This report discusses the concept of innovation management and focuses on the disruptive innovation theory and its application in Revolut, a British financial technology company. It covers the benefits and limitations of the theory, historical development, and future aims of the company using the business model canvas.
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Contents INTRODUCTION...........................................................................................................................1 MAIN BODY..................................................................................................................................1 Innovation theory.........................................................................................................................1 Application of disruptive innovation theory in the historical development...............................4 Application of the disruptive innovation theory in the future development context.................7 CONCLUSION...............................................................................................................................9 REFERENCES................................................................................................................................9
INTRODUCTION Innovation refers to the process through which a product, service is brought up to date and renewed by introducing new techniques, implementing new processes as well as establishing new ideas to generate new value. The generation of value is termed as the characteristic of innovation. Value is defined in various ways like improvement to current products, introducing the new product and service line and reduction of cost by implementing fast technology. Innovation management is a sum of all management and innovation process such as change in business process, organisational innovation, product and marketing to increase the brand value of company(Bansal, 2021). To define this concept the selected theory is disruptive innovation theoryandbusinessmodelcanvasappliedonRevolut.TheRevolutisBritishfinancial technology company which provides banking services. The report highlights the innovation theory and application of innovation theory in the historical development context. Further, it covers application of the innovation theory in the future development context. MAIN BODY Innovation theory Disruptive innovation theory Disruptive innovation theory refers to the process in that a small business with less resources come in the market to challenge the big and established company by introducing new start-up, product and services at the lower level in the market as well as continued to move up and change market. It is the long process which occur in number of steps. It is the technology which makes expensive products and services more affordable as well as accessible to a broader market. Disruptive innovation needs facultative technology, a coherent value network and a innovative business model(Batac and Maymo, 2019). Sustaining innovation refers to the process of creating or innovating for the improvement of product and services to satisfied the needs of current customers. For example in Revolut, to apply the disruptive innovation the company introduce new facilities in their financial services as online payment method, direct money transferring form bank account from any company as well as currency exchange services to reduce the risk of carrying cash all the time. 1
There are 4 steps to understand the disruptive innovation theory are as follows- Not all innovation is disruption-The company must use this theory to make changes in their process of services. The manager have to understand not all the changes are innovation as well as not all the innovation is disruption. Disruption means the changes, issues which are faced by the target customers and big companies neglect the requirements of their various other segments and new target market(Biemans, 2018). The company can use these as opportunities to introduce new innovation which fulfil the needs of this segments to attract them towards their company to earn profit and new customer base. Disruption can be low end and new market-The disruption is two type such as low end disruption as well as new market disruption.Low end disruption-It is plan of new businesses which come in initial stage of market and offersservices to the customers in a good way which is very effective. The big company not give importance to this market as when the new business enter and make huge profit then the bigcompany move ahead upstream and give their full focus and efforts on that area where the more profit margins are. Newmarketdisruption-Itreferstothecompanieswhichemulateagainstless consumption in low margin area of an industry. Same as low-end disruption, the goods and services offered are seen as effective as well as the emerging company is enough profit at the low price(Bucic and Singh, 2018). Disruption innovation is a process rather than a product and services- It is not concerned introducing new product and service, it is related with the process of services as well as a curing the product and services in fast and effective way. As in Revolut , the company change payment mode and type by providing the facility of debit card, online payment and currency exchange to improve the experience of their customers. By using these changes they can disrupt the current payment process or method of other big companies. As if the company introduce new financial services they cannot defined it as a termed of disruption innovation. Choosethebattleswisely-Manysmallandnewbusinesscomewithdisruptive innovative ideas to compete in the market. So the big and established company used it as benefit and opportunity to understand the disruption innovation and helps the company to generate new idea or scheme to make improvement in their current product and services to fulfil the needs as well as demands of customers(Gerybadze, 2020). So the manager of Revolut must evaluate the 2
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disruptive innovation of many start-up to take it as opportunity for the growth and innovation of their business. The benefits and limitations of disruptive innovation theory Benefits The best example of disruptive innovation are internet and artificial intelligence the company who take advantage of fast and innovative technology available in the market in their process to make their product and services more effective(Havins, 2020). By using many features and make addition to them the company can make best disruptive innovation in order to gain competitive advantage and enjoy various benefits in the industry as compare to their competitors. The benefits are of the disruptive innovation theory are as follows Expansion of market-The main advantage to adopt the process of this theory to make innovation in the Revolut is that it helps the manager to expand their market to a bigger extent that their traditional methods. Disruptive innovation enable the manager of Revolut to modified and make changes in the consumer behaviour and buying pattern in regards to the traditional industries which exist in the market(Jackson, 2019). Initially, it seem as low profitable and ineffective, but after some time it show the real impact and result on the consumer behaviour. Improvement of process-It is the modern method of innovation to solve and mitigate the issues of the customers. The manager of Revolut must adopt this theory in their process to eliminate the problems of their loyal customer base. Disruptive innovation bring changes in the evaluation of the company processes as well as provides a method to adopt changes in the process. It also helps the manager in the supply of better services as well as bring modification in the current industry functions. It will enhance and modernise all most all the procedure of the business, that further prove as advantage for the company. Theopportunityforbusinessgrowth-Ifthenewstart-upsandcompanymake disruptive innovation in the market the manager of Revolut use it as advantage to bring changes in their current process and make more innovative changes by using their innovation which will leads to improve their profit, market share and customer base. Limitations With all these advantage there are some limitation of the disruptive innovation theory which the manager need to be considered while implementing this theory for creating innovation 3
in the company. The manager of Revolut evaluate the all the necessary steps to determine the limitation and their impact while applying the theory for the new innovation. Lengthy and complex process-Disruptive innovation needs a isolate strategy procedure as well as this procedure must be focused and emergent unanticipated problems, opportunities and successes instead of focused or intended on improved knowing about the what works as well as what doesn't work for company(Perrini and Russo, 2019). The manager of Revolut will find difficulties to make the effective strategy to implement the disruption innovation successfully for the growth of the company. Difficulttounderstandcustomerbehaviour-Thistheoryisfocusescustomer behaviour rather than designing new products and services. The manager must make strategy by keeping the aims of people and customers should make the design of disruption innovations. The manager of Revolut must conduct all the research related to the demands, needs and expectations tom make innovation on the basis of that. Less profit margin-The impact of disruption innovation is very slow as well as the result of this innovation take ling time which leads to slow in the process of profitability. The disruptive companies not able to achieve huge profit quickly because of their nature low end and new market disruption as the innovation of Revolut take huge time to deliver reliable profit for business. So the manager can not use this innovation for the urgent changes and introducing new innovation in the market in order to get fast return and huge profit rapidly. Application of disruptive innovation theory in the historical development The Revolut is British financial technology company which offers banking and financing services to the people in UK. The company was estabilished in 2015 by Nikolay Storonsky and Vlad Yatsenko to bring changes in the current operations of banking industry. The company provides various banking services such as debit cards, current accounts, currency exchange, stock trading, insurance and foreign exchange. The company provides these services to the benefits of customers as it make easy to them to make payment easily by providing them the facility of foreign exchange. The Revolut also make various innovation to make the process of insurance easy to save the time of customers. The debit card facility of Revolut also prove beneficial to the consumers as they can make payment easily without carrying huge cash with them which reduce the risk of theft and their life. The company also provide stock trading services and the manager also suggest profitable opportunities to make investment and huge 4
profit by it to their clients which build trust among them towards the services of the company. Many customers experience many benefits by using the banking services of Revolut in their personal and professional life(Pol, 2021). Historical development The main motive and mission of the company is to offer a most simple way for people to save their time and money for the future needs. The company provide various solutions and services to attract customers to maximise their wealth as well as provide most effective solutions for the beginners and new comers in saving, paying and investing. With in few years the Revolut become one of the valuable and profitable company which provide banking services to the beginners or new company. The company achieve huge success in less time and attract many customers towards their services in order to compete in competitive market and make various innovation to change the old way of banking operations(Puhan, 2019). The main motive of this company to provide most affordable and fast services to the customer to make their life easy and reduce the complexity of their busy schedule. They make easy for them to conduct their business monetary transaction easy and fast. After globalisation, it makes more complex and long process to transfer money and attract many company for foreign investmentso the Revolut providescurrency exchangeand foreign exchange services which helps the many company to operate their business in many countries as well as they can export and import goods or services by using this facility of Revolut as the company allow many business to make exchange transactions in many currency as per their requirement(Sanz-Llopis and Ostermann, 2020). They also launch mobile banking app which provide services like peer to peer payment, fee free currency exchange, cryptocurrency exchange in 150 currencies directly by using app through mobile.They introduce new method such as digital mobile banking to eliminate the draw backs of traditional banking for the benefit of customers also. 5
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( Source:The challenge for Challenger banks, 2019) Business model canvas The business model canvas refers to the graphic template and model used in strategic planning and management. The manager of Revolut use it for conducting deep analysis of digital features, content and operations. The business model canvaswith business's activities, key stakeholders,, resources, revenue streams, cost, selling channels and key value propositions . The stakeholders of Revolut is Amazon, Apple and many more which use their services to spread brand awareness online for the huge profit. Various partners are providing rewards and discounts to customers by the apps to increase the loyal customer base(Szostak, Laviolette and Burger- Helmchen, 2021). Many banking company also the partner of company which provides many banking services in mobile for the convenience of customers. 6 Illustration1: The challenge for Challenger banks , 2019
(Source: Is Revolut becoming the ‘Amazon’ of banking. 2020) Applicationof the disruptive innovation theory in the future development context After globalisation theRevolut earn huge success and popularity in the global market. The company use disruptive innovation theory to make changes in the traditional banking industry and market. The awareness of digitalisation payment among youth and new business creates opportunities for the Revolut to reach the height of success. For the youth and large scale business the cash is becoming outdated, which is caused by the method crime for cash. Future aims The future aim of the Revolut is to make sustainable innovation to attract large number of customers by updating their current applications with creative features like offering cash rewards for shopping with Revolut app plus mortgage solution and life insurance. This helps the 7 Illustration2: Is Revolut becoming the ‘Amazon’ of banking 2020
company to make improvement in their services in order to gain competitive benefits and power for future development and accruing huge market share. In the global market, the common issues are associated directly and indirectly with money or their exchange. The values ofRevolut require to be more focused on making something more than earning profit. The future of the company is depending on their current action(Tan, 2020). The manager make various innovative strategy for the development and decided to implement disruptive innovation strategy again in order to compete their mission to reduce the global poverty issue. To apply process of disruptive innovation for the future growth. The manager of Revolut make plan to target 15% of population and make video tutorial as well as banking education lessons for beginner. By the effective and strong partnership with many income generating platforms they provide the most effective solution to this issue. As the recent trends the dynamic change in digital platforms will continue to enhance by many customers and industries will be focused on reducing risks, innovations and 4D printing will make new solutions. As technology advancement and robotising revolution are modifying the infrastructure and market of the world. Revolut requires to apply those changes and trends to create differentiationand give effective value to its loyal customers. Effective development for the business would be generating a new consultation at the mobile of people. They can use 4D hologram's images for the customers globally as financial experts as well as provide financial advice to the customer at home. The manager can use artificial intelligence to developed their services to provide facility to customers and warning them about the risks. They can also suggest them to reduce the risk associated with the investment as well as give them various opportunities to increase their wealth and future development(Thornblad,2018). By using internet they can search the current trends and technology available in many countries as well as in new market in order to make most effective innovation in the business to attract large number of potential customers. Application of disruptive innovation in future services To apply this theory the manager of Revolut will use the artificial intelligence as their personal adviser. Managing individual investments and finances is depends to a large extent of understanding and knowledge of risk as well as the talent to mitigate them. Computer are capable in advance to find out the errors and through cognitive analytics they will able tom predict and calculate risk. The most effective way to offer that make disruption in the market for Revolut is 8
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to target new segment and unattractive people that is people under age group of 20 to 40 with needs of mortgage and low credit scores in unsuccessful investments. Providing them the easy features which helps them to improve their wealth and status as well as the manager warn them for the risk related with investment. The demand and awareness among customers at both low and high end market. By using internet and various digital marketing tools the company can promote their services as well as various new features available for the customers(Visentin, 2018). They can easily spread awareness about their innovation and services among the users for their benefits and easy going. By this they can easily earn the huge publicity and customer base which helps them to get competitive advantage to compete with many big competitors. CONCLUSION As per the above presented information, it is concluded that the company can use disruptive innovation theory in their organisation in order to get competitive advantage and attract large number of customers. The disruptive innovation theory is the process which the company can use to make changes in the process of traditional function of market as well as to increase the threat among big and established company. The historical development of the company is their innovative service which they provide to the customers for earning money and satisfied their needs. The future development is by using various advantage of this theory the manager can improve their current services to reduce the problems of new segment and various customers related to quality or process exist in the market. 9
REFERENCES Books and journals Bansal, S., 2021. Managing Innovation in CIM Environments. InDesigning Innovations in Industrial Logistics Modelling(pp. 243-266). CRC Press. Batac, J. and Maymo, V., 2019. Managing innovation: controls and people.Recherches en Sciences de Gestion.130(1). pp.267-289. Biemans, W.G., 2018.Managing innovation within networks. Routledge. Bucic, T. and Singh, G., 2018. Apple watch: managing innovation resistance.216). IGI Global. Gerybadze,A.,2020.Technologyandinnovationmanagementinaglobalperspective. InManaging Innovation in a Global and Digital World(pp. 207-225). Springer Gabler, Wiesbaden. Havins, S.R., 2020. Decision Support Systems for Managing Innovation Through Project SelectioninPublicSectorR&DEnvironments.IEEEEngineeringManagement Review.48(4). pp.28-31. Jackson, N.C., 2019. Managing for competency with innovation change in higher education: Examining the pitfalls and pivots of digital transformation.Business Horizons.62(6). pp.761-772. Perrini, F. and Russo, A., 2019. The Roots of Corporate Sustainability: the Art of Managing Innovation and Relationships by illycaffè. InManaging Sustainable Business(pp. 363- 394). Springer, Dordrecht. Pol, E., 2021. The Client-Supplier Relationship in Managing Innovation: Delineating Defence IndustryFirstMoverChallengeswithintheGovernmentContract Competition.InternationalJournalofIndustrialandManufacturing Engineering.15(12). pp.491-499. Puhan, T.X., 2019. Managing Change and Innovation.Available at SSRN 3371800. Sanz-Llopis, J. and Ostermann, M., 2020. Innovation in project management through framing and challenge redefinition.International journal of managing projects in business. Szostak, B., Laviolette, M. and Burger-Helmchen, T., 2021.Managing Innovation According to Space, Time and Matter(No. hal-03583613). Tan, S.F., 2020. Managing innovation: Technology, consumer and sustainability perspective, and thechallenges.InLeveragingConsumerBehaviorandPsychologyintheDigital Economy(pp. 205- Thornblad, D., 2018. Managing Innovation without Managers: Valve Corp.Journal of Case Studies.36(2). Visentin, A., 2018. Managing innovation at firm's level. Online IsRevolutbecomingthe‘Amazon’ofbanking,2020[Online].Availablethrough: <https://www.linkedin.com/pulse/revolut-becoming-amazon-banking-antish-aubeelock> 10