Business Innovation: Theories and Made.com Case Study Report

This report delves into the realm of innovation, exploring two pivotal theories: the Diffusion of Innovation (DOI) theory and the Disruptive Innovation theory. It utilizes Made.com, a prominent online furniture and homewares retailer, as a case study to illustrate the practical application of these theories. The report begins with an introduction to the concept of innovation and its significance for businesses, followed by a detailed examination of the DOI theory, including its adopter categories and factors influencing adoption rates. Subsequently, the Disruptive Innovation theory is discussed, highlighting its core principles and implications. The report then provides an overview of Made.com's innovation history, emphasizing its strategic approach to cost reduction, technology integration (NFC), and customer experience. Finally, it synthesizes the application of the innovation theories to Made.com, offering insights into the company's historical and future development of products and services. The report concludes with a summary of the key findings and their implications for business strategy and innovation management.

MANAGING
INNOVATION

Table of Contents
INTRODUCTION...........................................................................................................................1
Innovation Theories................................................................................................................1
Diffusion Of Innovation (DOI) Theory..................................................................................2
Disruptive Innovation Theory................................................................................................5
Innovation history of company...............................................................................................5
Historical Development of Products and Services.................................................................6
Future Development of Products and Services......................................................................7
Application of theories...........................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Innovation refers to the process of creation of a new product, service, process, technology
or addition of value to existing goods and procedures to serve the needs and demands of
consumers. It is essential for business enterprises to indulge in innovative practices on a regular
basis so as to receive assistance and recognition from customers, government as well as
professional bodies (Helper and Henderson, 2014). By bringing in innovations in the form of
products or services at frequent intervals, companies strive to build trust and loyalty among
customers and retain them for a long duration of time. This report is based upon made.com
which is a retail brand dealing in furniture and housewares online as well as across a wide
network of experiential showrooms located within Europe. This enterprise is headquartered in
London, United Kingdom. It will gain an insight into two innovation theories and its implication
in context of the organisation. Also, the historical as well as future development of goods and
services is discussed.
Innovation Theories
Innovation is one of the most crucial concerns of every company and its role within the
marketplace is alienable. This ascertains the extent to which an organisation indulges in creation
of a new product or addition of value to existing procedures. Innovation can be brought about in
terms of product or service development, ways of carrying out work, methods of management of
tasks etc. (Noble, 2017). This is an element which strives to provide a strategic edge to an
organisation within the market. Innovation drives the attention of customers towards the range of
new and unique offerings of enterprise and works towards the growth of business in long run.
Besides this, innovation tends to provide satisfaction to customers by way of providing such
products and services which can fulfil the needs, demands and requirements of consumers in the
marketplace.
The need for entity to bring innovative processes and techniques is determined by
Research & Development (R&D) department within the enterprise which keeps on conducting
study in relation to the latest trends and techniques prevailing within industry (Grandori, 2012).
The company then undertakes steps to execute such advanced technologies and procedures
across the premises to gain recognition in market and retain customers for long duration of time.
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In this regards, various types of innovation theories can be used and implemented by enterprise,
some of which are specified below:-
Diffusion Of Innovation (DOI) Theory
This is a theory proposed by E.M. Rogers in the year 1962 and exist as one the most
ancient social science theories. It is generally used in the process of communication and explores
the ways in which an innovative idea or process is communicated by way of utilisation of
various channels. There can be a number of ways through which data can be transmitted, ranging
from interpersonal communication to mass media. Diffusion of Innovation (DOI) theory assists
in determining those aspects which affect the rate at which innovation is adopted by an
individual (Goolsbee and Krueger, 2015). It explores the manner in which an innovation first
gains momentum and then diffuses across a specified population. The end outcome of such
diffusion is adoption of innovative idea or process. The most crucial aspect of such adoption is
that personnel must be able to perceive the new or modified idea, goods or technology.
As per this theory, adoption of innovative idea, technique, product or service does not
take place instantly, instead this is a process which requires the element of time. Here, some
individuals adopt the innovation while others adopt it later. It is generally observed that
individuals who adopt innovation at an early possess different behavioural characteristics than
those who adopt it a slower pace. While promoting an innovative practice or process among a
target audience, it is imperative that focus is laid upon the behavioural characteristics of
individual within such population so as to identify the probable chances of adoption of
innovation (Dodgson, 2018). According to the philosophy of this theory, there exist five adopter
categories and although majority of the individuals belong to middle categories, yet it is essential
to gain an insight into the traits of target audience. Different strategies are utilised by business
organisations while appealing to various adopter categories.
As per this theory, adopters are defined as “individuals, groups, business entities or larger
population prevailing amidst the social system categorised as per their ability to adopt
innovation.” The five adopter categories which are included in Diffusion of Innovation (DOI)
theory are described below:-
Innovators: These are the individuals which are keen to adopt an innovation and possess
an enthusiastic approach towards any new product, process, technology or service. They possess
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high level of risk tolerance and are willing to adopt an innovation irrespective of the probable
chances of its failure.
Early adopters: These individuals are much more discreet when it comes to their
adoption choices in comparison with innovators. Early adopters represent opinion leaders and
embrace the change opportunities in order to adopt such potential products which may assist in
providing a strategic edge to them or the organisation in marketplace. They are highly aware of
the need to adopt change and thus, appreciate new and innovative ideas or processes. Strategies
by which an entity can appeal to this include 'how-to' manuals as well as information sheets
which contain data related to formulation (Key Innovation Management Models and Theories,
2019).
Early majority: This group includes those individuals which adopt innovative ideas or
processes in a significantly long course of time when compared to innovators or early adopters.
They constitute majority of the marketplace. Such personnel require an evidence in relation to
success of innovation before adoption of any innovative idea or procedure. Strategies that can
assist in influencing people belonging to this group include evidence of effectiveness of
innovation, success stories etc. (Greer and Hauptmeier, 2012).
Late majority: The personnel belonging to this category are immensely cautious and
skeptical of adopting innovation. They generally adopt innovative practice or process only after
seeing a proof of its favourable outcomes or ensuring that it has been adopted by majority of
people. Strategies that can be utilised for targetting this population can comprise of provision of
data related to the number of persons who have previously tried and adopted the innovation
feasibly.
Laggards: The people belonging to this category are last to adopt the innovative practice
or process as they are largely bound by conservative and traditional thinking and ideology. They
are immensely skeptical and are the hardest to be convinced for adopting the innovation.
Strategies that can be formulated to appeal to this category can comprise of fear appeals,
statistics and pressure arising from personnel who are a part of other adopter categories.
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(Source: Diffusion of Innovation Theory, 2019)
The stages through which an individual carries out adoption of an innovation comprises
of creating awareness for bringing up innovative idea or practice, deciding to adopt the
innovation, initial use of the idea to test its feasibility and continuous utilisation of innovation
(Diffusion of Innovation Theory, 2018). It is generally noted that there are primarily five factors
which affect an individual while they adopt an innovation. Each of the below mentioned
elements play a major role in influencing the adopter categories. Such factors that affect the
adoption rate of innovation within marketplace are briefly described below:-
Relative Advantage: This defines the extent to which an innovation is observed to be
better than the product, services, idea or technique that it strives to replace.
Compatibility: This refers to the extent to which an innovation is consistent with the
requirements, needs, values and desirability of potential adopters.
Complexity: This implies the extent to which the innovation is difficult to be perceived or
put to force by an individual. Also, it determines the probability of requirement of more skills
and competence to make use of innovative idea or practice (Jurkovic and et. al., 2015).
Trialability: This implies the extent to which the innovative product, service, technology
or process can be experimented or tested by individuals before making a purchase.
Observability: This explores the extent to which the innovative idea or process provides
such benefits which are visible to others (tangible).
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I
llustration 1: Diffusion of Innovation Theory

Disruptive Innovation Theory
This theory was proposed by Clayton Christensen during the year 1997 within the book
“The Innovator's Dilemma”. It is regarded as one of the most important innovation theories. As
per the ideology of Christensen, these are such innovations which leads to creation of a new
market as well as value networks. This ultimately results in disruption of existing markets and
value networks consequently displacing the technology prevailing in the marketplace earlier.
Disruptive innovations enhance the goods and services in a manner that is not expected out of
any company within the market (El-Refaie, 2013).
In the book, Christensen explained the theory of disruptive innovation in detail. The main
emphasis was on technological innovations and the way in which advanced technologies
overtook superior technology existing in the market. As per Christensen, disruptive innovations
lead to creation of values different from mainstream technologies and are regarded superior due
to performance dimensions which are of utmost importance to customers. Such innovations are
generally not accepted by traditional consumers. They may seem to be cheaper than mainstream
goods, yet they are valued by certain segments of audience. Thus, theory of disruptive innovation
can prove to be an optimum strategy for any company which strives to achieve business growth
in near future.
Disruptive innovation takes place within any company in the way of a process. In the
early stages of product or process development, goods developed using disruptive technology
tend to serve only a niche market which values their non-standard performance attributes. As per
this theory, market disruption occurs only when new yet inferior products developed as a result
of disruptive technology displace the mainstream goods irrespective of their superior
performance.
Innovation history of company
Made.com, launched in 2010, is an online retailer which deals in furniture as well as
other homewares. This enterprise distributes and sells high-end furniture procured through
independent designers and sell it for upto 70% less than other rivals of company. Over years, the
main strategy of this entity has been cutting down costs by way of shipping articles directly
procured from manufacturer to consumers and selling them online. The items are manufactured
within the premises of organisation only in case when enough orders pile up with the firm that
eliminates the requirement for warehouse space. This company has an excellent innovations
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history which assists in building trust and loyalty amongst customers so as to retain them for a
long duration of time in future. The stores of enterprise makes effective use of NFC technology
which is provided by CloudTags. Every article which is on display as well as the 600 drawers
within the outlets possess NFC chip which contain postcards of products for consumers to
purchase and take away (Acharya, Schaefer and Zhang, 2015). Made.com is an exceptional
example of high-tech use of innovation and advancements persisting within the industry to gain a
strategic edge in marketplace.
Historical Development of Products and Services
As pointed before, Made.com has been constantly focussing upon adopting such
strategies and innovations that can render them a competitive edge over rivals. Company at
present offer one of the best shopping experience to customers across the globe. The technology
that is being used within the showroom over years adds value to the retailer as well as customers.
This organisation has linked the offline and online shopping experience by making use of
technology in a meaningful and suitable manner. Made.com offers ease of shopping to customers
by way of their NFC technology. Herein, people can easily gain extra information about the
features and other details of products by pointing one of the digital tablets of showroom in front
of an appropriately marked NFC tag (Pound, 2013). Customers can save those articles in the
wishlist that they like and are probable to buy in near future. They can then email these items so
as to ponder in depth about the chance of buying the product. Made.com has been tapping the
advantage of this easy to use technology offering practical benefits by attracting around three
quarter of customers in market.
Also, this technology offers personalised recommendations to customers by way of
tablets during the course of their browsing. This has been made possible within the stores by
beacons dotted throughout the outlets of enterprise which communicate to the company about
those sections of store in which the people are spending their maximum time. Besides this, NFC
technology provides data regarding the number of times an individual saved as well as scanned
yet did not make the purchase. This type of information assists enterprise in collecting
personalised recommendations from a large number of customers on a regular basis in context of
online as well as in-store experience. Further, this hi-tech mechanism being used by company
renders the brand knowledge about their most valuable customers as well as most frequent
visitors. Thus, the CloudTags tablets of Made.com have been providing a large database of
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audience in relation to products being rendered by company in marketplace. NFC tag technology
also helps the entity in recognising the best performing employees as they also wear NFC tag
that they scan while assisting any customer.
Future Development of Products and Services
With inflexion of time, Made.com has been bringing continuous innovations in terms of
products, processes and features. Continuing with this ritual of enterprise, company is capable of
bringing up robotic furniture in future which will ease the experience of customers living in
apartments. This unique as well as creative robotic furniture system of enterprise will allow
apartment dwellers to adjust their space as per their convenience. This will let users transform
their space for various activities such as sleeping, working, entertainment all with just the push
of one button. This feature will transform the face of furniture retail industry by providing a
system which eases the experience driven by customers along with tripling the usage of a
specified space (5 innovations propelling the furniture industry into the future, 2019). The high-
tech wardrobe slides components within this system (such as bed, drawer etc.) convert a single
room into a one-bedroom apartment which is equipped with bed, desk, closet, lighting, media
centre etc.
Application of theories
As per the Diffusion of Innovation (DOI) Theory, adoption of an innovation requires
time so that people can analyse the feature or technology and then make a purchase. The
innovation brought in by made.com in past in the form of NFC tags and CloudTags also could
not capture the attention of customers from the very beginning, yet with the passage of time, this
technology was able to captivate three quarter of consumers in marketplace (Acharya, Schaefer
and Zhang, 2015). Besides this, the future innovation of company in terms of robotic furniture
will also take time to establish a good image amongst a wide range of audience. There are a
number of factors within this theory that impact the adoption rate of innovation in market, these
are briefly described below:-
Relative Advantage: The historic innovation of tag technology of made.com is highly
innovative and provides a large base of data to company in terms of staff performance
recognition, personalised customer recommendations etc.
The future innovation of robotic furniture is a hi-tech feature that aims to ease the
experience of customers and provide them space as per their own accords.
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Compatibility: The innovation of NFC Tags and CloudTags tablets is largely consistent
with the needs and desirability of customers and provides them extra information about products
they point at by way of tablets.
The future innovation of Made.com strives to give users the opportunity to transform
their space as per the activity they are willing to conduct, like sleeping, doing work etc. (Jurkovic
and et. al., 2015).
Complexity: The past as well as future innovation does not much require use of hi-tech
features by customers. This implies that the innovation is not much complex and can be accessed
by users easily while making a purchase during their shopping experience.
Trialability: The tag technology of made.com allow users to gather extra informations
about features of product so as to take decisions in relation to purchase of product. This implies
that customers can gain knowledge about the product before buying the product.
The robotic furniture is also providing the customers with the facility of moulding the
furniture as per the needs and requirements of people. This feature can be tested by customers
within the showroom before making a purchase.
Observability: The benefits of robotic furniture as well as tag technology are tangible and
can be seen by customers, thereby rendering a competitive edge to made.com and assisting them
in retaining the consumers for a long duration of time.
As per Disruptive Innovation Theory, there are many innovations which lead to
disruption of existing and generation of new markets as well as value networks. In this regard,
the tag technology innovation of Made.com largely disrupted the industry by introducing a whole
new and unique concept of NFC tags and CloudTags tablets which provide large scale
convenience and ease to people (Goolsbee and Krueger, 2015). Besides this, the robotic furniture
that is going to be launched by company in future context is a new technology not yet explored
by many companies. Thus, this innovation will largely disrupt the furniture retail sector and
assist the enterprise in gaining a high stake in market.
CONCLUSION
From the above report, it can be concluded that innovation is a tool by which entities can
gain a strategic as well as competitive edge in market. Also, it has been analysed that innovation
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drives the business growth and sustainability of enterprise for a long duration of time. Besides
this, it has been assessed that Diffusion of Innovation (DOI) and Theory of Disruptive
Innovation can be implemented by an organisation to enhance the existing capabilities of their
products and services, thereby, striving to gain a high stake in marketplace. Furthermore, it is
ascertained that by continuously engaging in innovative practices, company can easily build a
feeling of trust and loyalty among customers to retain them for long time.
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REFERENCES
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general motors and chrysler. Journal of Economic Perspectives. 29(2). pp.3-24.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge.
Greer, I. and Hauptmeier, M., 2012. Identity work: Sustaining transnational collective action at
General Motors Europe. Industrial Relations: A Journal of Economy and Society. 51(2).
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Jurkovic, S. and et. al., 2015. Induction machine design and analysis for general motors e-assist
electrification technology. IEEE Transactions on Industry Applications. 51(1). pp.631-
639.
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Vehicular Technology Magazine. 8(1). pp.90-99.
Acharya, V. V., Schaefer, S. and Zhang, Y., 2015. Liquidity risk and correlation risk: A clinical
study of the General Motors and Ford Downgrade of May 2005. The Quarterly Journal
of Finance. 5(02). p.1550006.
Pound, A., 2013. The Turning Wheel-The story of General Motors through twenty-five years
1908-1933. Edizioni Savine.
Grandori, A. ed., 2012. Interfirm networks: organization and industrial competitiveness.
Routledge.
Online
Key Innovation Management Models and Theories. 2019. [Online]. Available
Through:<https://www.viima.com/blog/innovation-management-models>.
Diffusion of Innovation Theory. 2018. [Online]. Available Through:
<http://sphweb.bumc.bu.edu/otlt/MPH-Modules/SB/BehavioralChangeTheories/
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5 innovations propelling the furniture industry into the future. 2019. [Online]. Available
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