Innovation Strategy and Design Thinking: An Amazon Case Study Report

Desklib provides past papers and solved assignments. This report analyzes Amazon's innovation strategy using design thinking.

Assessment 1 – Individual Report:
Innovation strategy
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Contents
Introduction................................................................................................................................3
Concepts of organisational environment, innovation trend, innovation strategy, innovation
capabilities, innovation value creation and capture...................................................................4
Creation of innovation strategy and why it is important............................................................6
Analysis of the impact of design thinking on Amazon..............................................................7
How the organisation’s innovation strategy best responds to the innovation trend...................9
How the organisation best ensures strategic alignment to address the innovation trend:........10
Conclusion................................................................................................................................11
References................................................................................................................................12
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Introduction
Design thinking is an innovative trend that focuses on the formulation of new strategies
according to the needs of the user. Nowadays business industries have become customer-
centric, and they have started producing goods and services according to the needs of the
customers. Amazon is an online shopping store established on the 5th of July 1994. Amazon is
the largest company in the world in terms of revenue. It allows its customer to purchase the
goods and services over the internet. In this report, an innovation strategy will be framed for
the company so that the needs of the customers can be fulfilled in an appropriate manner. An
innovation strategy will be framed on the innovation trend design thinking.
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Concepts of organisational environment, innovation trend, innovation
strategy, innovation capabilities, innovation value creation, and capture
The organizational environment consists of the external and internal environment. It is
dynamic in nature. The internal environment consists of numerous factors such as employees,
shareholders, the board of directors, managers and so on. Proper management of the internal
environment is essential; otherwise the operations of the business will not work efficiently.
The external environment comprises of political, legal, social and Technological factors.
These factors affect the business and balance in these factors is important for the smooth
running of the business (Blank, 2013). External and internal factors are responsible for
affecting the operations of the organisation, and the strategies are framed after the analysis of
external and internal factors.
The proper balance between external and internal factors is important as these factors affect
the smooth functioning of the business organisation. For identifying in the market
opportunities and minimising the proper threats balance between these factors is necessary.
Amazon does a proper analysis of internal and external factors in order to grab new
opportunities and minimize risks and threats.
Innovation trend is the identification and implementation of new ideas and methods. For
surviving in the cut-throat competition, it has become essential for each and every
organisation to identify the new trend and the needs of the customer, and according to that,
they should frame the strategies. Design thinking is a new innovation trend. It is a process
that focuses on identifying the needs of the users, creating an innovative solution to the
problems.
Design thinking consists of five phases which are as follows:
Stage 1 Empathize: In this first stage, Amazon should ascertain the needs of the customers.
It focuses on researching human needs instead of setting their own assumptions about the
requirements of the customer. In this stage, Amazon should conduct research and detect the
user's needs (Dalsgaard, 2014).
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Stage 2 Define: At this stage, Amazon should state the users’ needs and requirements after
collecting the data from the Empathize stage. This stage involves stating the needs of the
customers and the problems they are facing.
Stage 3 Ideate: At this stage, the designers of Amazon should generate ideas to solve the
challenges and issues. After the first and second stages in this stage designers find the ideas
and design various alternatives to solve the problems statement.
Stage 4 Prototype: This is the execution stage at this stage from the various alternatives best
solution to the problems chosen. At this stage, Amazon should frame solutions to solve the
problems of the customers for the expansion of the market.
Stage 5 Test: This is the final stage of the design thinking process. At this stage, the test of
the solution finds out at stage 4 is done. If the solution is not appropriate, then the designers
again go with stage 1. Amazon should find the best solution to the problem to target the
maximum customer.
Innovation strategy is a proposal for the expansion of the business. Innovation strategy is
formed to enhance the sale of the organisation to generate more revenues(Liedtka, 2014). It
aims at forming new ideas and methods to increase the sale and creating a solution to the
problems. Amazon should frame a good innovation strategy to increase the sale. It is a plan
which encourages the organisations to remove the weakness and earn profits.
Innovation capability is the capability to introduce new methods in policies and procedures.
Amazon is the world’s biggest innovative company it always introduces new ideas and plans
to deliver high quality of services to its customers.
Innovation helps out the business organisation to create the value of their products and
services. The aim of innovation is to search the new methods and procedures in order to
provide maximum satisfaction to its customers. Amazon is the leading business organisation,
and it always provides a high standard of goods and services. It brings innovation to its
products and services on a regular basis.
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Creation of innovation strategy and why it is important
Innovation strategy assists business organisations in designing the products according to the
requirement of the customer. Innovation strategies ensure strategic alignment within the
organisation. Strategic alignment is the procedure of linking the innovation strategy to the
goals and objectives of the business.
Importance of innovation strategy
Expansion of the business: A good innovation strategy helps out an organization in the
expansion of the business. Amazon can expand its business with the innovation strategy by
designing the products and services according to the needs of the customers. Nowadays
customers have become more aware of the quality of the products (Pisano, G.P., 2015). A
good innovative strategy will help out Amazon to expand its business all over the world and
targeting more customers.
Revenues: Through an innovative strategy, Amazon can earn more profits. The objective of
the innovation strategy is to frame new innovative products in order to attract more
customers. Amazon always introduces innovative products to attract more customers and this
the only reason behind the number one position of Amazon. If the innovation strategy is
effective, then more customers will be attracted towards the products and that will result in a
generation of more profits.
High quality of goods and services: The innovation strategy always focuses on producing
high quality of goods and services. It always strives to maintain the quality for providing
maximum satisfaction to its customer (Turunen and Finne, 2014). Amazon always delivers
high quality of goods and services to its customer and allow them to give feedbacks in case
the product does not meet the expectations.
Creativity: the aim of the innovation strategy is to generate new ideas, and it improves the
creativity of the company. Innovation strategy is focused on exploring new ideas to bring
innovation in the current products and services of the company. Innovation strategy is
essential as it allows the business organisation to do research and add new designs in the
products. It helps the business to generate plenty of profits.
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Analysis of the impact of design thinking on Amazon
Design thinking focuses on improving the delivery of goods and services. Amazon is the
largest online shopping store in the world. There are 5 stages of design thinking procedures.
It is an innovative trend that relies on the production of goods and services according to the
needs of the customers (Žižlavský, 2013). It is a procedure that provides a solution-based
approach to solve the problems. It is a solution based approach that aims at resolving the
issues of the customers. According to this innovation trend, the requirements of the customer
should be fulfilled in an appropriate manner.
Swot analysis
A swot analysis allows the organization to identify new opportunities and threats prevailing
in the market (Liedtka, 2014). It helps out the organisations to do the analysis of the
prevailing situations of the market and make appropriate strategies in order to get a
competitive advantage.
Strength: Weakness:
Strength is the inherent capability of a
company that it can use to gain a
competitive advantage over other firms.
Amazon by the innovation trend design
thinking is gaining them an advantage over
the other forms and generating plenty of
profits. Strength is the ability of the
company through which it earns more
profits.
Weakness is the inherent disability of a
company. Every company should try to
overcome weaknesses so that other
companies gain the advantage. Design
thinking is not a weakness for the Amazon as
a company is using this trend to provide
maximum satisfaction to its customer.
Opportunities: Threat:
This innovation trend is an opportunity for
the company as Amazon rely on providing
the services in accordance with the
requirements of the customer. Through this
innovation trend, there are multiple
The threat is danger prevailing in the market
such as new sellers, bargaining power of
suppliers, bargaining power of customers and
so on. By doing research on the market
conditions, Amazon can do reduce or
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opportunities available in the market.
Opportunity is a benefit for a company that a
company can grab by proper strategic
planning.
minimise the threat. Design thinking trend is
not a threat to the company as the main focus
of the company is only to provide a high
quality of goods and services so that the
customer can experience better services.
Business model canvas
Key Partners
 Manufacturer
s
 Publishers
 Sellers
 Retailers
Key Activities
 Merchandisin
g
 Production of
digital content
Value
Proposition
 Brand
recognition
 Competitiv
e pricing
 High
quality of
goods and
services
Customer
Relationships
 The high
degree of
services
 A higher
level of
satisfaction
Customer
Segments
 The
applicatio
n is very
easy to
use; hence
every
segment
of the
customer
is
targeted.
Key Resources
 Warehouses
 Technological
infrastructure
Channels
 Mobile
application
 Emails
Cost Structure
 High investment in new technologies
 Investment in environmentally friendly
equipment
Revenue Streams
 Online payment
 Cash on delivery
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Recommendations for organisation innovation strategy to respond to
innovation
How the organisation’s innovation strategy best responds to the innovation trend
 Amazon should do research on the needs and preferences of the customer and then
organise its innovation activities. innovation activities include designing new products
and services in such a manner so that customers of every segment can be targeted
(Blank, 2013).
 Amazon should use high quality of technologies and equipment for delivering better
services to the customers (Pisano, 2015). Now each and every company is using high
quality of services hence for competing with them the application of high
technologies is important.
How the organisation best ensures strategic alignment to address the innovation
trend:
Through the following approach an organisation can best ensure strategic alignment to
address the innovation trend:
 Ask questions: For ensuring strategic alignment, an organisation needs to frame
questions in order to find whether any improvement on the innovation strategy is
needed or not. By asking the questions from the customers and shareholders that are
they facing any challenge in using the innovative products and services (Dalsgaard,
2014).
 Pose innovation challenges based on strategic needs: after framing the question, the
next step would be the detection of challenges. For example: whether the innovation
trend is delivering its brand value or not.
 Evaluation: After identification of the challenges the next step would be the
evaluation of how these challenges can be minimised to ensure strategic alignment. It
is the last step, and through this approach, an organisation can easily ensure strategic
alignment to address the innovation trend.
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What innovative initiatives should it pursue?
 Amazon should do research on the perception of the customer about the Amazon. By
collecting the data from the customers, Amazon can ensure whether their innovation
strategy is creating value from the innovation or not.
How should the organisation ensure that it creates and captures value from the
innovation?
 By building, an innovative culture Amazon can develop innovation capability.
Innovation capability is the capability of an organisation to design or produce
exquisite products and services. Amazon should focus on developing an innovative
culture so that employees working out in the Amazon will always try to find new
ideas for improving the services.
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Conclusion
It has been concluded from the report that innovation is essential for an organisation for
surviving in the long run. Amazon is the online shopping store, and it is the most profitable
business organisation in the world. The report is prepared for Amazon by considering the
new innovation trend design thinking. design thinking emphasizes on conducting research on
the needs and requirement of the customers. It focuses on resolving the challenges discovered
in the research. Innovation strategy is essential for every organisation as it assists the
organisation to develop new ideas and bring innovation in the products and services. In this
report, the recommendation has been given how Amazon can ensure strategic alignment to
address the innovation trend.
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References
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design, 8(1).
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 Liedtka, J., 2014. Innovative ways companies are using design thinking. Strategy &
Leadership, 42(2), pp.40-45.
 Pisano, G.P., 2015. You need an innovation strategy. Harvard Business
Review, 93(6), pp.44-54.
 Turunen, T. and Finne, M., 2014. The organisational environment’s impact on the
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