Importance of Innovation and Commercialization

This document discusses the importance of innovation and commercialization in organizations and how it can shape the success and growth of a business. It explores the 4 P's of innovation and the use of innovation funnel in the context of Burberry. It also highlights the developments in frugal innovation and its application in an organizational context.

Innovation and
Commercialization

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Importance of innovation to an organization in comparison with invention...............................3
Explain how
organizational vision,
leadership, culture and
teamwork can shape
innovation and commercialization..............................................................................................4
P3 Burberry's 4Ps of innovation and the use of innovation funnel with respect to innovative
ideas ............................................................................................................................................6
Developments in frugal innovation and how it can be used in organizational context...............9
The
importance of commercial funnel and the
application of new product
development
(NPD) processing for
commercialization of
innovation.................................................................................................................................10
Innovation business case for an organization including ways to access funding......................12
Tools used by an organization to develop, retain protect intellectual property rights...............13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Innovation is the most important thing for a business if it wishes to succeed and grow in
the future(Prajogo, 2016). It refers to the creation of more effective products, services and ideas
in order to introduce something new into the market and it also contributes heavily towards the
success of the business. Burberry is a British fashion luxury company headquartered in London,
England that manufactures and sells clothes, fashion accessories. Sunglasses and cosmetics. The
company was established in the year 1856 by Thomas Burberry and has 498 stores in 51
countries. It also provides employment to 9,752 people worldwide and with an annual sales of
more than $3 billion, the luxury fashion company is also ranked as 73rd best global brand of all
time along with its competitors like Gucci, Louis Vitton and Prada. The current study will
highlight the importance of innovation to the organizations, 4 P'S of innovation and the process
to develop an innovative product(Ahram and et.al., 2017).
MAIN BODY
Importance of innovation to an organization in comparison with invention
Innovation:- It is way to translate any new idea on invention in form product and services that
organisation can offer to its respective customers(Burget, Bardone and Pedaste, 2017).
Invention:- It is generation of new idea or thought that previously one have never thought of and
that can be used further in innovating some new product, services or process for the
organization(Cowen and Shenton, 2017).
In this dynamic business environment, it is critical for every business to innovate
continuously or else the company will fail to survive in this high volatile competitive market.
Burberry company has always been a flag bearer of innovation and it has helped in creating a
brand image of the organization. Importance of innovation is:
 Competitive advantage: The main importance of innovation is that it helps an
organization in achieving competitive edge over other players in the market. It is
imperative for a business to identify the consumer needs and wants and accordingly
innovate the old product or service by adding some new features to it. Burberry company
uses its skills to manufacture innovative clothes and introduce new fashion into the
market. It has further helped the company in achieving competitive advantage as the
customers wish to adopt the latest trends every single time (Brem, Maier and
Wimschneider, 2016).

 Solving complex problems: The major motive behind innovating a product or service is
to solve complex problems that consumers are facing. It basically involves the process of
identifying consumer problems, developing an idea and then innovating the product or
service accordingly. Solving complex problems further increases the level of trust
between both consumers and producers. Also, innovation helps in improving the standard
of living of people which helps in increasing the profitability of the
organization(Gopalakrishnan and et.al., 2015).
 The Latest technology: Innovation helps in technological advancement which further
reduces the cost of the company and increases the overall profitability of the
organization. Burberry uses the latest technology like artificial intelligence in order to
forecast the demand and to improve the quality of products and services much faster.
Also, Burberry has spread its operations online that has helped the organization in
attracting large customer base and the company provides unique discounts and offers in
order to increase its sales and profitability (Ahram and et.al., 2017).
On the other hand, invention is concerned with the introduction of a new product line or service
by performing research and development. Invention involves scientific experiments and a lot of
market research as well. It is different from innovation because:
 Unexpected results: Unlike innovation, inventions have an unexpected result which
means that the newly launched product or service can become an instant success or a
gradual failure as well. Inventions are more risky as compared to innovation therefore it
is imperative for an organization to perform market research and identify consumer needs
and wants before developing and launching the product or service. Burberry group
introduced its new line of products like sunglasses and cosmetics by performing adequate
market research in order to ensure the viability of the products(Handoko and et.al., 2017).
 Building block for innovation: Invention has a wider scope as compared to innovation
because it is the first step in the process of developing a product or service. Invention of a
product involves identifying the problem, developing and idea then converting that idea
into an opportunity and finally manufacturing a product or service accordingly. Also,
invention requires huge scientific knowledge, funds and time unlike innovation. Burberry
company innovated the fashion and clothing lines according to the latest trends but it was
invented a long ago.

Explain how organizational vision, leadership, culture and teamwork can shape innovation and
commercialization.
Innovation can be described as a value addition to a product or service by either adding some
new features to it or by making some modifications in the earlier product or service.
Commercialization is concerned with the introduction of new product or service and
making it available in the market in order to earn profits. Several factors that shape innovation in
the organization are:
 Vision: The organizational vision is concerned with the future expectations a business
and the way in which it wishes to operate in order to maximize its profits through
consumer satisfaction. Burberry company's vision involves maintaining the integrity and
image of the brand by providing innovative products that adapt with the current market
needs and the changing taste of consumers. The clear vision of the Burberry group has
helped the organization in developing innovative products and services incessantly which
has helped in establishing a brand image of the company in the fashion industry(Kazadi,
Lievens and Mahr, 2016).
 Leadership: The organizational leader plays a huge role in generating an environment of
innovation and creativity within the company. It is imperative for a business to adopt
innovative leadership style that involves motivating and guiding employees regarding
developing a new idea, product or service that can be commercialized efficiently and
effectively. The commercialization can further help in profit maximization of the
business. Also, the leaders must communicate with the team members regarding the
financial viability of an idea, opportunities and threats associated with it and the target
customers that will get attracted by innovation. Burberry group's Chairman Sir John
Peace incubates an environment of innovation and creativity within the
organization(Prajogo, 2016).
 Culture: It is essential to have a culture of innovation and commercialization within the
organization and it is the duty of the top-level management to motivate and guide the
employees regarding the importance of innovation and how it contributes towards the
success and profitability of the company. Also, it is imperative to educate the employees
about the rapid changes in business environment and the way it can affect the growth
prospect of the business. Burberry group encourages its employees to provide them with

creative idea that creates value for the business and also motivate them by giving rewards
and incentives both monetary and non-monetary which also improves the productivity of
employees to perform their tasks.
 Teamwork: Innovation takes teamwork because it involves coordination and
collaboration between all the employees in the organization as every employee has
different skills and knowledge that can be used effectively in order to achieve the
innovation. Different skills are required at different levels of innovation process hence
teamwork is very important in order to successfully implement the innovation
process(Preenen amd et.al., 2017).
Sources of innovation are:
 Industry and Market structure change: Every business operates in a dynamic
environment therefore it is important for top-level management to keep a continuous
check on the daily trends and happenings in the industry. It is also important to analyse
the reasons behind the change, customer needs and wants and other problems faced by
them. Moreover, Burberry group analyse the entry of new players into the market,
products offered by them and accordingly the company innovates its products and
services (Cuervo-Cazurra, Nieto. and Rodríguez, 2018).
 New Knowledge: Innovation has also occurred due to increasing knowledge about the
use of technology, its benefits and ease of use. All the fashion brands have started
adopting the use of latest and modern technology in their business so that they can
maximize their sales and profitability. Use of technology also provides cost advantages to
the company. Burberry group innovated their distribution channel and started selling their
goods and services online which not only helped in increasing the sales but also helped
the business in reducing their costs and maximizing the profitability.
Burberry's 4Ps of innovation and the use of innovation funnel with respect to innovative ideas
Figure:- 1

Burberry's 4 P's of innovation are as follows:-
 Paradigm:- Paradigm is a type of innovation that is related to mental model which an
organisation uses to shape what there business is about in order to have better position in
the market by producing better products. Burberry works to return to their old paradigms
by using cost-containing policies as previously they were focusing on geographic
expansion of there products(Lynd And et.al., 2017). However, In market, sales and
promotions are raising as threat for the business because of which Burberry is working to
have its focus on product value with organic growth of the organisation.
 Product:- Product innovation is the improvement in quality of product or coming with
new ideas that differentiate products of Burberry from other competitors. Burberry have
innovated its products with the use of durable new fabrics and company never hesitate to
use new technology and as a result company is planning to have artificial intelligence in
its business with respect to operations and product development. However, Company is
working to have diverse products and for the same they also come up with new style of
products with quality material. They come with innovative strategy with respect to
Illustration 1: 4 P's of innovation

product packaging and offers new product line in order to satisfy the customers needs
(Kazadi, Lievens and Mahr, 2016).
 Position:- Burberry works for change in context in which its product and services were
introduced in market. Company is making its position in market with the use of
traditional media that is television and radio(Baregheh, Rowley and Hemsworth, 2016).
However, the use of digital technology have increased and it is therefore important for
the business to implement the same have. They are innovating in there promotion
activities as they are working to undergo digital marketing techniques so that online
traffic is overcome with respect to its websites. These innovations are helping the
organisation to have position in market.
 Process:- As the products offered by Burberry are available at its retail stores, Burberry
works to produce these products with the online delivery process. Burberry is also
working to collect feedback of the customers so that customers needs are fulfilled in more
effective manner. However, many customers are writing bad reviews that affect other
customers who are purchasing the product with online sources.
Application of Innovation funnel in Burberry:-
Figure:- 2
Illustratio
n 2: Innovation funnel

Innovation funnel is a mechanism that is used by the organisation in order to have
constant steam of innovative ideas in order to have organisational growth. The steps of this
innovation funnel is as following:-
 Idea development:- First of all idea is developed in Burberry related to product
development or taking new technology in business. Information is then collected with
respected to the idea. In case of Burberry, as they generated idea to have AI in the
organisation they collected different information from the market(Prime, 2017).
 Concept development:- After the development of idea it is discovered and scope of the
idea is determined. As AI is having huge scope in market, Burberry have decided to take
it in there business process(Kowalski and et.al., 2016).
 Concept launch:- For implementing this idea in business, Burberry has to build a
business case so that they are aware about the resources that will be needed and also
about the development plan. Further, testing and validation will take place, so that the
effectiveness of this innovation is checked out with respect to the market. At the end the
innovative idea is launched to market.
Developments in frugal innovation and how it can be used in organizational context.
Frugal innovation is concerned with the process of reducing the cost of goods and
services by using innovation techniques that can help in removal of additional and non-essential
features from products and services. Frugal innovation is generally done by companies to sell
their goods and services in developing countries. Developments in frugal innovation are as
follows:
 Identification of Frugal innovation: The first step in the development phase of frugal
innovation is concerned with identifying the areas in a product or service where this
technique can be applied. It is important for a company to identify the features, qualities
or services that do not add value to the product but adds to the cost of the company.
 Deduction of problems: Once the frugal innovation is identified then it is important to
deduct the areas that are creating additional costs but are not providing any value to the
customers (Durmusoglu, Hirunyawipada and McNally, 2017).
 Deduction of solution patterns: Deduction of solution patterns is concerned with
identifying potential solutions to replace the removed area with something more valuable.
Deductions are also important as it helps in achieving cost advantages to the organization.

 Deduction of pattern system: Deduction of pattern system is the last step in the entire
development frugal innovation process as it is concerned with identifying suitable
solutions to introduce the innovated product in the market(Salerno and et.al., 2015)
Role of Frugal innovation in organizational context: With the increasing use of internet and
digital media, new players are entering into the market thus affecting the customer base of big
companies therefore it is imperative for these organizations to make use of frugal innovation in
order to make their products and services more affordable. Frugal innovation plays a significant
role like:
 Affordability: It has become imperative for the companies to provide goods and services
at an affordable rate in order to gain huge market share. Although, Burberry is a luxury
brand and the goods are highly priced because the company spend a lot of money in
research and development. The biggest challenge for Burberry group was to use
innovation to drive prices down so that the economically disadvantaged people can also
afford it. Therefore, the Burberry group adopted the policy of frugal innovation in order
to reduce the prices of its products and services by cutting cost on some other non-core
features and services (Salerno and et.al., 2015).
 Technology platforms: The new technology platforms are increasing the scope for
frugal innovation by reducing the operating cost of manufacturing products and services.
Burberry group also adopted frugal innovation in order to enhance the customer
experience and also to maximize their profits.
The importance of commercial funnel and the application of new product development (NPD)
processing for commercialization of innovation.
The commercial funnel is also known as a purchase funnel that focuses on the journey of a
consumer towards the purchase of goods and services. There are five steps that leads a consumer
towards the purchase of products or services that include awareness, opinion, consideration,
preference and purchase. The importance of commercial funnel is as follows:
 Relating to customers: The commercial funnel helps an organization in knowing their
customers better. It also helps in changing the way an organization sells its products and
services. Burberry group identifies the customer needs and wants and then develop a
product or service because it helps the company in maximizing their profits.

 Competitive advantage: The commercial funnel provides direction to the business and it
increases their focus on the areas where the company needs to change its operations.
Also, it guides the business and provides them idea about the consumer's changing
desires. Adequate use of commercial funnel helps an organization in establishing their
goodwill in the market and also provides them competitive advantage(Arora, 2018).
 Increased sales: The commercial funnel helps the business in picking up a marketing
strategy which is beneficial for the organization as it attracts more customers and further
increases the sales of the company.
The new product development application includes several stages like:
 New product strategy: The first step in the new product development stage is concerned
with developing the business strategy regarding the innovation of products or services.
Burberry company developed a strategy before launching its cosmetics line, it included
details about the manufacturing process, target customers and the pricing of products.
 Idea generation: The next step involves development of an idea regarding what product
or service must be manufactured by the organization that can help them in increasing the
sales and maximizing the profits. The ideas can be generated through both internal and
external sources(Salerno and et.al., 2015). Burberry group developed the idea with the
help of internal sources like suggestions from employees and also by performing research
& development activities.
 Idea screening: Idea screening is concerned with filtering all the ideas and finally
selecting a suitable idea by analysing all the important factors. The company often selects
the idea that provides great value to the customers and also increases the profit of the
business (Preenen and et.al., 2017).
 Concept testing: Concept testing involves testing of a particular product or service
towards its target customers and reviewing the feedback received. Burberry group shared
the concept about their cosmetic brand with its target customer and the company received
a positive feedback therefore it developed into an actual product.
 Business analysis: Business analysis is the practical concept of the new product
development process as it involves analysing the sales, cost and profit of the product to
check whether it satisfies company's objectives. The Burberry company priced the

products at a higher end as it involved a lot of research and development therefore the
overall cost is comparatively higher.
 Product development stage: This stage is also called the action stage as it is concerned
with the development of an actual product or service(Handoko and et.al., 2017). Once the
product gets past the testing stage then it goes into production stage. With proper
allocation of raw materials and research and development the product is manufactured
effectively and efficiently. Moreover, the Burberry PLC company also performed various
tests to check whether the products and services are safe to use.
 Test marketing: The last stage before commercialization in the new product
development process is test marketing. In this process, a company tests its marketing
strategies and other processes in real life solutions. Thus, it helps the marketer in getting
an advanced experience about the market before actually entering at a cost.
 Commercialization: Commercialization is the last step in the entire process of new
product development as it involves introducing a product or service in the market.
Although there are certain factors that must be analysed before commercializing a
product like:
Introduction timing: The timing for launching the product must be appropriate that means that
there must be no external factors to hamper the sales of new product. Burberry company waited
for an year regarding the launch of the product in UK because the economy was down during
that period (Handoko and et.al., 2017).
Introduction place: Introduction place is concerned with the place for launching a product or
service. The company must identify the suitable market for a product and then take necessary
decisions whether it must be launched in a single country or several countries.
Innovation business case for an organization including ways to access funding.
Burberry company launched its cosmetic line in the year 2010 after years of research and
development. The make up line by Burberry is made up of natural ingredients and does not cause
any harm to the human body(Handoko and et.al., 2017). The creative director of Burberry,
Christopher stated that the main reason behind the launch of the cosmetic products was that the
make-up available in the market was of very poor quality and it was an important reason behind
the failure of their Lakme Fashion Week. The company avoids the use of Paraben and
oxybenzone in their make up products as they are very harmful for the body and skin. The

organization offers a wide range of cosmetic and make up products from perfume to bronzer, the
huge variety and good quality of products and services has helped in increasing the sales and
maximized the overall profits of the business. Estimated total expenses for the company are:
Expenses Cost
Manufacturing expenses $500
Raw material expenses $600
Labour expenses $850
Management expenses $450
Marketing expenses $600
Total $3000
Available source for funding:
 Equity: Equity financing is concerned with financing from a third party in return for a
share of business. Equity funding can be done by angel investors, friends and family.
Although, there is a problem that equity funding leads to lose of control by the business.
 Crowdfunding: Crowdfunding is the practice of funding money from large number of
people. It helps the Entrepreneurs in gaining market validation and avoid giving up
equity. Burberry PLC obtains funds through crowdfunding as it helps the company in
raising huge amount of funds from the market because it enjoys a good brand image in
the market (Ciabuschi, Dellestrand and Martín, 2015).
 Debt: Debt is concerned with obtaining money from third party on a promise to be repaid
on a maturity date with a fixed amount of interest. Burberry company also financed its
cosmetic brand from debt as the company was able to retain the equity with an option of
flexible repayments.
Tools used by an organization to develop, retain protect intellectual property rights.
There are various tools and legal sources to protect and preserve the intellectual property rights
of an organization that include:

 Patents: Patents are generally used to protect and retain inventions. It gives the owner a
right to restrict others from making, using and selling products and services for a limited
period (Prime, 2017).
 Trademarks: A trademark is a legal word or logo that distinguishes a product from the
rest of the companies. Burberry's check pattern which dates back to the 1920s is a
registered trademark product in red, camel, black and white checked patterns.
 Copyright: Copyright is an intellectual property right that is considered with providing
legal rights to the originators for a fixed number of years. Copyright is generally
associated with a creative piece of work like art, music or film.
In the view point of Gopalakrishnan and et.al., (2015) The IPR have their own set of advantages
and disadvantages but the most important benefit is that it provides competitive edge to an
organization and help them in increasing their market share which further leads to profit
maximization. Also, it provides motivation to other entrepreneurs to develop innovative products
and services as it will help them to become market leaders as well. It is a win-win situation for
both consumers and producers as by continuous innovation the standard of living of people will
improve and the company's revenue will also increase.

CONCLUSION
From the above study, it can be concluded that innovation is very important for a
business, without innovation a company will not be able to survive and grow in the near future.
Innovation not only helps a company in achieving competitive advantage but also plays an
incessant role in the success and profitability of an organization. Burberry PLC has continuously
innovated its products and services which has helped them in establishing their brand image. The
report also focused on the importance of commercial funnel and how it can be used as an
application in the new product development. Furthermore, the new product development process
is very essential for Burberry and every other company to follow in order to avoid uncertainties.
Lastly, it also included a list of various intellectual property right tools like Patents, trademarks
and copyrights that help in protecting the innovative ideas and products and services. Thus, it can
be said that IPR is very important as it promotes innovation and creativity within the inudstry.

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