Managing Innovation

This report explores the concept of managing innovation and focuses on the application of disruptive innovation theory. It discusses the benefits and limitations of the theory and examines its application in the historical development of Spotify. The report provides insights into how disruptive innovation can drive growth and success in the industry.

Managing Innovation

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Disruptive Innovation Theory................................................................................................3
Application of the Disruptive Innovation Theory in the historical development context......7
Application of the Disruptive Innovation Theory in the future development context.........10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Innovation is defined as a process of implementation of a new or significantly changes
goods and processes. In addition to this, it is a new idea, plan or a method that an organisation
adopt in order to bring some innovation in market that customers are looking for (Biemans,
2018). It is basically an idea to add value for customer and satisfy them with innovative product
as well as services. In context to innovation management, it is the process which involve
developing awareness of new idea within a company & in external environment with a view to
enhance efficiency of innovative goods and services. For the present report, Spotify is taken into
consideration. It is a Swedish audio streaming & media service provider that was established in
year 2008 and its head office is located in Stockholm. The main motive of the company is to
offer unique as well as best platform to its user in order to stream their interest of music, audio
media, podcasts and so on. The report will cover disruptive innovation theory along with its
benefits & limitations as well. In addition to this, respective theory is applied for historical
development & future development in relation to Spotify.
MAIN BODY
Disruptive Innovation Theory
Disruptive Innovation is defined as a procedure by which goods or service initially
takes roots within simple applications that is less expensive as well as more accessible. In
addition to this, it is basically a way of bringing product at marketplace and enhance its presence.
It shows the concern for existing businesses and companies in market that is caused because if
new entrants at marketplace In the present business environment, the way of doing business is
change and shift towards bringing creativity and innovation that has arisen number of start-ups
which emerges or enter in market with an objective to change the way offering of industry by
providing substitute of existing product or by considering an unattended requirement of social
groups.
Hence, disruptive innovation theory revolves with the concept of how a business entity
either existing or new entrants can develop an alliance in order to understand the present
opportunities as well as threats for gaining out potential & how it become more adding value to
customer requirements and objectives attainment of a company (Mousavi, Bossink and van Vliet,
2018). This theory is basically a procedure of initially presenting goods and services at minimum

price that is more accessible for target customers and other customers as well. It is analysed that
once a new product or service is gained position at marketplace then it moves up gradually and
beat with its competitors in an effective manner.
Following the procedure of disruptive innovation theory, it involve four key concepts that
are mainly used by every individual for a real application of theory in organisational context. The
steps or prices associated is discussed below:
 In context to the present business environment, innovation is important and beneficial as
it assist an organisation to grab opportunities and enhance its performance level.
Therefore, an organisation innovate, develop as well as make improvements in its goods
or service in order to meet with the customer and market demand and to gain higher
profits as well (Kelliher, Kearney and Harrington, 2018). It is stated that sometimes
business entities neglect the requirements and preferences of downmarket customers.
 Most of the new business is commonly start-ups that focuses on social groups &
requirements by analysing it and considering its target market segment. In addition to
this, they gain traction by considering requirements and provided new product or service
at lower price in comparison of other goods and service presently offering at marketplace.
 Business entities that are already existing & being emphasised on earing high profitable
customer base level ignore new entrants & did not undertake them as rivals.
 Then, the company that adopt disruptive innovation theory effectively moves upwards
within their respective sector by providing a suitable and better solutions to social groups
and other segments that are high profitable customers for company.
 Once the new product or service is making its presence and attracted people then a new
entrant consider as disruptor that causes disruption for incumbents & becoming rival for
longer time that directly leads to change in attitude and competencies of company by
innovation & attaining competitive advantage at marketplace.
In relation to the Disruptive innovation theory, when applied is not basically an attempt
to bring new products or service at marketplace. On the other hand, it is used for disruption
& redefining mechanical phenomenon of company & industry by developing offerings that is
lower in context to the present business in market (Mandal, 2019). In addition to this, such
theory assist in offering lower price in order to become more accessible by customers that
has direct impact on profits. It is determined that the respective theory also consist of four

key elements which are addresses as an appropriate and relevant tips for bringing innovation,
which are as follows:
 Not all innovation are Disruption- As per the professionals, the precise meaning of
disruptive is analysing and interpreting the theory in a different wat & in context to which
anything that is new as well as successful will considered as disruption. In context to an
industrial and business, disruptive innovation theory is valid when the incumbent
organisation concentrates its emphasis on a specific segment in order to please them &
misjudged the requirements, desires and preferences of different sector of social groups.
It leads to development of an opportunity for start-ups and new small business.
 Disruption can be low ended or new market- It is analysed that such theory is divided
into two aspects that are used by new company to enter and develop their presence as
well. The first aspect is low end disruption and herein a business entity is enter in market
at bottom stage and provide goods as well as services to customer which satisfy their
requirements an needs (Thornblad, 2018). In addition to this, it involve lower profits and
working towards social platforms which express their concern towards customer. The
second aspect is new market disruption, wherein an organisation emphasis on to compete
against non-consumption considering low profit margin. The products and services that
are offered is enough to make customers happy and satisfied at lowest price. It is stated
that both the disruptions forms are different from each other as one focuses on over
served customers and other focuses on under served customers.
 Disruption innovation is process, instead of a product or service- This theory is
defined as a process and is valid in entering and execution stage of a fresh business entity
at marketplace instead of a product as well as service. In addition to this, the innovation
factors is more focused and concerned on the procedure of entering as well as capturing
the market in order to be innovative & creative instead of developing an entirely new
products and offerings.
 Chose your battles wisely- It is analysed that all the mentioned new entrants are not
disruptive as the incumbents are require to be attentive and focusing for emerging and
trendy business of different way. Therefore, the existing business entity have to be
concerned for knowing and understanding the impact of creative idea of being entering at
marketplace & required to make wise decision by gaining insight about the actual

influence of disruptions take place or if they have more better opportunities at
marketplace that aid in gaining more benefits within the respective industry.
BENEFITS OF DISRUPTIVE INNOVATION THEORY:
 One of the major advantage of disruptive innovation theory is it deliver and effective
opportunities to industry that help in gaining growth and success at marketplace. In
addition to this, industrial improvements and developments will be highly impactful for
people as their requirements are being considered and fulfilled (Bushuyev, 2019).
Moreover, the benefit will be developed for particular sector so the rivals in influence to
have high growth and opportunity in order to serve customers and enhance performance.
 Another benefit is, disruption innovation theory is considered as it give long-term vision
to the new start-ups and new entrants. In addition to this, the far sightedness allow
practitioners and users in order to become competitive enough to fight with other large
corporates who is bigger in size, nature scope & other aspects as well.
LIMITATIONS OF DISRUPTIVE INNOVATION THEORY:
 One of the disadvantage of such theory is it needs a unique procedure to be created in
order to develop effective strategy. In addition to this, it is the process developed &
determined gave to be majorly emphasised on opportunities & issues of social groups that
are unanticipated & can effectively leads the manner of company to gain success as well
as development.
 The phenomenon of such theory is particularly focused on needs, ideas and development
of goods and services by considering requirements of population. The weakness consist
within disruptive innovation theory is the outcome which is profitability will be provided
of practices to innovative entrants in future for that business owners will be require high
amount of resources, money, patience, motivation and many more
 Another disadvantage is lack of financial support, the procedure of disruption innovative
theory is futuristic and slow as its nature is characterised. Therefore, this concepts
objective is determined in the starting that will be satisfied steadily as well as slowly
(Jackson, 2019). It is stated that finance providers and houses by which new entrants
borrow money for operations are impatient & expect that returns will be gain rapidly of
their investment. It show that disruptive innovation theory involve long-term returns that
is consider as a disadvantage for start-ups and small businesses.

Application of the Disruptive Innovation Theory in the historical development context
OVERVIEW OF THE COMPANY:
Spotify is a Swedish brand that provides a transformed platform for music lovers through
changing the concept of listening music. The company was founded in year 2008 and has
developed an application for people in which they manage, discover & share more than 50
million music audio and tracks for free. In addition to this, it also provide a premium
membership for people who wishes to enjoy music of different forms & other related advantages
of premium membership. It is a leading brand within the industry in present in audio streaming
field. The company has more than 299 million subscribers and in this around 47% subscribers
belongs from different places globally.
VISION:
The vision statement of respective organisation is based on its objectives, the company is
aiming to offer a common platform to all people of all culture and societies in order to decline
borders & make them experience all the artistic work that empathize with another (Jackson,
2019).
MISSION:
The mission statement of respective organisation is related on transforming the aims and
goals into reality that direct the company to achieve all the objectives while considering broader
notions and perspectives.
BUSINESS CANVAS MODEL:
Key Partners:
 Record
Labels
 Rights
holders
 Self-
governing
artists
 third party
integration
 internet
Key Activities:
 Platform
maintenan
ce and
developm
ent
 online
web
 mobile
applicatio
n
Value
Proposition:
 free music
streaming
service
(with
advertise
ment)
 access at
any time
and at any
Customer
Relationships:
 streaming
on
demand
 micro
segmentati
on
 automatic
 improved
sound
Customer
Segments:
 free users
 people
who love
music
 advertisers
 developers
 students

and online
service
provider
 cloud
providers
 acquireme
nt
 Product
and
service
roadmap
 Managem
ent of
music
library
 content
acquisitio
n
 marketing
and
promotion
 legal
 contract
negotiatio
ns
place.
 Spotify
provides
accessibili
ty to more
than 30
million
songs
 personalis
ations
 Discover
weekly
playlist
 effective
advertise
ment and
promotion
platform
quality up
to a 380
kbps
bitrate
 online
 on
demand
 co-
creation
 fans
Key Resources:
 1500+
staff
members
 brand
 innovation
&
creativity
 contracts
 organisati
on culture
 big data
Channels:
 spotify.co
m
 web-app
 Desktop
app
 Applicatio
n store
 Google
Play
 Applicatio
n
available

 playlists
 long tail
music
catalog
 active
users
for
Microsoft
Windows
 IOS
 Android
 entertainm
ent
systems
 Television
 cars
 smart
watches &
other
platforms
Cost Structure:
 Royalties of number of artists
 Head offices
 Bandwidth
 Salaries or pay
 Licensing fees
 Intellectual rights
 Information technology Operations
 Product Roadmap
 Legal regulation fee
Revenue Streams:
 Spotify operates under freemium model
which is basic service provided by
brand at free of cost but to get extra
benefits there is subscription of
premium accounts.
HISTORICAL DEVELOPMENT OF SPOTIFY:
Spotify is a music application that providing common platforms to music lovers and
explorers so that they can enjoy music of all the culture around the world. It is analysed that
company make use of premium model of business wherein it provide full access to people of all
forms of music, songs, podcasts & other products of music industry (Gurca, 2020). In order to

enjoy more, premium is paid by users and subscribers wherein they listen music without any
breaks and advertisements.
In addition to this, disruptive innovation theory fits the development, purpose and
functioning of Spotify. If it is taking about the present time period, Spotify applications renders
all forms of music without any advertisement and breaks to premium membership. On the other
hand, if a person want to enjoy free music, then they have the accessibility but with less features
that is advertisement is played in between their songs. Disruptive innovation theory is valid as
first the organisation analyse the requirements of people that were unaddressed to enjoy free
music belong from all the cultures.
Moreover, Spotify created the application rendering a common platform to all here the
rivals such as Apple music is incumbent kept their emphasis on gaining higher profits from
market by only offering music via an application to subscribers. It is determined that the
company change the dynamics as it enter with the attractive concept that users have full
accessibility without occurring cost to them. Therefore, disruptive innovation theory is
developed and applied by brand for increasing its market and in the present it has capture more
than 92 markets globally. In the present time, Spotify is termed as world’s leading company
within the audio industry that have more than 30 million users all over the world.
Application of the Disruptive Innovation Theory in the future development context
Disruptive innovation theory is defined as the procedure that encompasses different stages
which enable business entities to reach on the high & adding value to enter in market, develop
their presence & uses market research method in order to engage with competition by offering
unique selling point (Havins, 2020). If it is talking about the future innovation and development
with the offering of respective organisation that enlarge areas from music to other audio
associated services.
In the present, market trends of audio industry is collecting their emphasis in new customer
segment which is book readers & other related shows by podcasts. In addition to this, it is an
episodic series of spoken words & digital audio for users that can be downloaded by the help of
internet and also listened by a person at any point of time and place as well. The higher
authorities of Spotify analyse the unsatisfied requirements of market segment of book readers as
well as others who wishes to discover aspects of other culture and prefer to listen new stories,
books, music & other entertaining materials such as Stand-up comedy.

These podcasts are easily available to users globally like music at free of cost and without
any subscriptions but it involve some breaks and advertisements while listening music. It is
analysed that people who have premium membership can enjoy their music without any breaks
and interruptions and also develop their content which will be uploaded on application. Hereon,
disruptive innovation theory is applied and respective organisation is the first music streaming
app that developed streaming podcasts on their platforms. Moreover, the market segment will be
attracted here is small in size & profitable with the help of effective marketing promotions which
in turn assist in developing market presence and increase its customer base level
Different content providers globally is being engaged in the business of podcasts, the
advantages is given to the overall industry and a new market segment is targeted in less time &
wishes to be entertained in less time period. Another advantage of podcasts service that is
proposed due to application is raise in number of subscribers. In the present, the customer
portfolio of Spotify is enhanced as people who love music, books, stories, stand up comedy &
other related things of entertainment are subscribing channels for enjoyment and to listen their
preferred content.
The Disruptive Innovation Theory also allow an organisation to increase their podcast
portfolio as in the present new podcasts of various news, discoveries and kids is being
developed. It is an opportunity for gaining growth and development with premium feature of
application (Znotka, Lindenmeier and Dietrich, 2019). In addition to this, it allow general public
to comment online by considering the guidelines and rules of the organisation. This plan will
bringing new content of music and entertainment for large number of users that impact positively
on the brand. Disruptive innovation theory enables a company to be unique in order to expand,
develop and to enhance customer base level.
CONCLUSION
From the above study, it has been concluded that bringing innovation at marketplace help
a business to sustain and attain higher growth as well as success in the industry. Disruptive
innovation theory were discussed in a proper manner and then applied to the historical as well as
futuristic ideas of the organisation in order to extract high benefits of it. This theory assist in
developing a new strategy to enter in market and establish market presence in an appropriate

manner. Moreover, disruptive innovation theory opens the door of innovation & development by
offering various expansion possibilities and growth expansion ways.

REFERENCES
Books and Journals
Biemans, W., 2018. Managing innovation within networks (Vol. 7). Routledge.
Mousavi, S., Bossink, B. and van Vliet, M., 2018. Dynamic capabilities and organizational
routines for managing innovation towards sustainability. Journal of Cleaner
Production, 203, pp.224-239.
Kelliher, F., Kearney, A. and Harrington, D., 2018. Managing innovation in the hospitality micro
firm: A framework for sensing, seizing and reconfiguring dynamic
capabilities. Hospitality & Society, 8(2), pp.159-178.
Mandal, P.C., 2019. Managing and Applying Innovation in New Product Development-
Strategies and Initiatives: Managing and Applying Innovation in NPD. International
Journal of R&D Innovation Strategy (IJRDIS), 1(2), pp.21-30.
Thornblad, D., 2018. Managing Innovation without Managers: Valve Corp. Journal of Case
Studies, 36(2).
Bushuyev, S., and et. al., 2019, December. Complementary Neural Networks for Managing
Innovation Projects. In 2019 IEEE International Conference on Advanced Trends in
Information Theory (ATIT) (pp. 393-396). IEEE.
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.
Gurca, A.,and et. al., 2020. Managing the challenges of business-to-business open innovation in
complex projects: A multi-stage process model. Industrial Marketing Management.
Havins, S.R., 2020. Decision Support Systems for Managing Innovation Through Project
Selection in Public Sector R&D Environments. IEEE Engineering Management Review.
Znotka, M., Brandt, F., Lindenmeier, J. and Dietrich, M., 2019. ‘What the public values...’The
stakeholder-oriented business model approach as a tool for planning and managing
innovation in public and nonprofit management–A qualitative inquiry into public value
creation in German healthcare. ZögU Zeitschrift für öffentliche und
gemeinwirtschaftliche Unternehmen, 42(1-2), pp.13-33.