Innovation Management, Design Thinking: A Critical Assessment

This assignment delves into the core concepts of innovation management and design thinking. It critically discusses the advantages and disadvantages of being a first mover versus a late mover in the market, providing a comprehensive analysis of strategic positioning. The assignment further explores process innovations, examining social and open innovation with relevant examples. It defines disruptive innovation, explaining its characteristics and how it reshapes markets, and also outlines the key features of business model innovation. Additionally, the assignment assesses design thinking as a problem-solving methodology, emphasizing the importance of reframing problems and the research techniques that characterize user behaviors, needs, and aspirations. This comprehensive analysis offers valuable insights into strategic management and innovative practices.

Q1. Innovation management (total 20 marks)
a) Critically discuss the advantages and disadvantages of being a ‘first mover’ and a ‘l
mover’ (6 marks)
The first mover refers to a company that initially introduced a particular product or service.
Being the first business to perform a specific strategy can entail several advantages.
Advantages
1. Have control of resources. Examples can involve setting up a base in a strategic location,
employing talented individuals or drafting a premium contract with the primary suppliers.
2. Gain an advantage when consumers have a high switching cost to shift to later entrants.
3. Make a strong impression on consumers first, which can lead to the recognition of the
brand and loyalty to it.
4. Cause their product to be recognized as an industry standard.
5. The leadership of technology in which later entrants may find it hard to replicate a particular
product or technology or service offered by a first mover company.
6. First movers can control scarce and strategic resources. A good example would be
Walmart being able to place their stores in small towns as well as bar others from market
entry.
7. First movers able to establish themselves may cause consumers to think twice about
switching to a new brand as this may seem inconvenient to them.
Disadvantages
1. If they heavily invest in the persuasion of consumers to try a new product, later entrants
may not feel the need to spend on educating consumers, and this can create an advantage
for them.
2. If a first mover fails to capture the attention of a consumer with their product, a later entrant
can take advantage of it.
3. Mistakes made by the first mover can be avoided by the later entrant(s).
4. The areas of improvement the first mover needed to make their product better can be
identified by a later entrant and be taken advantage of.
5. New products can be made cheaper or better by the later entrants’ reverse-engineering of
the previous product.
Late movers are businesses that go into the market with a service or a product by making use
of the ‘wait approach’.
Advantages
1. Viability of market: before involving themselves with a new product, late movers can see
how well a new concept or approach has been received by the consumers; this can assist
in the mitigation of numerous risks.
2. Improvements and tweaking: a late mover can quickly produce (and introduce) a ‘new and
improved’ version of an existing early mover’s product by watching the trials of a first
mover and then making adjustments before producing any of its products.
3. In case a product or a service flops in the market, the early movers will be the most at risk.
So, a late mover can be able to observe how price points, features and functionality of the
product are received and make their adjustments to their approach according to that.

4. Coattails momentum: late movers can take advantage of the excitement generated by a
novel concept or product well received by the public. They can do this by establishing and
marketing their versions of the product and their company by extension through using the
buzz momentum.
Disadvantages
1. Late movers can have their reputations harmed by being seen as creating knock-offs and
ripping off their customers with what is considered to be a cheap imitation of the original
product.
2. They must also ensure that proper care is taken to not violate the intellectual property rights
of another company by moving into their established market.
3. The late mover company may also have a tough time gaining an established service or
product’s market share.
4. In industry, the early entrant sets the standard for particular services or products, and it can
be challenging to compete with such a standard as it is subjective.
5. Late movers are forced to play catch-up
6. Consumers are loyal to first movers
7. Entry barriers created by first movers
b) With the use of examples, identify and critically discuss two process innovations (4
marks)
Social Innovation
Social innovation refers to the application of practical, sustainable and innovative business
approaches that lead to the achievement of positive social and environmental changes. Social
innovation is seen by some as product development done to better serve society. But in the
eyes of other businesses should not be involved in the process of social innovation. Social
innovation involves the placement of new and innovative systems to enable companies to rise
to meet growing social and environmental challenges and is not about the products. A driver of
change would be the recent rise of social media use and the power it has given the consumers.
This forces companies to think about creating higher value for them; they have to create more
value for their shareholders as well. An example of a social innovator would be Hitachi. Hitachi
collaborates with their partners. The challenges surrounding them may seem impossible, but
they believe that when companies come together to think on a global scale, they can create
solutions to different social problems and ‘ power good’ for the present generation and future
generations.
Open Innovation
Open innovation refers to a situation where organizations use external sources of knowledge
and resources in addition to their internal experience for a change. Examples of this would be
using published patents, consumer feedback, competitors, the general public, external
agencies etc. in addition to their staff or research and development to develop products,
business models, services etc. The principles of open innovation include using the knowledge
and expertise of bright and talented individuals outside their own company. Getting to the
market first is only secondary to the vital requirement of building a good business model.
Internal research and development are required so that a portion of the significant value
created by external research and development can be claimed. Other companies’ intellectual
property should be bought if it is capable of advancing the business model; at the same time,
the company should profit off of other companies’ use of its intellectual property. Making the
best use of both external and internal ideas can help a company reach the top.

c) Define the term ‘disruptive innovation’ and describe how it occurs (6 marks)
A term coined by Clayton Christensen, disruptive innovation refers to a process using which
a service or product takes its place initially at the bottom of a market in simple applications;
then, it displaces established competitors by moving up the market relentlessly. Most
companies eventually produce products or services too expensive, sophisticated and
complicated for many consumers in their market. This is because consumers’ needs evolve
slowly when compared to the rate at which companies innovate. Sustaining innovations’ are
pursued by companies at the market’s higher tiers as historically this has helped them
succeed, charging their most sophisticated and demanding consumers at the top of the
market; the highest prices give them a significant profit.
This, however, can cause these companies to unknowingly pave the way for ‘disruptive
innovations’ at the bottom of the market. This type of innovation gives access to a different
population of consumers, at the bottom of a market, to a service or product that was
historically exclusive to consumers with a lot of money or skill. Disruptive businesses, at least
in their initial stage, have various characteristics; these can include smaller target markets,
lower gross margins as well as more straightforward products or services that appear to be not
as attractive as the solutions that currently exist when traditional performance metrics are used
to compare them. These lower market tiers offer lower gross margins; so, they are not
attractive to other companies moving up in the market, and this creates space at the bottom
for new disruptive companies.
d) What are the characteristics of business model innovation? (4 marks)
Business model innovation refers to developing new and unique concepts that can support
the financial viability of a company; it also involves the processes required to help these
concepts come to fruition. This type of innovation has the primary goal of improving product
value and method of delivery to consumers to realize new revenue sources. Technology has
dramatically changed how companies work and deliver services to consumers; this is because
the new digital age has provided significant new opportunities for business model innovation.
The potential for systemic risk has increased in addition to stiffer international competition.
This has forced companies to turn to business model innovation to remain competitive and
foster growth in the global marketplace. Changes made by Apple in the early 2000s can be
considered to be an example of a successful business model innovation. Their introduction of
products and services like the iPhone, iPod and iTunes expanded on what the company could
offer aside from desktop computers. The iPhone was a breakthrough in the smartphone market
while iTunes and the iPod created the ability to profit from downloadable music.
Q2. Design Thinking (total 20 marks)
a) Critically discuss the assertion that ‘Design thinking is a powerful problem-solving
methodology’. (8 marks)
Design thinking involves the process of problem-solving, and this informs its principles. By
recognizing the necessity of operation, we are consequently able to avoid the progress
inhibiting mentality of quick-fixing. Design thinking employs principles that emphasize on a
meticulous approach to problem-solving.
The fundamental principles of design thinking are:

1. The first step in solving a problem is to identify it. This involves an honest and thorough
assessment of the severity of the problem as well as the steps that led to the problem. This
allows the design thinker to identify any inconsistencies and understand how to tackle the
problem.
2. Design thinking allows the cultivation and application of creative thinking toward problem-
solving. This means that thinkers are given the allowance to think outside the box and be
innovative or think of new ways to apply preexisting problem-solving methods to further
problems.
3. Identifying and nurturing good ideas is a crucial aspect of designing thinking as a problem-
solving method. Once these ideas are identified, they can be developed and tested
theoretically to ensure their effectiveness. But this can only be achieved when design thinkers
are allowed to freely suggest several ideas and share these ideas with their team members.
4. Once all the steps in the process of design thinking have been completed, the team must
now execute the best idea to solve the problem and equip the business with a new found
ability to avoid a similar problem. This type of execution requires a maximal commitment to
everybody part to ensure its effectiveness.
b) Describe why ‘reframing the problem’ is an important first step in problem-solving (
marks)
“Reframing the problem” is a process in which the problem is observed from different
perspectives. This is an essential first step because it forces the team of thinkers tackling the
issue to arise with multiple solutions to the problem. Even though not all the answers may be
useful, reframing the problem as soon as it is identified means that the thinkers are equipped
with knowledge of all the possible ways that a problem might occur, and multiple solutions give
way for design thinkers to take necessary measures to prevent future occurrences of a similar
issue. This leads to a stronger and more streamlined organization that is less likely to
experience a recurring problem.
c) What research techniques/methodologies enable Design Thinkers to characterize
user behaviours, needs and aspirations (4 marks)
1. Human/User centred methodologies: design thinking places a strong emphasis on
seamless user experience, as they interact with the business model. This requires that the
design thinker factors in the end-user when solving innovation problems.
2. Holistic and Co-creative methodologies: this process requires that design thinkers
maintain communication with both stakeholders and end-users throughout the problem-solving
process. This ensures that the thinkers are continually taking into account the individual needs
of the business as well as its customers allowing them to come up with solutions that
simultaneously fix the problems, restore/increase profit margins, and optimize the user
experience.
c) What are the characteristics of the ‘prototyping phase’ of Design Thinking (4 marks)
Through the process of determining and understanding user-product interactions, design
thinkers create test products, prototypes, which are simple, scaled down versions of the final
product, and release these prototypes into a test market. They then gather feedback and user
information based on user experiences with the prototypes and use this information to develop

the final product further. This process is known as Beta Testing. Beta testing allows design
thinkers to fail without any severe financial repercussions and learn from those failures, to
create a finished product that is well equipped to compete and succeed in the target market.
An example of this is a social media platform testing a software update with a test market of
500 users, and then collecting and using the data gotten from the feedback to adjust and
optimize the software update in order to better suit the general target audience when the
finished version of the software is officially released to the general public.
Q3. The value proposition (total 20 marks)
a) Define the term ‘value proposition’ (4 marks)
The term “Value Proposition” can be defined as the value or quality of service that a
company intends to provide to any customer(s) that chooses to patronize them. It can be
described as a mission statement, of sorts, introducing potential customers to the company’s
operation standards in an attempt to convince the customers that the company is the right
choice for their patronage. Value propositions serve as a marketing tool that helps to satisfy
potential clientele that specific or general goods and services (provided by the company in
question) will be more suitable for the client/consumer than similar products and services
offered elsewhere. A value proposition should be a concise outline of the reasons why the
company’s goods and services are of great value to the customer. It should further highlight the
added benefits that the products and services may provide to the customer. The goal of a
value proposition is to convince the consumer of the importance and necessity of a company’s
goods and services by appealing to and aligning with their most innate decision-making
factors.
b) Why has a ‘psychographics’ become increasingly important in understanding buyer
behaviour, customer segmentation and product/service innovation? (6 marks)
In the preparation of marketing strategies, marketers are more likely to place a strong
emphasis on the demographics and locations of the target market, whereas, the
psychographics and behaviours of individual customers are given a significantly less amount of
attention. The reason for this oversight is that marketers generally find it challenging to obtain
accurate and reliable information on psychographics and consumer behaviour patterns. The
importance of psychographics in targeting a market comes from its ability to provide an
accurate representation of the interests of consumers in the intended target market.
Psychographic segmentation is the categorization of an audience based on its needs,
opinions, and attitudes. This categorization helps to build a more accurate depiction of the
target audience, and this, in turn, makes for a stronger marketing strategy. Factors such as
activities, interests, and opinions are generally employed when compiling the psychographic
analysis of a target audience.
c) Critically evaluate the advantages and disadvantages of persona mapping (4 marks)
Persona mapping can be defined as the identification of consumers and their decision-
making process while simultaneously applying this information to the creation of a more
effective marketing strategy. Persona mapping helps by providing marketers with the more
specific needs of the target consumers, and this allows the marketing team to be able to
identify inconsistencies in the marketing strategy that could potentially affect the overall
success of the campaign. They are also easy to communicate, help prioritize the features of the
new product and allow us to help focus on the needs of the consumer. A common
disadvantage of persona mapping is that it requires a significant amount of time and resources,
and this makes it a problematic marketing plan to sell to the leaders of the organization.

Some other drawbacks include:
1. The basis for construction in which some companies forge personas in regards to their types
of personality and behavioural style instead of referencing the classes of the actual visitors.
2. Sometimes it becomes hard for companies to understand and connect with other cultures
and understand their real motive, rendering international personas challenging to construct.
3. Personas can be used to target specific audiences rather than a whole of the consumers
because it is impossible to address the needs of all the consumers
d) Identify and provide examples of three ways that business can capture value (6 mar
Three ways through which a business can capture value include:
1. Diverse Customer Base: a diverse customer base protects the company from high impact
losses when it loses a single customer. For example, if four of your top clients are collectively
responsible for 33% of your total sales, new buyers might be wary of the fact that one or more
of the top clients might be inclined to leave if the company is sold, taking a large portion of the
company’s total sales along with them.
2. Demonstrated Scalability: refers to when a company can demonstrate its ability to increase
its profits margin when there is an increase in revenue. An example of this will be a company
called “Y”. Y licenses computer software to private investigation offices. Once it has been
created, the production cost of the software is next to nothing. However, the revenue
generated from all the additional licensing causes the profit margin to increase.
3. Financial Foresight and controls: this is a value driver that has two aspects, financial
reporting and growth planning. Financial reporting refers to the reporting of the finances of the
company as well as its sources of revenue and expenditure. This allows buyers to track how
the company spends its money and where the company gets its money from. Growth planning
refers to the prediction and estimation of the growth pattern and trends of the company within
a specified timeframe.
Q4. Tools and frameworks (total 20 marks)
a) Describe three benefits of design thinking, versus ‘traditional’ innovation
methodologies (6 marks)

b) Discuss the benefits of the ‘Divergent’ and ‘Convergent’ phases in Design Thinking (
marks)
Divergent thinking refers to the kind of design thinking in which multiple solutions are
conceived for a single problem. Some benefits of divergent thinking are that it has no order or
arrangement for how ideas are conceived, it is free-flowing, and it encourages creative thinking
and problem solving in which multiple solutions may be explored simultaneously.
Convergent thinking refers to the process of design thinking in which the thinker explores all
solutions conceived through the divergent thinking process in an attempt to find the correct
one. It benefits us by analyzing all solutions and sometimes even combining multiple solutions
to arrive at the right answer. Some requirements for convergent thinking are accuracy, logical
reasoning, speed, efficiency, and the reapplication of techniques.
c) Describe the benefits of Kano Analysis (2 marks)
Identifying Information and Value: the primary benefit of the Kano survey is how uniquely and
effectively it identifies the needs and desires of a consumer base. The questions are easy to
analyze, thus giving the reader a more focused descriptor of what the right product should be.
It is an excellent medium to use to test new product ideas and determine consumer
expectations.
Good Analysis: received from the Kano Survey is beneficial in identifying priorities and
customer complaints, and understanding what steps to take to take action based on these
findings. The surveys ask the same questions in different forms, allowing you to obtain a more
detailed analysis of the responses.
d) Identify four alternative ways to generate revenue from consumer products or servi
(8 marks)
Reviewing Pricing Strategies
When dealing with price-sensitive goods and services, it is essential to emphasize pricing
strategies. Consider the market prices of similar products from competing organizations and
adjust your rates based on this information, while considering organizational goals. An increase
in prices may cause the consumers to perceive your products as higher value/quality and in
turn, increase your profit margins. On the other hand, rising rates may increase company
revenue without affecting sales.
Expanding Distribution Channels
A change in the channels through which your goods and services are distributed can
significantly increase sales and profit margins without affecting the product pricing. Carefully
studying the process and effect of distribution through online retail, sales representatives etc.,
can help to determine the effects that using each of these channels will have on the product
sales volume and profit margins, and whether or not additional marketing campaigns will be
required for these channels.
Diversify Offerings
In the case of a well-established organization, the addition of new goods and services will aid
in the growth of the company. If the organization has a high supply of a particular product in
the market, the identification of low supply products with high consumer demand will aid in
determining what new products to market and sell profitably. This may lead to a decrease in
sales and higher revenues if the new product has a higher market price.

Develop Relationships and Cross Promotions
An increase in the number of people promoting your goods and services will lead to an
increase in sales and revenue. A possible way of doing this is by building relationships with
businesses with whom you have a shared target audience, providing goods and services that
are different from yours. An example of this would be a cement manufacturing company
working cross promotionally with a construction company.
e) What benefits may be gained from producing a detailed customer journey map? (2
marks)
Benefits of a customer journey map include:
1. Identifying where the customer and your business interact
2. Highlighting various consumer needs at the different levels of the buying funnel
3. Providing an outsiders perspective on your company’s sales process
4. Identifying developmental priorities for the business
5. Providing directions for more productive and effective allocation of efforts and money.
Q5. Business Model Innovation (total 20 marks)
a) Critically evaluate why and how business model innovations have developed in the l
20 years (8 marks)
Within the last 20 years, business models have evolved from the previously applied techniques,
mainly because of the position held by the internet in today's society. Businesses that existed
in the 1980s and 1970s, advertised and marketed their products through mediums such as the
printing press, posters, and television placements. Companies today, rely on more direct and
comparatively less expensive media such as social media platforms, emails, and
advertisements on websites with large amounts of internet traffic, this evolution. However, it
has not entirely abandoned the older business models in their entirety. Classical models, such
as placing stores close to the locations of potential customers, are still being applied in various
forms to modern day business models.
b) With the use of examples, describe three new forms of a business model; identify
where value is created and captured in each (10 marks)
High Touch: a high touch business is a business that requires human interaction. It is a
person-centred business model where the relationship between the company and the
customer directly and dramatically affects the business revenue and customer retention.
Examples of organizations that employ this business model include barbershops, private law
firms, and professional management agencies (for entertainers).
Freemium: this business model is the most common on the internet and involves attracting
customers by giving them a free trial period within which the customers have access to all of
the services provided by the business without any payments. After this period, certain services
become restricted and can only be accessed if the customer upgrades to a paying profile with
the industry, usually in the form of monthly or annual subscriptions. Youtube is an excellent
example of a company that does this. Essential video streaming services are available to all
youtube users, and after the trial period, users are given a choice to upgrade to the platforms
premium service, Youtube Red, which provide the user access to much more streamable
content such as movies and tv shows.
Bricks and Clicks: this refers to a business model that sees a business operating both online
and offline. This allows the user to buy products online with an option of home delivery or in-

store pickup. This business model enables the user to the convenience of receiving their items;
however, they choose based on their schedule and personal preferences. An example of such
a business model is Netflix. Netflix has a platform that allows users to either stream movies and
tv shows on the internet or rent them on DVD and pick them up from local distributors.
c) What are the benefits of using the business model canvas? (2 marks)
1. It helps structure discussions: entrepreneurs typically keep the business model canvas in
mind (and sometimes in hand) when meeting and brainstorming with members of their
business team. It helps the team to think in a specific direction and allows them to
articulate their ideas more quickly when they have guidelines to follow.
2. It is fast: because of how simple the business model canvas is, both new and seasoned
entrepreneurs can quickly and easily create business models. This allows them to efficiently
determine how strong a business idea is and how to develop it better if need be while
observing their market and target audience in real-time.
3. It is excellent for developing a portfolio of ideas: due to its efficiency in capturing many
business ideas simultaneously, the business model plan is an excellent medium to use to
store and structure ideas with the intention of further development at your convenience.
4. It intuitively makes sense: the business model canvas has both front and back stages, with
each stage serving a specific function. The front stage gives an idea of how to drive
product value and make a profit, while the backstage expatiates on what steps to take to
actualize the ideas presented in the front stage.
5. The value proposition: the business model canvas is centred around the value proposition.
This gives a good incentive for the entrepreneur to analyze their existing business model,
as well as identify the business models able to satisfy the customer's needs and solve the
customer's problems while optimizing the customer's experience with the business itself.