tassimo did
not execute its idea properly in terms of making people educated about its product. Hence, it
died. Thus, strategy execution matters a lot for the firm.

Blue Ocean just talk about creation of new market and it does not give must importance to
the defence of business in new market (The risks of following Blue Ocean strategy., 2019). Other
firms can follow company that is in new market and due to this reason, it is also very important
to do defence of the business idea. If this will not be done then in that case firm may fail into the
new market.
Another major disadvantage with the Blue Ocean strategy is to come up with the new
idea. It is considered to be very difficult to select the right blue ocean associated with the
identification of large and untapped markets (Dvorak and Razova, 2018). Choosing of the right
blue ocean is considered to be as one of the most deliberate and detailed process which requires
a lot of research. One of the major limitation associated with the Blue Ocean strategy is that
trusting the innovative idea requires a lot of patience and trust. Getting appropriate results tends
to require a lot of patients. It is very difficult to assess the time required in order to be successful
in the desired market. Another major limitation is that companies are failing to effectively get
employees onto the board in order to get through a new direction (Sitinjak, Pramawijaya, and
Gunawan, 2018). This eventually influence the end results associated with the innovation
strategy and idea. This also results in shift in the corporate culture where large number of the
employees do not agree or are not comfortable with the change or shift in the business. This
eventually largely affects the business operations.
3. APPLICATION OF THE THEORY
3.1 Company Background
Made.com is a retailer company in London which was founded in the year 2010 by Ning
Li, Chloe Macintosh and Julien Callede. This company is headquartered in London, UK and it
also tends to operate an office in Shanghai, China (MADE.COM – A UNIQUE BUSINESS
MODEL, 2018). Made.com company tends to focus on designing and it also retails home wares
and furnitures through online and showrooms across Europe. It has around 350 employees in the
Made.com retail company. This company tends to deal in various range of services which mainly
comprise of sofas, armchairs, tables, mattresses, beds, lighting, kitchen, home accessories,
furniture, etc.

Illustration 2: The rise of ‘direct-to-consumer’
brands: Simply Cook, Made.com and Dollar Shave
Club lead the way. 2019.
Made.com tends to use various business models which helps to streamline the
manufacturing process and furniture design. The company tends to focus on minimizing the
overhead cost by effectively selling online (Orlov and Chubarkina, 2017). It also focuses on
grouping orders of same item, building close relationship with designers and factories and not
owning the factories are considered to effective strategy to minimize the overhead cost to the
company. Another effective business model used by the Made.com is that, its website tends to
showcase furniture designs and also encourages individuals to vote for their favourites.
Customers tend to have full control over the purchasing of the furniture. Crowd sourced fund
tends to go into production. Individuals who have voted for the product through Made.com's
Unboxed online community tends to take a move to purchase specific set of furniture
(MADE.COM – A UNIQUE BUSINESS MODEL, 2018). The unboxed community helps in
allowing customers to be more connected the particular brand and also helps in finding like
minded peers. Order are placed directly with manufacturer in order to create mass production.
After the production of the goods, order are shipped to the customers.
Illustration 3: MADE.COM – A UNIQUE BUSINESS MODEL. 2018.

Made.com tends to focus on exemplar product business model. This model tends to revolve
around various online platforms which links innovative designers and end customers at a
relatively lower price when compared to its competitors. This business model helps in close
monitoring of sales, effective management of the cash and enhancement of the affiliation
programme (Xavier, Siddiquee and Mohamed, 2019). The company also tends to focus on
tailoring their supply chain by effectively complying to the demand of the customers. This
business model helps in understating the current trend which leads to trial and error.
Crowdsourced helps the company to effectively tailor their supply chain in accordance to needs
and demand of the customers. Made.com also tends to organize “Made Emerging Talent Award”
contest every year where the designers gets to submit there unique design.
3.2 Application in historical development.
Made.com has been selected as one of the 25 new business in UK by British
government's Future fifty programmes. This is considered to be one of those companies which
government wanted to float and expand (Lauer, 2019). All the three key partners of the
Made.com tends to have prior experience in the venture capital, online furniture website and start
up management. Made.com has 130 employees and also have over 1.5 million unique visitors.
There are 2000+ exclusive designs and also have growing network of the designers. Made.com
has made an average order value of around £400. It has also successfully launched its business in
France and Italy. Blue Ocean strategy has played a very critical role in developing and growing
the operations of the business. This eventually leads to long term operational growth and
sustainability. With the application of Blue Ocean strategy, Made.com has now become one of
the leading retail business who tends to have networked across the Europe (Lee, Wang and
Chung, 2017, May). In the year 2012, Made.com has opened 9th floor showroom in Notting Hill.
In the year 2013, it has opened showroom in Batley and in the year 2015, Made.com has opened
a flagship showroom in Soho, London. Made.com has also collaborated with large number of
designers such as Steuart Padwick, James Harrison, Kirsty Whyte, Ian Archer, Ilaria Marelli,
Genevieve Bennett and has also made a partnership with design Museum in order to design 2
seater sofas. With the application of Blue Ocean strategy, Made.com has influenced the
furniture industry. Made.com has brought fashionable furnitures at a very reasonable price.
Currently Made.com tends to have operations in various retail business which is located in
Birmingham, Lomdon, Berlin, Paris, Amsterdam, Leeds, Spain, Italy, etc. From just the family

run business in the Europe, with the application of Blue Ocean strategy, Made.com has now
become one of the most favourite furniture brand across the Asia. Made.com is becoming one of
the fast furniture retailer (Aithal and Kumar, 2015).
3.3 Application in future development.
With the application of Blue Ocean strategy, Made.com wants to become the pioneer and
become the next trend in order to how to shop from home. They tends to focus on high end
design which tends to focus on creating pieces which one will love (Sitinjak, Pramawijaya, and
Gunawan, 2018). With the application of Blue Ocean strategy, Made.com is in turning future
upside down by effectively integrating new and advanced technology. This helps in better
manufacturing and production process which leads to higher sustainable growth. Made.com
tends to focus on successfully connecting the online customers through the company's website.
Integration of better automated software and integration of artificial intelligence helps in
effectively carrying out the business operations. Innovation in the furniture products offered by
the company by effectively hiring talented designers helps in designing new and innovative
range of the furnitures (Xavier, Siddiquee and Mohamed, 2019). This leads to future growth and
development of the Made.com. It tends to expand its business operations within various parts of
the globe. Blue ocean strategy helps Made.com to avoid contacting with the overdeveloped
saturated markets. This helps company to position its business in less competitive market and
create a market value. This will result in future growth and development. Blue Ocean strategy
tends to analyse the competitive risk and helps in positioning its business in such a market which
results in future growth and development. Designing a website which h is more consumer handy
and integration into digital marketing platforms like search engine optimization helps in
generating more traffic to the website. This eventually leads to higher growth in sales and
profitability of the business (Xavier, Siddiquee and Mohamed, 2019). Integration API which is
considered to be the first designed and streamlined workloads, voice search optimization,
Chatbots and customer support system, etc. helps in future development of the Made.com
company. Modular design results in lower operational cost to the business. Synchronizing all the
data and providing a better easy approach to the customers helps in effectively creating higher
sustainable growth to the Made.com. Hiring talented designers and finding the right market with
the help of Blue Ocean strategy helps in future growth and development of the Made.com.

4 action Framework
Eliminate: In the historical context, Made.com used large number of woods and natural
resources. In order to reduce that they focused on reusing the woods. In the future context,
Made.com will eliminate to use high degree of natural woods to protect environment.
Reduce: In the historical context, Made.com reduced the use of labour intensive and integrated
with advanced technology. In the future context, it will reduce wasting various natural resources.
Raise: In the historical context, Made.com has developed new designs to meet the need and
requirements of the customers. In the future context, Made.com will use eco-friendly ways to
create furniture. They will reuse woods which helps in protecting environment.
Create: In the historical context, Made.com create furniture from waste wood and resources. In
the future context, it will create eco-friendly furniture and also designs which attracts attention of
customers.
Business model canvas

Key partners Key activities Value
proposition
Customer
relationship
Channels
 CEO
 Customers
 Producers
 Manufacturers
 Government
To find
effective way
to reduce use
of natural
resources in
order to protect
environment.
To reuse
woods and
create eco-
friendly
furniture.
By delivering
goods online
and provide
effective
customer
service.
 Social
media
platforms
 Online
website
Figure 1Canvas Diagram of Made.com
The red line demonstrates Ringling bros. The blue line demonstrates Cirque du Soleil and the
pink line demonstrates Regional Circus.
The Made.com has been highly focusing on matching the expectations and need of the peers.
It leads to higher productivity and performance. The networking of the company is very strong
which helps in better connection.
Red: Ringling bros
Blue line: Cirque du
Soleil
Pink line: Regional
Circus

CONCLUSION
From the above conducted study it has been summarized that, Managing innovation is
useful in generating, evaluating, prioritizing and validating the idea by effectively putting them
into the practice. This also results in long term operational growth by effectively creating higher
value to the product. Blue ocean strategy refers to the expansion of the market where competition
are less. This helps in creating better position in the market for Made.com. Firm tends to focus
on breaking boundaries and develop products which meets their expectations. This study also
demonstrates the key limitations associated with the Blue Ocean strategy. Blue Ocean strategy
does not state mindset that company must have about new market. It is difficult to select the
right blue ocean associated with the identification of large and untapped markets. Engaging
employees onto the board to comply with the innovative idea is difficult. Furthermore, this study
also summarizes that, this study also summarizes the various business models associated with the
company which helps in attaining future growth. One of the key advantage associated with the
blue ocean strategy is to avoid overdeveloped saturated markets. This helps company to grow in
the future with fewer risks and results in increased productivity for the company in the blue
ocean market. This strategy tends to analyse the competitive risk and helps in positioning its
business in such a market which results in future growth and development.

REFERENCES
Books and Journals
Agnihotri, A., 2016. Extending boundaries of blue ocean strategy. Journal of Strategic
Marketing, 24(6), pp.519-528.
Aithal, P.S. and Kumar, P.M., 2015. Black Ocean Strategy-A Probe into a new type of Strategy
used for Organizational Success. GE-International Journal of Management Research
(GE-IJMR). 3(8). pp.45-65.
Aithal, P.S., 2016. The concept of ideal strategy and its realization using white ocean mixed
strategy. International Journal of Management Sciences and Business Research. 5(4).
pp.171-179.
Dvorak, J. and Razova, I., 2018. Empirical Validation of Blue Ocean Strategy Sustainability in
an International Environment. Foundations of Management. 10(1). pp.143-162.
Kamal, A.H. and Dionne-Odom, J.N., 2016. A blue ocean strategy for palliative care: focus on
family caregivers. Journal of pain and symptom management. 51(3). pp.e1-e3.
Kim, W.C. and Mauborgne, R., 2015. Red ocean traps. Harvard business review. 93(3), pp.68-
73.
Lauer, T., 2019. Generic Strategies, Outpacing and Blue Ocean-Discussing the Validity of Three
Strategic Management Theories Using Case Studies from Airlines and Grocery
Retail. Theory Methodology Practice (TMP). 15(01). pp.57-66.
Lee, Y.L., Wang, W.S. and Chung, S.M., 2017, May. The Blue Ocean Strategy applied in a flood
control product development. In 2017 International Conference on Applied System
Innovation (ICASI) (pp. 1961-1964). IEEE.
Mi, J., 2015. Blue ocean strategy. Wiley Encyclopedia of Management, pp.1-1.
Orlov, A.K. and Chubarkina, I.Y., 2017. Blue ocean strategy application in the course of
planning and implementation of construction projects in the area of SMART housing and
social infrastructure. In MATEC Web of Conferences (Vol. 106, p. 08015). EDP Sciences.

Sitinjak, M.F., Pramawijaya, K. and Gunawan, A., 2018. ICanStudioLive use of Blue Ocean
Marketing Strategy for Value Differentiation. Pertanika Journal of Social Sciences &
Humanities.
Thompson, A., Strickland, A.J. and Gamble, J., 2015. Crafting and executing strategy: Concepts
and readings. McGraw-Hill Education.
Xavier, J.A., Siddiquee, N.A. and Mohamed, M.Z., 2019. Public management reform in the post-
NPM era: lessons from Malaysia’s National Blue Ocean Strategy (NBOS). Public Money
& Management, pp.1-9.
Online
The risks of following Blue Ocean strategy., 2019. [Online]. Available through:<
https://theadaptivemarketer.com/2017/08/20/risks-following-blue-ocean-strategy/>.
Definition of Blue Ocean strategy., 2019. [Online]. Available through:<
https://economictimes.indiatimes.com/definition/blue-ocean-strategy>.
MADE.COM – A UNIQUE BUSINESS MODEL. 2018. [Online]. Available
through:<https://consumervaluecreation.com/2018/02/18/made-com-a-unique-business-
model/>