Assessment 1: Innovation Strategy in Sustainable Business Development

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MGMT20132: Innovation and Sustainable Business Development
Assessment 1: Individual report: innovation strategy
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Executive summary
Design thinking is the cognitive, practical, and strategic process by which the concepts of design
are developed including the development of new products and services. In this report of
innovation strategy, the design thinking innovation movement's impact on Amazon company has
been described and the relationship among the organizational environment and innovation
capabilities, innovation strategies and trends have also been explained. The recommendation has
been made with regard to the strategic alignment for addressing the innovation trends.
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Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Introduction about Amazon.............................................................................................................6
Introduction of Design Thinking.....................................................................................................6
Definition of various concepts and their relationships....................................................................8
Description with regard to how the creation of an innovation strategy ensures strategic alignment
within organizations and why it is important................................................................................10
Analyses of the impact of design thinking on Amazon; SWOT analysis and use of the business
model for analyzing the impact, opportunities, and threats to Amazon........................................11
Recommend how the organization’s innovation strategy best responds to the innovation trend by
answering the following questions................................................................................................14
Recommendations how the organization best ensures strategic alignment to address the
innovation trend.............................................................................................................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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Introduction
Amazon is a multinational company in the field of technology and it’s headquartered is in
Seattle, Washington. The focus of the company is on artificial intelligence, electronic commerce,
and cloud computing. Measuring in terms of revenue or market capitalization Amazon stands as
one of the largest in the platform of cloud-computing and the marketplace of electronic
commerce. This is the innovation strategy report in which the impact of the design thinking on
Amazon has been described in detail. The brief introduction about the company and the design
thinking has been made. The concepts of organizational environment, innovation strategy,
innovation trend, innovation value capture and creation, and innovation capabilities have been
explained in detail along with the relationships among them.
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Impact of design thinking on Amazon
Design thinking movement has affected Amazon to a great extent as this methodology is used by
the company for solving the complex problems and finding desirable solutions. It helps the
company in understanding its customers, their needs and desires and tries to provide them with
innovative products and services due to which the satisfaction level of customers get increased
resulting in enhancing the customer's loyalty. This movement helped the company in
understanding and acting on the rapid changes taking place in the external environment. The
impacts of design thinking can be understood by the measurable framework that has been built
by design thinking. Many solutions are provided which are groundbreaking in an innovative and
disruptive way. It allows the managers of the company to think in an entirely new way and
collection of hands-on methods are offered which helps in applying the new mindset
(Valentine.et.al, 2017).
The feasibility of the business, technology viability and needs of users are aimed at by Amazon
through the design thinking movement. The innovation capabilities of the company also get
improved as this help in getting outside the box and exploring the new and innovative ideas. It
supports the agility and allows the team to move whenever needed at the different phases. There
is a reduction in the risks and the failure costs to Amazon. Company’s adaptability has been
increased and local capabilities successful implementation after their creation has also been
enhanced through this (Ulibarri.et.al, 2014).
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Introduction about Amazon
In the whole world, Amazon is considered as one of the largest retailers of online and provider of
cloud services. Originally the company was the bookseller, but it expanded its business and is
now engaged in selling audiobook streaming or download, video games, apparels, MP3
streaming or downloads, software, jewelry, furniture, electronics, food, and toys. In cloud
infrastructure services it is considered as the largest provider which provides services through
Amazon Web services subsidiary. Simple storage services and elastic compute cloud of Amazon
are the company’s backbone in growing and a large collection of services of Web. Around the
world, in many locations, the company has centers of software development, individual websites,
customer service, and fulfillment centers.
Introduction of Design Thinking
Design thinking is the process which is iterative which focuses on understanding the users,
redefining the problems, and challenge assumptions with an attempt of identifying the alternate
solutions and strategies which are not instantly apparent with the initial understanding level
(Ulibarri.et.al, 2014). The approach is provided by the design thinking which is based on
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solutions for solving the different problems. It helps in observing and developing the empathy
feeling the target users. Questioning process, questioning assumptions, questioning the problems,
and questioning of implications are assisted through this. Within the business the innovative
products and services can be developed by this methodology and solutions for the multifaceted
problems with respect to creative and business sectors can be established (Knemeyer, 2015).
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Definition of various concepts and their relationships
Organizational environment- It consists of various forces and elements including the legal
factors, political factors, government regulations, competitors making an entry in the market
continuously, and consumers preferences that keep on changing constantly. All these factors and
elements prevail outside the boundaries of the companies by which the company’s performance,
resources, and operations get affected. It is significant for the managers of the organization to
properly understand the organizational environment and keeps on monitoring it in continuity as
any changes in the environment affects the organization as a whole and it has to adapt to these
changes by making amendments in its organizational structure (Alexiev, Volberda, & Van Den
Bosch, 2016).
Innovation strategies- the strategy of innovation is the plan which is used by the company for
encouraging advancements in services and technologies by making an investment in research and
development. Through this innovation strategy, the company gains a competitive advantage and
helps in extending the market share of the company and its profitability ratio.
Innovation trends- The trends in innovation are the methods or process that are based on
images, thoughts, and ideas. The innovation trend helps the company in making growth and
emerging as a good brand by taking competitive advantage and satisfying the customers’ wants,
desires, and expectations (Mihaela Diaconu, 2018).
Innovation capabilities- it is the capability of an enterprise of adapting the innovation by
transforming the ideas, thoughts into something innovative way which carries the economic
value.
Innovation value captures and value creation- This refers to the creation of value to the
company through innovation which increases the economic value and helps the organization to
be highly competitive in the competitive markets (Chesbrough.et.al, 2018).
There exist the strong relationship among all these concepts as innovation can be adopted by the
company only if it is possessing the innovation capabilities and for the planning and
implementing the innovation strategies the management of Amazon has to consider its
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organizational environment where it has to analyze the competitors, political, legal and economic
factors and also has to understand the preferences of consumers. It is significant for the company
to analyze the organizational environment before adopting the innovation strategy. Otherwise, it
will lead to the failure of innovation.
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Description with regard to how the creation of an innovation strategy ensures strategic
alignment within organizations and why it is important
It is significant for Amazon to align its innovation strategy with the corporate strategy as this
allows the company to gain a competitive advantage. For ensuring the effectiveness in the
organization it is important that the organizational cultures are essential. Alignment of
innovation strategies with structure, resources, operations, and goals of Amazon are required to
be made. The effective alignment is important as there is a high amount of costs and time
involved and there might be the resource’s wastage if not properly embedded. For progress’
monitoring and measuring the optimal metrics can be used and correct expectations can be set.
There should be proper communication of innovation’s role to all the employees of Amazon for
the proper aligning of strategic innovations with the objectives and goals of the company
(Panapanaan.et.al, 2014).
Strategic alignment ensures that there is no wastage of resources. Amazon's employees will get a
clear purpose and structure through this. The conflicting priorities will be eliminated; workplace
redundancies in Amazon will also get abolished or reduced. The coordination, communication,
and buy-in among the team members will increase, ensures the higher performance by making
the optimum contributions made by inputs, processes, and people that helps in realizing the
measurable objectives and through this the wastage gets reduced and empower the team
members in shaping the organization’s future (Zarrabi.et.al, 2013).
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Analyses of the impact of design thinking on Amazon; SWOT analysis and use of the
business model for analyzing the impact, opportunities, and threats to Amazon
Amazon has been positively benefited by the design thinking approach as the company is now
better able to solving problems that are complex and finding the solutions. The company can
understand the customers' needs and desires by developing the empathy feeling and after that
adopt such innovation strategy through which it can fulfill the expectations of the customers.
Tackling problems can be done easily with respect to the ill-defined one. With the application of
the design thinking Amazon, new thoughts and ideas can be developed for the testing process
and the adoption of the practical approach is allowed through this. It results in a collaboration
that engages the people with different potentiality and perspectives to develop new ideas for
solving the problems which have increased the employees' productivity (Valentine,.et.al, 2017).
SWOT analysis is used as a strategic tool for analyzing the threats, opportunities, and impact of
design thinking on Amazon.
Strengths Weaknesses
 Diversified streamed revenue can be
developed
 High margins in profits
 Allow the company to gain the position
of market leadership
 Helped the company in rapidly scaling
of success of new products
 Penetrate different segment’ customers
 Diversify the revenue stream
(MacFadyen, 2014)
 Competitors can gain a competitive
advantage as low investments are being
made in the design thinking that is
customer oriented
 The extra cost for building the new
network of logistics and supply chain
 Design thinking financial statements
can be pressurized due to the improved
gross and operations margins
 High replacement cost
Opportunities Threats
 Low rate of inflation will allow
increased consumption of products of
 Competitive pressure
 Increased product’s commoditization
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Amazon
 Getting high brand recognition in the
segments of premium
 Collaboration with local players can
provide growth opportunities in the
international markets
 Low cost of the launching of new
products
 Skilled human resources’ shortage
 Legal actions and institution’s distrust
(Seidel.et.al, 2013)
Business model canvas
Key partners
 Sellers
 Publis
hers
and
author
s
 Logisti
cs
partner
s
 affiliat
es
Key activities
 Platform
design
 optimizati
on
 Merchandi
sing
Value proposition
 The
selection is
wide
 Convenienc
e
 Fast
fulfillment,
reliability
 Price is low
Customer
relationships
 Best in class
fulfillment
system that
allows
customers to
receive their
order in one
to two days
 Customer
first service
mindset
 On Amazon
hardware,
built in
support
channels
Customer segments
Business clients:
 Retailers on the
website of Amazon
 Require infrastructure
and cloud-computing
Retail clients
 Purchase products
that are listed on
Amazon
 Purchase
subscription
services of
Amazon
Key resources Channels
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