Innovation and Commercialisation Report for Essence Drinks, Unit 8

This report delves into the concepts of innovation and commercialisation, analyzing their importance for businesses, particularly in the context of Essence Drinks. The report explores different types of innovation, including incremental, architectural, disruptive, and radical approaches, and highlights the difference between innovation and invention. It discusses the 4Ps of innovation (Process, Paradigm, Product, and Position), the innovation funnel, and frugal innovation strategies. The report examines various sources of innovation and how Essence Drinks can leverage these to improve its market position. It also provides recommendations for Essence Drinks to enhance its innovation processes and commercialization strategies. The report concludes with a discussion on accessing funding for innovation and the overall importance of innovation for business success.

Unit8
INNOVATION AND
COMMERCIALISATION
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Table of Contents
Introduction......................................................................................................................................4
LO1..................................................................................................................................................4
P1.................................................................................................................................................4
P2.................................................................................................................................................5
M1................................................................................................................................................6
LO2..................................................................................................................................................7
P3.................................................................................................................................................7
P4.................................................................................................................................................9
M2..............................................................................................................................................11
M3..............................................................................................................................................12
LO3................................................................................................................................................12
P5...............................................................................................................................................12
P6 Build an Innovation business case and ways to access funding...........................................15
M4..............................................................................................................................................16
LO4................................................................................................................................................17
P7...............................................................................................................................................17
M5..............................................................................................................................................18
Conclusion.....................................................................................................................................19
Reference List................................................................................................................................20
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Introduction
This report is based on innovation and commercialisation.Organisational innovation means
applying new business ideas for the smooth functioning and practices in the organisation
(Hullova et al. 2019). The processes are made more effective and the existing products are also
improved. To commercialise the products innovation is required. These days’ businesses are
facing a lot of challenges in innovating new products. It is necessary for the business to bring
new and innovative products for the competitive markets of the UK. In this report, the situation
of Essence Drink is taken into consideration.The founder of this company is Akshay Kumar. He
had launched a healthy mango lassi in the UK market. The first year it rapid growth and sales
also increased. However, in the third year, the sales of this healthy drink decreased drastically.
This happened because of the new competitors coming into the UK market. The author of this
assignment has been appointed as a junior brand strategy innovation consultant to understand the
situation and provide recommendations for the improvement in the company.
LO1
P1
Innovation is the process of representing new ideas and trends. Many activities are performed in
innovation so that new products can be made. Innovation comes with creativity. Here people
have to think out of the box to enhance a product.Innovation is very important for companies
these days as it creates great opportunities so that companies can survive the market situation
(Jensen et al. 2016). It gives growth to the economy and success. Original concepts are
developed through innovations. The current problems of the companies can be easily be solved
by innovation process. There are four types of innovations and they are Incremental,
Architectural, Disruptive and Radical.
However, innovation is different from invention. In the case of the invention, it is the idea that
has never occurred for a particular product. Here the product is completely created and it is
original in nature. The company needs to have scientific skills for an invention. But in the case of
innovation, the new product is not created (Muthukrishna and Henrich 2016). Modifications are
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done in the existing product. The skills required in this case are technical, marketing and
strategic. The activities of innovation are spread across the organisation.
Innovation is of much importance when compared to the invention. There are many reasons why
companies are taking the innovation process. Developments for companies are creative in nature.
The company can also see growth and new trends can be set through innovation. The company is
gaining improvement and they also get sustainability. Just by rebranding, the product people get
attracted. Creativity gets increased through innovative business ideas. Innovation allows the
usage of social media as innovative campaigns can improve the business (Amabile and Pratt
2016). This also gives motivation to the employees. Innovation gives a unique selling point.
Customers get to see and use innovative products and hence value is added to the company. They
also gain commercial advantages and media exposure is also positive. However, companies
avoid using invention methods because it is a long process. Scientific skills are required and
companies do not have much time to spend on a new product. It also requires a large amount of
money and there is no guarantee that the new product will be successful in the market.
P2
Innovation mainly depends on creating new ideas.New thinking can be decoded through the
process of innovation (Breuer and Lüdeke-Freund 2017). The company's goal is to
commercialise its products through innovation. The products have to be according to the
needs of the customers. It is seen that commercialising simply means bringing new
product in the market. One of the ways they do it is by bringing out drinks with new
flavours, different combinations of flavour’s , promoting their new products to the public.
There are factors that are affecting the innovation process and commercialisation. Essence
Drinks want to reach their goals and objectives to make their company successful. They want to
give the best healthy lassis in the market. For this, they are coming with innovative ideas and
then commercialising their products. Essence Drinks have the vision to become the leading
company in the market by launching an innovative product. They are also using the latest
technologies so that they can satisfy their customers.
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To meet the organisational goals leadership is very important. A leader looks after all the
problems in the company. They try to overcome those with some solution so that success can be
achieved. Leadership is of many types like autocratic, democratic and participative. Essence
Drinks are following participative because it will be helpful in critical situations.Organisational
culture consists of values, attitude and norms which are followed by the company (Breuer and
Lüdeke-Freund 2015). This is shaped according to the values of the country. Innovation and
commercialisation process is affected due to cultural differences. Essence Drinks aim to meet
their goals and they are becoming aggressive towards it. Culture plays a major role in Essence
Drink to achieve its goals and objectives. Teamwork is very important in any organisation. It
helps to solve various issues in just a small time. It also helps in completing important tasks that
are done through planning. Essence Drinks have a specific team who work on the existing
product and try to innovate something new in it. This also helps in commercializing the product.
The team tries to follow the goals and objectives of the company and gives the best services so
that success is achieved. This will improve the efficiency process and will contribute to
innovation and commercialization. The value and importance of innovation to organizations is
numerous as the innovation brings in new products or enriches the quality of the old..In the case
of essence drinks one can notice innovation in sectors like flavors, new variations of flavors
which benefits the society with a big variety of items available to purchase.
M1
There are many sources of innovation which helps the organisation in many ways. They are:
 The Unexpected is this first source of innovation. It gives an opportunity to innovate
something new.
 The next one is the incongruities. People use a particular way to innovate things.
 Process change analyses a method and then find ways of improving it.
 Industry and structure of the market gives new technologies and open market to innovate.
 Demographics play an important role in innovation.
Environment and culture play an important in organisational innovation. Organisation
environment must be open to give challenges, creation, ideas and freedom so that experiments
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can be carried out (Bessant and Tidd 2007). The organisation must allow people to learn from
their failures and success while innovating something new. Essence Drinks creates a culture and
clarity for innovation purpose. They bring in diversity and also encourage dialogue. People feel
safe while the innovation of new things. It also gives them a competitive edge in the Australian
market.
LO2
P3
The 4Ps of innovation is explaining how the company can increase its profit and productivity
(Akgun et al. 2017). The 4Ps of innovation are Process, Paradigm, Product and Position.
 Process Innovation: In the process part it consists of manufacturing and distribution of
the product. Essence drinks are selling their drinks directly as well as in supermarkets and
local shops. This gives easy access to lassis to the people of the UK. The product is
displayed attractively so that it catches the attention of the people. There are special
booths in the supermarket for Essence Drinks. They also provide an option of tasting the
drink so that people can buy after that.
 Paradigm Innovation:There are different activities organised by the company. They try to
look at the business from a new perception. The company is trying to bring innovation in
the existing products and this helps them in moving one step forward in the UK market.
 Position Innovation:Essence drinks are targeting a new set of people in the UK. Their
target market is based on gender and age. Essence Drink’s product is healthy mango lassi
so young people who are health conscious will surely buy this drink. They are also
concentrating on their manufacturing processes. New machines are being implemented
and the company is using the latest technologies for their products.
 Product Innovation:Essence Drinks are planning to launch a new innovative product.
There are looking after all the needs of the people and then making a product
accordingly. This is giving them a good position in the market of the UK. They are also
gaining a competitive advantage.
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Figure 1: 4Ps’ of Innovation
(Source: Self Developed)
Innovation funnel consists of different steps while the development of a particular product
(Weyrauch and Herstatt 2017). It is seen that innovation is generally has done to bring in a new
product according to the needs of the market. The basic step is to collect ideas and then the
refinery system starts to make the product. Innovation funnel is used for shaping innovative ideas
but there are some steps that need to be followed.
 Assessment of opportunity: The Company looks after the opportunities in the current
market.
 Ideation based on Insights: To capitalize on the opportunities different ideas are given for
the product.
 Conceptualization: The concept for the product is designed from the ideas coming from
the previous step.
 Process of evaluation:Testing the concept and targeting the market accordingly.
 Go/No Go:Feedback is gathered after the evaluation step and the chances of success are
measured.
 Launching:If one of the concepts is good then the product is launched in the market.
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The Innovation Funnel is a mechanism which allows a constant stream of ideas that can
be screened for viability. It’s a tool that helps companies and individuals to innovate
successfully. It has 3 main sections, Investigation, Development and shipping products.
Using the innovation funnel one first investigates which products could be potentially
successful. Develops them and brings them to the market.
P4
Frugal innovation is the idea that a business uses to see resource limitations. The idea of frugal
innovation comes from Frugal Engineering.It can be material, financial and institutional. These
resources are then converted into business practices and innovative ideas. This innovation is
made from the above processes like circular economy, open innovation, co-creation and shared
economy. To gain benefits from frugal innovation, the company needs to come with better
quality solutions. Frugal innovation is needed because the growth of the product is reducing and
the company is cutting the funds so that debt gets reduced. There are environmental constraints
like energy, climate and water. Frugal innovators are getting new opportunities due to new
technological development. These days’ people are searching for healthy products and so the
company needs to reshape their business model. The market is growing and hence, the product
demand is also increasing.
Figure 2: Frugal Innovation
(Source: Weyrauch and Herstatt 2017)
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These days most of the organisations are using frugal innovation so that they can gain
competitive advantages.Frugal innovation allows the company to compete with the cheaper
manufacturers so that great products can be made with more affordability. Essence Drinks should
follow some approaches for succeeding while they take frugal innovation.
A good example of Frugal innovation has been the case of Renault motors takeover of Dacia. It
has benefited both the society by bringing affordable cars to the market, while simultaneously
bringing huge profits to Renault. Dacia is now the fastest-growing car brand in Western Europe.
Frugal innovation challenges the traditional “more for more” business model of Western
companies which pump billions of dollars into R&D, use lots of natural resources to crank out
complex, expensive products, and charge customers ever more for new features. But this “bigger
is better” approach to innovation is running out of steam for two key reasons. First, increasingly
budget-constrained American and European consumers no longer want over-engineered and
costly products. And second, natural resources like water, minerals and wood are growing more
expensive and scarce.
 Setting specific goals: Essence Drink is planning to launch the products that have some
health benefits and specifications. This will be doubling their sales. They are trying to
bring environmentally friendly products. So they are also contributing to reducing the
environmental footprints in the years to come. They are using frugal innovation so that
they provide greater value to the products by just using few resources.
 Looking after the needs of the customers: The frugal innovation is based on the
foundation of customer needs. Essence Drinks is trying understanding the needs of the
customers and then launching products accordingly. The product has to be innovative to
attract people’s attention.
 Teaming with innovative partners: The Companyis finding innovative partners who can
provide them with good ideas for their drinks.They can easily bring new products to the
market and that too at a faster rate. This is helping the company to work efficiently.
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 Use the resources in hand: Essence Drinks are having their famous product and they are
trying to reinvent it again so that they gain some profit. They are revising their strategies
so that they survive the competitive market.
 All the obstacles need to be overcome: At first, the stakeholders might not be happy with
frugal innovation (Fraser and Bunduchi 2016). However, they need to be convinced that
this innovation is for the betterment of the company. All the problems have to be solved
and Essence Drinks have to come with great results.
M2
Innovation funnel is known as funnel management process (Wang 2017). This helps the
companies to make realistic plans of action. This funnel tries generating as many ideas as
possible. Later on, they are developed as concrete plans. This is just like a funnel shape starting
with many ideas and then filtering out limited ideas. The organisation takes innovation funnel to
find out the best idea and it is useful for projects, products and other innovations. Companies like
Essence Drinks take innovation funnel so that they can find the best idea for the current
competitive market. While using this funnel the company has to be careful regarding the criteria,
rules and filters. This also helps the on-going projects. In the case of Essence Drinks, the funnel
helps to innovate in their current product mango lassis. They try meeting manufacturing and
economic needs. The easiest form is to make a graphic structure for making an innovative
product. This funnel consists of three main parts. In the widening mouth, the base knowledge of
the company is expanded. In the narrow part, the ideas are screened and finally, the main idea is
found out. The company finds its goal and finally meets the business objects.
M3
The product's cost and complexity are reduced through the method of frugal innovation. The
unnecessary features are removed with the help of frugal innovation. In Essence Drinks, frugal
innovation will be highly beneficial. The production cost will be reduced and the company will
try earning profit through this system of innovation. They will also ensure that the quality of the
product doesn’t decrease. This is a reliable approach and company will be able to attract the
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customers. According to the emerging market, frugal innovation is widely being used (Lim and
Fujimoto 2019). Essence Drinks could sell their products in the other parts of the world through
this innovative method. However, the organisation needs to keep some things in mind like; the
process of innovation must be simplified. Wastage should be avoided and value focus should be
their main target.The frugal model should be made simple and later on, modules can be added.
There should be continuous improvement so that the company can beat their enemies. Frugal
innovation has been very beneficial in the Essence Drinks industry.
Frugal innovation has more benefits then drawbacks for smaller or start up companies which do
not have large funds available for research and development. Rather then spending tons of
money on research and development the company can apply these funds in other areas of the
organisation.
LO3
P5
Whether a business is a startup or a large organisation the commercial funnel is important for any
business for expanding its operations. It is a funnel which describes the process of the customer
from the point where it becomes aware of the product up to the point where he actually
purchases it. The funnel is based upon six steps which mark this journey. It is a method through
which a prospect is actually converted to a customer. The steps are described as follows:
Awareness – This is the topmost phases where a potential customer becomes aware of the
existence of the product through a blog post or advertisement (De Massis et al. 2018).
Consideration – This is the stage where the customer becomes interested in the product and tries
to find out more about the product or service.
Preference – In this stage, the customer develops a preference for a particular product above
other products.
Action – In this stage the customer takes the decision to actually purchase the product.
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