Managing Innovation

This document discusses the theories of innovation, including diffusion of innovation and blue ocean strategy, and their application in the business world. It explores the benefits and limitations of these theories and how they can help companies gain a competitive advantage. The document also provides insights into the application of blue ocean strategy in the case of Made.com, an online retail industry. Additionally, it covers the historical development of innovation theories and emphasizes the importance of continuous innovation for business growth and success.

Managing Innovation

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Innovation....................................................................................................................................3
Theories of innovation:................................................................................................................3
Application of Blue Ocean Strategy............................................................................................7
Historical development..............................................................................................................10
Application of diffusion theory in the future development.......................................................11
Recommendation.......................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Management of innovation is important for survival and growth of firm as it helps in
bringing new and innovative changes and helps firm in gaining competitive advantages in the
industry. There is various theory of innovation that can be used by firms are diffusion of
innovation and blue ocean strategy to gain competitive positioning and increase its market share.
Therefore, various innovation theories such as diffusion and blue and red ocean innovative
theory can be used by business to get competitive positioning. It can be state that continuous
innovation and creative ideas promote growth and success of firm by meeting needs and
requirements of people.
Innovation
Various theory of innovation is used by firm in order to meet requirements of changing
environment and gain competitive advantages in the industry. Innovation means something new
that is not invented or launched by some other person so firm by innovating its products and
services is able to meet needs of customers on prior basis (Aniram, 2019). Thus able to increase
its market share and sales margin by making continuous investment in innovation and updation
of technologies. Different theories of innovation that can be used by company to promote its firm
growth and survival are as follows:
Theories of innovation:
Diffusion of Innovation Theory: It is one of the oldest theory that defines the way
communication process expand an idea or products through large number of people living in the
society. People get aware about recent trends and technologies and demand or give preference to
purchase particular products as it is innovative and creative at the same time meets requirements
of them in an effective manner (Guerra Guerra, A. ed., 2018). Firm have to be aware about its
target customer characteristics for whom it is planning to launch new products, services or ideas.
The adapter of innovation are classified into five broad categorise so that firm can easily
formulate strategies to influence people to adapt innovation. Therefore, classifications of adaptor
of innovations are as follows;
Innovators: It included such people that are highly interest to use innovative and update products
and services in order to satisfy their needs and demands. Therefore they are first person to take

step to bring new ideas and innovation in society by taking in associated risk thus differentiating
themselves from others.
Early adopters: It consists of people that have previously knowledge about recent trend and
innovation so that they easily adapt to various changes without any delay. Such person does not
require much information in order to influence them to make purchase products of company as
they are already aware of changes and innovation that have to be bring in society.
Early Majority: People that adopt particular technologies and innovation by seeing success
stories of other people to know about effectiveness of innovation (Miron-Spektor and Paletz,
2017). Therefore they does not come in category of leaders as they follows people that are
satisfied with innovation before using such ideas and products.
Late Majority: These people adopt change or innovation after seeing, analysing and evaluating
that the number of people have adopted such innovation. At the same time they also evaluates
how successfully such innovation is able to meet demands of people so on that basis they can
decide to purchase particular products or accept new idea.
Laggards: Such people are very difficult to influence them to purchase particular products as
they are bound by their tradition and customs. They can be influenced to adapt innovative ideas
and products through fear appeal or pressure from other people that adopt such innovation.
Process of diffusion of innovation theory
Process is to create innovate products and services to satisfy needs of customers then it plans
way to create awareness among people regarding products or innovate idea to influence early
adopter. As soon product are satisfied by some of the people majority of people start purchasing
it by analysing and evaluating benefits of products (Natalicchio and et.al., 2017). At last it tries
to influences the people that are highly stick to their tradition and culture by fear appeal or
influence of other people that have used innovative products.
Benefits and limitation of theory:
Advantages: People by analysing and evaluating each other experiences of innovative products
and ideas motivate other to prefer products and services of particular company.

Disadvantages: It focus on adaptation of behaviour rather than prevention of individual
behaviour that may dissatisfy needs of people that highly belief in tradition
Blue ocean strategy:
It is another innovative strategy that can be used by companies to gain competitive
advantages in the industry. In it such product or idea is launched that have no competition or
have business that is owned and operated by some of the people so that it can charge competitive
pricing for people living in the society. Aim of such strategy is to cater demand and needs of
people by launching products that have superior qualities and features so that customers are
ready to pay something extra (Dürr, Nisch and Rohlfing-Bastian, 2017). High class people are
target market of such company that want to sell superior quality products as they are focus is on
quality not on prices of products and services. Therefore, such innovation has high power and
wider potential to satisfy needs of customers beyond their expectation. It is more innovative and
better than red oceans as in it due to increase competition market share and profit margin of
company reduces.
Principle of Blue oceans strategy:
There are four principle of blue ocean strategy that can help company in growth and
success of firm by using such principles to create a blue ocean where it can charge competitive
pricing (Brem, Tidd and Daim, 2019). Therefore various principles for blue ocean strategy are
as follows:
Reconstruct Market boundaries: Firm has to create market boundaries by thinking of such
innovative strategies that helps it in taking competitive advantage. Therefore such innovative
ideas and strategies that is able to meet needs of customers.
Focus on big picture: Company focus is to think innovative or something extra that people are
not able to get from existing markets. Therefore it analysis and evaluates customers needs,
various means to satisfy their needs and more to be developed in order to meet demands.
Beyond existing demand: This principle states that firm focus is to attract future potential
customers that are not purchasing existing products available in market due to specific reasons.

Therefore, company by indentifying various ways to meet needs and requirements of such
customers is able to grow and expand its business operation.
Getting strategic sequence right: It is the last principle that needs to be considered for blue
ocean strategy where it is concerned about various hurdler that company faces in adaptation of
ideas and innovation, products by retailers, customers and partner and the way they will
overcome such problem (Möller and Halinen, 2017). Thus, firm by finding ways to remove
various barriers in effective adaptation of ideas and products and services is able to attract large
number of customers and increase its profitability and sales margin. Companies that follow all
such principle is able to uses blue ocean strategy and effective charge competitive pricing from
people.
Process of Blue ocean strategy:
Various process and steps to be followed in order to build blue ocean strategy to enhance
profitability and sales volume of firm. Therefore there are five steps that are followed by
companies to implement blue ocean strategy are as follows:
Selection of people or target market: First and foremost steps that company has to take
are identified and various business or products that are innovative in nature so that it can take
first mover advantage (Sanz-Llopis and Ostermann, 2020.). It means products and services that
are manufactured or provided by less number of people or businessman so it by introducing such
products or business idea can gain competitive positioning.
Clarity about current state of firm: Company should evaluate and analysis that where it stand
in the market by evaluating its market positioning, profitability and sales or resources it had for
operation of business. By analysing all such factors it is able to know about things that needs to
be improved so firm can enhances its positioning and market share.
Identify strength of company: In this stage firm has to identify its strength and capabilities that
it can used to manufactured product and services so that it can make effective utilisation of
hidden opportunities and able to satisfy needs of customers beyond their expectation. Company
by solving problem of people and meeting their needs effectively is able to grow and expand its
business.

Find way to implement blue ocean strategy: At this stage company redefine market
boundaries and create new market space so that customers can easily identify such firm and its
products (Barbieri and et.al., 2016). It does by differentiation through quality products or by
decreasing cost of products.
Make move: It is final step where firm decide the way it can expand and grow business by
redefining market potential through testing market result that have arrived due to
implementation of blue ocean strategy.
Benefits and limitation of theory:
Advantages:
High rate of return: Firm by using blue ocean strategy is able to get maximum output as such
strategy helps in increasing sales and profit margin of company at the same time it can charge
high prices from number of customers.
Disadvantages:
High fund requirement: Company should have high resources and innovative products in order
to charge high and competitive prices from customers. Therefore it requires large amount of
capital and resources to gain competitive positioning in the industry.
Application of Blue Ocean Strategy
Made, com is online retail industry which is headquartered in England, UK. It designs and sells
homeware and furniture in Europe. The number of showrooms of Made.com estimate eight
which operates in various countries such as UK, Ireland, France, Belgium, Germany, Australia,
Switzerland and Spain. Where more than 590 employees offer their services in organization in
different places (Möllerand and Halinen, 2017). It is launched in March 2010 while in 2013,
organization opened its another franchises in France, Italy and Philippines. Organization enhance
their sales growth approx. 40% which upgrade its market positioning in Europe (Namboodiri,
Banerjee and Dasgupta, 2019). Organization is not selling their products but also manufactures
customized products. It is quite innovative concept to offer customized furniture which
differentiate company from other competitors in global market.

Organization uses various business model such as product business model, brand model,
innovation model, value chain model and monetarization model. These models support
organization to gain competitive advantage in business market.
Product business model
Organization use this model to differentiate their products and services from others. This
model offers online platform which interlink with innovative designers and targets customer who
seeks for design led furniture pieces at lower price of product as compared existing competitors.
Organization plays as intermediate role between furniture purchaser and designers where
generally both parties can’t connect to each other. By the model organization offers facilities to
customer to upload their own design that gives values to customer and builds loyalty of them on
brand. Thus, organization differentiate their products and services from competitors.
Monetization model
This model is totally based on the mass customization and invested cash flow for example
customer have to pay before manufacturing initiates. There has no inventory cost but has limited
cost of logistic. By the model organization easy to upgrade cashflow position by enhancing 5%
of sales furniture.
Innovation strategy model:
Organization applies Blue Ocean Strategy to introduce different product which is beyond
from customer expectation. By the strategy, organization offers customized furniture to customer
which is beyond to expectation for competitors and customers. Even Made. Com provides online
delivery services that differentiate brand from others.
Business canvas model
This model gives a shape of a business plan without creating confusion and uncertainty.
It contains nine components which supports to create a business plan (Sanz-Llopis and
Ostermann, 2020). It is dependent on seven components such as resources, relationship,
customer segment, value proposition, cost structure, revenue stream and activities. Organization
uses this model to determine key drivers of business.

Key activities
This element determines that which unique strategy follows by organization to meet their
objectives. Production, designing, manufacturing and delivering are major key activities of
Made.com which gives clarity in task by removing confusion in workers. Consultancy activity
also posses by organization which supports to solve problem on time and leads highly focus on
operations which are executed within workplace (Natalicchio and et.al., 2017).
Value proposition
The bundle o products or services which builds values for targeted customer segments.
Organization gives values to their customer by offering customization facility. According to this
strategy customers can upload own design of furniture where Made.com provides them desirable
products in return gets high profit on products.
Customer segments:
Organization targets only those customers who has income above 20,000 and up to
100000. Company offers premium products services only to those customers who can afford
these products or services.
Channel
There is various channel which is used by organization such as factory, trucks, online
home delivery and word of mouth. But organization majorly uses internet medium which helps
company to meet customer objectives by offering home delivery services on time.
Key partners:
Optimization and economy of scale is major partner of organization so, organization collaborate
with factories so that easy to access customers and generate high profit on products.
Revenue stream
Organization follows transaction type revenue system between two party’s furniture designers
and end of customers who pursues unique design led furniture on lower price than competitors

Ridgway, Orbelland and Gray, 2017). Made. com generates sell profits from both sides such as
manufacturer and purchaser.
Customer relationship
Organization offers customized furniture and online home delivery services to customer.
The main goal of the such kind services to retain potential clients and customers with company
prolong time. In addition, Made.com keeps close relationship with factories as well so that they
get customer products on time.
Figure 1 Business Canvas Model
Historical development
Made. com follows Blue Ocean Strategy to introduce online customized furniture which
is beyond of expectation for customers and other competitive companies. Organization has goal
to become innovators which is not for competitive advantage. The main aim to adapt strategy to
give suck kind products and its services so that quality of customer life improves. Customization

of furniture means company allows customers to give their furniture design and their imaginary
design (Okello, 2018). Made.com manufactures imaginary structure of furniture and modify
them into reality. To innovate such kind product has goal to meet next new generation
objectives. Company develops five phases of Blue ocean Strategy to innovate customized
furniture. First phase is thinking which should extempore for everyone. To think about
customized furniture offering which meets existing and future generation is first phase of blue
ocean strategy. To develop succession planning involves manufacturer, designers and online
networking channel. These supports Made.com to work on the project by offering different point
of view on issues which can occur while conducting operation. Made. com recruits diverse
cultural employees who has brain storming due to different culture and region. When products
has manufactured then organization thinks that if product directly deliver to home rather then
customer come to order their design which consumes more time. Where internet plays essential
role in the organization it supports organization to convert idea into reality (Wei, Wang and Ma.,
2016).
Application of diffusion theory in the future development
Diffusion innovation theory can adapt Made.com which supports company to offer highly
innovative products and meets up each type of customer objectives. There are five type people in
the diffusion of innovation theory. Innovators who always ready to take risk and wants to try
new idea without concerning about outcomes. Early adopter who are always interested to try
emerging technology and builds their utility in business market. Early majority who finds a way
for using of innovation within context of society and become part of general population. Late
majority is considered a part of general population. In other word those people who follows early
majority innovation to become part of daily life. Laggards are those people afraid to try new
technology. They adapt innovation when above public adapts that and gets good outcomes
(Orlov and Chubarkina, 2017). By the diffusion strategy organization classify its class that what
they want to be. It supports organization to determine that which strategy they apply that comes
in innovators and early adopter. It is only help to company to differentiate brand but also assist to
become innovator in the future as well.

Recommendation
 Organization can build innovation team to hunt starts up growing forward. Such kind
culture can develop live technologies i.e. website recommendation engine. This
technology support company to influence sell infrastructure and meet potential customer
objectives. In addition, it won’t give more time to retailer to access on innovation as
small starts up business can do. Thus, organization should adapt this strategy to improve
selling scale of company.
 Made. com can collaborate with Tesco which supports them to influence brand image in
global market. Apart from this, organization gets access to offer products around the
world by the help of Tesco. while Tesco gets opportunity to attract it’s customers by
offering customized furniture which is offered by Made.com. so, collaboration strategy
should adapt by Made.com to expand their products popularity across the world.
 Organization provides premium products to customer which is not possible to afford by
each customer. So, organization can adapt diffusion innovation strategy which can help to
reduce cost of innovation as result can provide low cost furniture as well. So,
organization should adapt diffusion innovation strategy.
CONCLUSION
The brief study of report has been understood that Blue Ocean Strategy and Diffusion
innovation strategy which supports organization to become innovators by innovate such kind
products which beyond to expectation and meets with existing generation scenario and future
generation. It can be concluded definition, principles and process of blue ocean theory and
diffusion innovation theory. Benefits and limitation of the Blue Ocean and Diffusion innovation
strategy has been summarized in report. Background of Made.com and its business model which
is used to innovate its products can be evaluated in report. Business canvas model and historical
development of organization’s products by Blue Ocean Strategy has been summarized in the
brief study of report. It has been concluded application of diffusion innovation theory in the
future development can be understood.

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