Innovation Report: Case Studies of Disruptive Business Models

This report provides a comprehensive analysis of innovation in the business world. It begins by examining the factors that promote innovation, using the Expresso Mushroom Company as a case study, highlighting the roles of imagination, collaboration, failure, and resourcefulness. The report then delves into the concept of sustainable innovation and its impact, particularly focusing on the environmental and financial advantages. Furthermore, the report explores different types of innovation, specifically focusing on disruptive innovation. It analyzes the disruptive models of companies like Airbnb, Service Now, and Tesla, evaluating their impact on the market and the challenges they face. The report also discusses the negative examples of innovation failure. Overall, the report offers a detailed overview of innovation strategies, models, and their implications in the business landscape.

1.0 Introduction
Innovation is the driving force of business growth, offering clients benefits they value
and distinguishing brands from contestants (Brown, 2015). Innovation matters for
ameliorating living levels and is defined as the exploit and commercialization of
products that are new to the marketplace and the world (Racine, 2011). Purcell,
(2019) held the point of view that innovation can help companies distinguish
themselves. Essentially speaking, innovation is trying something differently from
others who work in your space. For instance, the goal of innovation in an organization
is to exploit new products until there is no same product. Charan (2008) held the view
that innovation can shape corporate life, which helps leaders consider some
unpredicted strategic choices.
Innovation is a crucial driver in exploring several environmental-friendly resolutions
to the challenges the world faces. For example, people can know a variety of methods
that new technologies, such as AI, virtual reality, can make sustainable effect at Pictet
(Picket, 2013). The competence of innovation can facilitate countries’ global
competitiveness at a macro-economic level. About a quarter of US productivity is
generated by innovation between 2010 and 2020 according to some academic
research (Monterde, 2015). Innovation is an important source of current and long-
term competitive advantage. Evidence illustrates that those businesses who pursue
innovation are more likely to survive longer and provide higher returns to
shareholders. Through different forms of innovation, companies can suppress
competitors, increase barriers to entry and better satisfy clients’ present and future
demands (Monterde, 2015).
This article will evaluate the main factors that boost innovation in the first chapter,
then it will analyze the disruptive innovation of some companies in the second part,
and then it will evaluate the negative example of innovation failure in the last part.
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2 Chapter 1 The components of innovation and factors that promote
innovation
2.1 The enablers of innovation in Mushroom Company
Imagination is the root of innovation, which means that innovation requires stronger
imagination (Baumgartner, 2014). Innovation equals to creativity plus exploitation
(Roberts, 1988). After generating the idea of using coffee grounds to produce
mushrooms, the Expresso Mushroom company constantly tried and tested. By
utilizing various of resources such as support of the Sussex Innovation Centre and
investment, the Expresso Mushroom Company finally earned value in the market, and
succeeded in innovation.
Collaboration plays an essential part in innovation. Teamwork can improve the
efficiency of innovation process. More innovative tasks often involve unaccustomed
technology and, therefore, it is harder to rely on past experiences to solve new
problems. Collaborative process is more than working together. It means the
capability to think together and to act on complicated projects (Kathy Moore Cowan,
2009). As everyone conveys an outstanding set of skills and knowledge, collaboration
can stimulate innovation in the working environment (Hipp, 2008).
There exists strengths and weaknesses of collaboration in innovation in Espresso
Mushroom Company. In terms of strengths, first of all, the pressure can be lifted to an
extent as working with a wide range of people and spread risks (Roberts, 1988).
Espresso Mushroom Company is made from scratch, the most difficult thing is that it
requires lots of money. Besides, it may have some risks of innovation. Alex and
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Robbie, as a cooperative group, can help Mushroom Company share the risks of
innovation, and help the company share the financial pressure. Secondly, it can
enhance greater creative input. When people collaborate with others on a complicated
project, different views, different methods to the plan and brainstorms can simulate
innovative outcomes, thereby, it can raise the quality of the services and products
(Garlough, 2013). Alex had heard about the growing of mushrooms with by-products
of the coffee bean plant in the first time whilst working with Café Direct, however, it
wasn't until Robbie discovered this idea when he was reading development research at
the University of Sussex that it prompted the two to create a start-up company around
this concept. In terms of weaknesses, when different people work together to
complete a project, there may be a conflict in the working styles of the individuals in
the group, which is one of the adverse aspects of teamwork (Makarova, 2021).
Sometimes, Alex and Robbie may have the problem of inconsistent working methods
while innovating.
Failure plays an essential role in innovation process. It has several benefits in
innovation. Failure can make people become more conscious of their actions and their
environment, which can stimulate exploration and lead to new fields of innovations
(Michelle, 2011). In addition, failure can encourage people to learn from the past
mistakes and find methods to improve (Paul, 2013). Expresso Mushroom company
has made great efforts in experimenting with the best method to grow mushrooms,
and experienced a lot of faults. Taking a few weeks to see the outcome of the
experiment is the biggest trouble with trial and error. It is precisely because of these
mistakes that the company has the opportunities to reflect on the mistakes and explore
new methods to improve.
A variety of resources also enabled this company to innovate. Without the support of
Start Up Sussex in 2012, Alex and Robbie would not gain investment after winning
the entrepreneurship competition, thereby, the lack of investment support will make it
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difficult for the company to innovate. Through the Sussex Innovation Center to help
Mushroom Company establish a bookkeeping system, the long-term growth can be
increased. In addition, the introduction of Kitchen Garden mushroom growing kits
gave a significant help to the financial achievement of this company and facilitated
the idea of growing sustainable mushrooms.
2.2 Analysis of sustainable innovation in Mushroom Company and its
impact
The principled feature of the company is mainly reflected in the company’s
environmental awareness. Sustainable innovation involves bringing into common
usage of ideas, concepts, practices and products that contribute to the ecological
environment, social cohesion and economic viability (Clark, 2007). Espresso
Mushroom company has tried to use coffee grounds to grow mushrooms to reposition
them from waste to resources. A large amount of methane can be transformed into an
energy source through growing mushrooms with the grounds (Weliwita, 2015). First
of all, this innovation method can save resources. Besides, it can create environment
value. It can reduce energy consumption and decrease greenhouse gas emissions into
the atmosphere, thereby, it can minimize the pollution hazards to the environment. In
addition to the environmental benefits, organizations that incorporate sustainable
innovation can also gain significant financial advantages and draw more attention
from investors, which is a key to long-term profitability (Bocken, 2019).
However, this innovation may have some drawbacks. As it stands they are a collective
of three like-minded individuals, but further growth may put their ideals under the
inspection of others that are less ethically-minded. So far, their development has
brought in decisions regarding their environmental footprint that have been higher
economic costs than substitutes, which may not attract more potential investors in the
future.
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3 Chapter 2 Type of innovation
3.1 Evaluation of disruptive innovation on Airbnb Company
Disruptive innovation means technologies and innovations that make high-priced
services and products more affordable to a wider market. Enabling technology, a
consecutive value network is required in disruptive innovation (Christensen, 2015).
Disruptive innovation transforms how an organization assesses its processes and how
to adjust according to them, which contributes to the provision of better services, and
brings an alteration in the industry. It can renovate lots of processes of a company
(Dolnicar, 2003).
Disruptive innovation is based on the low-end market (Christensen, 2015). Airbnb is
regarded disruptive as it attracts the low-end of the market, providing a low cost to
rent. Besides, it has an innovative internet-based internet and its exceptional appeal to
tourists. With the use of comments, user profiles, and identity authentication, Airbnb
allows peer-to-peer accommodation. Hosts can also promote their accommodations
easily through utilizing Airbnb’s technological infrastructure to post photos and
content. For tourists, it cost lower than staying in a hotel and provides them a more
“local” experience (Leist, 2016).
The disruptive innovation of Airbnb posed a positive impact on people. It has
transformed people's occupancy awareness. What Airbnb does is precisely to provide
services for those who dare to try, so that local homeowners are more willing to let
strangers live in their homes, while also allowing guests to live in the local
homeowners' homes with greater peace of mind.
However, there are some disadvantages of disruptive innovation. First of all, people
need to break the original rules and need to restart as in a new market, which will
require detailed research, market evaluation, documentation and challenges in
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materializing ideas (Chen, 2020). In addition, for some traditionally organized
companies, disruptive innovation become a big challenge to them. These companies
often regard disruptive innovation as a hazard as they feel that they are not very
tolerant and become disturbed themselves (Quinto, 2013). For Airbnb, it may be
difficult for people to break what is established and start from scratch in a new
market.
3.2 Analysis of disruptive innovation on Service Now Company and Tesla
Disruptive innovation has the characteristic of simplicity (Daub, 2020). Service
Now’s biggest disruption to the enterprise software market is about simplifying and
creating processes. The founder of Service Now came up with the idea of making the
IT tools simple and easy for consumers to use. They provide a single collection center
for requests, data points and checklists, all of which can in turn be appraised by
algorithms to predict demands, flag concerns and measure efficiency. The method of
disruptive innovation in Service Now provided customers with great convenience. In
addition, rather than making people learn dozens of pieces of software to handle
simple tasks, the way of disruptive innovation can enable everyone manage their work
in the same method, eradicating waste and empowering staff (Kays, 2015).
Tesla's disruptive innovation is reflected in a variety of aspects. From a technical point
of view, Tesla has disruptive technology. The traditional BMW car takes up a lot of
space is the engine. Its transmission system, gearbox and cooling system fill the front
end of the car. Tesla's design is that compared with the traditional BMW, the chassis
has no engine and no traditional transmission equipment. The main part of Tesla is the
battery, which is at the bottom. The bottom is a high-density aluminum alloy support,
and the battery is sub packed inside. The back two wheels are motors, and the motor
is basically smaller than the size of a watermelon (Evans, 2018). Therefore, the whole
car has huge space. Tesla has two compartments, the front spare compartment and the
rear compartment (Frohman, 2014). This unique design can open up the space of the
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whole vehicle. As the front spare compartment produces a huge space, the safety of
the vehicle is very good, and it opens up a lot of space for the whole front impact.
In addition to the subversion of some key technologies, there are many new
subversion points in Tesla's business model. In pursuit of the ultimate user experience,
Tesla provides users with eight years of battery upkeep and replacement for free. At
the same time, taking into account of the troublesomeness of users in charging, it uses
solar panels to build outlets across the country (Perez, 2015). Therefore, people can
use the charging network around the world for free without any cost in the whole
process after the Tesla charging network is built, in this regard, it also goes beyond the
user experience.
Tesla also subverts the traditional marketing model of the automotive industry. Tesla
used two channels including experience store and online direct sales. People can go to
an experience store to see, touch and feel. Besides, the salesperson in the experience
store will not promote products for people, they are more likely to let people
experience the products without any promotion. The orders can be placed on the
Internet (Giesen, 2007). Finally, the car will pass after placing the order and will be
sent directly from the manufacturer. In the experience store, if people are interested in
the car, they can go back to the Internet to make an appointment for a test drive (Amit,
2011).
Tesla's experiential marketing innovation can bring a series of benefits. First of all, it
provides lots of opportunities for brands to establish contact with consumers, thereby,
it will gradually create awareness for the brand. Secondly, brands can create double
way conversations with clients through experiential marketing, and provide them a
good experience, which can humanize the brand. In addition, it is also a great method
to gain the attention of the media and influencers. The media often likes to engage in
experiential marketing event. Consequently, experiential marketing can be a creative
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marketing initiative that offers people the chances to expand brands through getting
the attention of influencers and medias (Manalac, 2015).
In terms of direct online sales, compared to the traditional sales method, for Tesla, the
consumers can have direct access to consumers and obtain first-hand information.
Besides, the direct selling mode and order receiving production can decrease product
inventory and capital occupation in an effective method, and the received deposit can
be used for production organization (Chavhan, 2016).
4 Chapter 3 Example of Nokia that failed to innovate
4.1 Theoretical definition of boiled frog in warm water
Boiled frog in warm water means that seemingly comfortable environments often
contain dangers. As the water temperatures increases slowly, the frog’s physical
strength has been exhausted, so it can not climb out. Consequently, the frog will be
boiled to death. On the contrary, if the frog is boiled in very hot water, the frog will
feel the danger and jump out of the water immediately (Fallows, 2006).
4.2 Factors leading to Nokia's failure
Nokia gradually reduced to a declining position. First of all, Nokia's failure is mainly
due to its gratification. Nokia was still content in its E-series disregarding how a new
concept has transformed the way a smartphone should be while Apple initiated the
iPhone in 2007. Actually, compared with Samsung's rapid transition to smartphones,
the iPhone’s achievement did not have any influence on Nokia (Blandford, 2011).
Consequently, complacency would lead to Nokia’s hesitation in innovation and make
it difficult for Nokia to adapt to the new changes. The overestimation of Nokia’s past
success would cause Nokia to be content with the status quo, thereby people may still
insist that their hardware was superior. As a result, it would lead Nokia to disregard
the significance of transition and change. As time goes on, with the transfer of all
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target markets, new products and better versions of mobile phones have changed,
which made Nokia far behind new market entrants.
Secondly, Nokia’s failure is attributed to fierce competition in the industry and its
untimely reaction. Progressively, the mobile phone industry became saturated with a
lot of corporations serving the same target market. Apple, Samsung, Blackberry, and
Nokia all were the leading players struggling for the target market. Nokia failed to
ameliorate its service and lost to the players in the market in the race of competition
(Ahmer, 2019). In addition to the high-end competition, the low-end competition such
as HTC, Huawei and ZTE also occurred. Progressively, these businesses gained huge
share, which was a huge number as a rival for Nokia. However, Nokia did not
investigate this in time, which is why it failed in the market (Bouwman, 2014).
Thirdly, the lack of vision caused the failure of Nokia. Due to the lack of vision, the
staff in the company never know what they need to do next (Bhalodiya, 2015).
Consequently, the company neglected the broad market in the future. This gave way
to the new businesses and competitors to enter and serve the market.
Last but not least, Nokia’s failure is due to its lack of sensitivity to changes in
consumer requirements. Nokia's design concept still stays at the stage of making
communication equipment and how to better realize the call function (Sachdeva,
2018). Nowadays for consumers, they actually need the multifunctional handheld
terminal, which can make their lives more convenient and more colorful. The call
function has become the most basic function of mobile phone rather than the most
important function. Therefore, Nokia only stays at the stage of realizing call function,
which is far from enough.
4.3 Recommendations for Nokia’s innovation
Nokia needs to straighten out its attitude and maintain a state of humility. The
company should not superstitious about past success. Too confident about the past
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achievement would lead to the resistance of change. As the competitive environment
is changing and consumers' consumption habits are changing, Nokia needs to keep
pace with the times, quickly capture the crisis contained in the market and make rapid
response strategies. For example, Nokia needs to be aware of the potential crisis
brought by its competitors. In addition, in the face of the changes in customers'
demand for mobile phone functions, Nokia's mobile phone design concept needs to
follow the trend of the times, it is important for Nokia to follow the realize perfect
customer experience, a wide range of entertainment and mobile office functions, thus
making users' operation more convenient and faster.
5. Conclusion
In a whole, to innovate, in addition to creativity, there needs to be a process of
exploration. Collaboration with others, errors and a wide range of external resources
are vital driving factors in innovation. Generally speaking, collaboration and external
resources can speed up the process of innovation to an extent. And the errors in
innovation process can inspire people to reflect on themselves. In terms of disruptive
innovation, it can bring lots of convenience to people and bring people different and
novel experiences. However, it may take a long time for the companies to learn new
things from the scratch. In the process of innovation, being satisfied with the past
success will lead to the loss of innovation power, lack of foresight leads to
complacency with the status quo. In the rapidly changing modern society, companies
need to stay alert in times of safety. In addition, companies can't stick to the rules,
instead, they need to make some relevant adjustments according to the changing trend
of the times.
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6. References
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Amit, R (2011). “The business model: Recent developments and future research.”
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November, 2021]
Blandford, R. (2011) “Understanding Nokia's smartphone strategy decision.” Natural
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Resources Journal, 23(1), pp131-148.
Bouwman, W. (2014) “How Nokia failed to nail the Smartphone market”, conference
paper, 31(2), pp. 209-220
Brown, B. (2010) “Why Innovation Matters”, Research-Technology Management,
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Charan, R. (2008) “Why Innovation Matters”, [online] Available
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November, 2021]
Chavhan, A. (2016) “Direct selling and its benefits to the market place”, Int. Res. J. of
Science & Engineering, 4(2), pp57-64
Chen, H. (2020) “A literature review of disruptive innovation: What it is, how it
works and where it goes”, Journal of Engineering and Technology Management,
56(2), pp49
Christensen, C. (2015) “What Is Disruptive Innovation?” Harvard Business Review,
34(2), pp45-47
Daub, A. (2020) “The disruption con: why big tech’s favourite buzzword is
nonsense”, [online] Available
at<https://www.theguardian.com/news/2020/sep/24/disruption-big-tech-buzzword-
silicon-valley-power> Access [6th November, 2021]
Dolnicar, J. (2003) “Disruptive Innovation – What is It and How Does It Work?”,
[online] Available at< https://www.viima.com/blog/disruptive-innovation> Access
[29th October, 2021]
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