Roehampton University: BUS020X618S Managing Innovation Report - Ocado

This report provides a comprehensive analysis of Ocado's innovation strategies, focusing on the application of innovation theories such as the business model canvas and disruptive innovation. The introduction establishes the importance of innovation for companies and highlights the models and strategies that can be adopted. The main body of the report defines innovation theory, outlining its principles and processes, and then delves into the specifics of the business model canvas and disruptive innovation. The report then applies these theories to the historical development of Ocado, examining the company's background, business models, and its evolution. Finally, the report explores potential future development pathways for Ocado based on the chosen innovation theories, offering recommendations for continued growth and success. This report is designed to provide a detailed overview of innovation management within the context of a leading online retailer.

Managing
Innovation

Contents
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
Innovation Theory...................................................................................................................................3
Application of the innovation theory in the historical development context............................................7
Application of the innovation theory in the future development context...............................................10
CONCLUSION.........................................................................................................................................12
REFERENCES..........................................................................................................................................13

INTRODUCTION
For every company it is essential to adopt innovation as through it they can attract more
and more customers toward them which leads to increase in sales as well as profitability ratio.
While adopting innovation a company may adopt numbers of models, strategies and concepts.
This is so because that will help them in adopting innovation properly as well as it helps in
developing proper strategies. The respective report is based on different innovation theory which
respective company may adopt as well as it also includes application of innovation theory in
respect of the historical development and future development (Baldwin and Curley, 2020). In
addition to this the innovation theory which is used in respective report are business model
canvas and disruptive innovation as that will help a company in adopting innovation at their
workplace in effective manner. But before selecting business model a company management
need to conduct several analysis related to past development, market requirement, resource, own
capabilities and many more. It is so because through it they can attain their desire goal as well as
objective successful by implementing innovation at the workplace.
MAIN BODY
Innovation Theory
Definition of innovation theory
Innovation theory is considered as model or method which provide guidelines to the
company and their management so that they can adopt and implement innovation in effective
manner. Innovation theory also help management in developing strategies properly so that
employees conduct practices accordingly which help in successful of project in impressive
manner (Bell, 2020). There are numbers of innovation theory which a company may adopt for
conducting their business operations and functions in successful manner such as blue ocean
model, business canvas model, knowledge creation, knowledge conversion and many other
models. In respect of Ocado, they are also planning to adopt innovation at their workplace and
for that they can adopt different innovation theory, from which some are mentioned in respect of
respective company.
Principle of innovation theory

There are several principles associated with the innovation theory, from which some are
mentioned below:-
 In order to start innovation it is essential that a person must convert their issues or
problems into an effective idea on which they can do work for attaining it successfully
(Bonesso, Cortellazzo and Gerli, 2020).
 It is essential that management need to have proper system for conducting innovation at
their workplace.
 In order to adopt innovation it is essential that a management must underlies the methods
of innovation as well as they also need to manage their resources properly for attainment
of objective which is related to innovation.
Processes of the innovation theory
The process of respective theory will include several phase through which company may
attain their desire goal, explanations of stages are mentioned below:-
 Knowledge – In this customers are the first who expose to the innovation as well as they
do not posses understanding about the innovation.
 Persuasion – According to this phase customers get attracted to know more about
innovative products and try to seek information related to that.
 Decision – At respective stage customer compare benefits and limitations of the
innovation and take decision whether they need specific product or not.
 Implementation – In this phase customer will identify the usage of specific innovation
for them.
 Continuation – In this a person who is customer will take decision whether they want to
continue using specific product or not.
Business model canvas
It is considered as strategic management as well as lean startup model or template which is
used by a company in order to develop new business model or modifying existing business
model (Chesbrough, 2020). It is considered as visual chart or diagram with having elements that
describe a firm or a specific products value infrastructure, proposition, finances and customers. It

is also considered as plan according to which a person or management may start with a brain
dump, filling the segments which spring their mind at initial stage as well as they work in order
to the empty segments for closing gaps (Erdogan, Rondi and De Massis, 2020). There are several
factors which are considered in the respective model and it is essential for a company to adopt
those factors while developing decision. Explanation of business canvas model factors are
mentioned below:-
 Key Activities: This factor will include activities which leads to value proposition for a
company such as a manufacturing company develop a appropriate supply chain in order
to drive down cost or price.
 Key Resources: It refers to important resources which are required by a company in
order to develop effective goods and services for satisfying customer’s need, demand and
expectations.
 Partner Network: It refers to partners of a company who help management in
conducting business activities in effective and appropriate manner. This will also help in
determining relationship among the buyer and suppliers.
 Value Propositions: It is considered as product and services which are innovative as well
as different from the competitive products. This is so because that will help a company in
attaining competitive advantage successfully.
 Customer Segments: In order to develop an effective business model a company needs
to identify their target customer for whom they will develop as well as supply products
and services (Hilbolling and et. al., 2020). There are several kinds of customer segment
such as mass market, niche market, segmented, diversity, multi sided platform and many
more.
 Channels: It is considered as delivers which help a company in delivering their products
and services to the potential customers. It is essential that the channel must be effective,
cost effective and fast. There are several channels through which a company can reach to
their clients such as store front, major distribution and combination of both.
 Customer Relationships: It is essential for company to develop proper customer relation
as it help in succession and survival of business. There are several ways through which a
company can develop as well as maintain effective customer relationship such as

personal assistance, dedicated personal assistance, self service, automated services,
communities and many more.
 Cost Structure: It is essential for a company to develop effective monetary
consequences during conducting business in different business models. The cost structure
has different characteristics which based on fixed cost, variable cost, economies of scope,
and economies of scale.
 Revenue Streams: It is considered as model through which a company able to develop
revenue by reaching to the customers (Huber, Wainwright and Rentocchini, 2020). There
are numbers of ways a company may adopt for development of revenue stream such as
assets sale, subscription fee, usage fee, renting amount, advertising, promotion, licensing,
brokerage fee and many more. From this a company may adopt a revenue streams
according to their business operations and functions.
Benefits Limitations
 By adopting respective model Ocado
able to reduce risk of the failure.
 Respective company also helps in
effectively targeting customers
according to their requirement and
need.
 It is also considered as scientific
framework which provide effective
outcome.
 Respective model required extra tool
for implementation which is hectic as
well as time taking for Ocado.
 There is also no or proper tool to
implement the Business model canvas
for a respective company.
Disruptive Innovation
The respective concept of innovation first analyzed and used by American Scholar
Clayton M. The idea of disruptive innovation is get popularized by the book named The
Innovator Solution written by Clayton Christensen (Kavadias and Hutchison-Krupat, 2020).
According to him there are main two kids of technologies which are experienced by business. It
is considered as innovation which develop a new market as well as value network and it also
disruptive the existing market as well as value network which leads to displacing developed
market leading product, firms and alliances. Respective model generally hold the bottom of the

market as well as it meet the similar requirement as the high market solution in relatively cheap
and easy manner. In this company generally set their price at the low which help them in gaining
other benefit like covering market very quickly and be competitive in the similar market
(Mariev, Nagieva and Simonova, 2020). There are several characteristics of respective
innovation such as it focus on new market, customers not know about innovation, innovation will
be dramatic as well as game changing, in this problem not well understand by company and
many more.
Benefits Limitations
 This innovation will help Ocado
management in developing process,
product and services which is totally
new as well as innovative.
 Moreover, disruption helps a company
in attracting different kind of customers
so that they can attain their desire goal
and objective.
 The limitation of respective innovation
theory is that big or large companies
will not able to adopt it properly as they
more focus in conducting research and
development.
Application of the innovation theory in the historical development context
Company background – Ocado well knows online supermarket which describe itself as
the largest online grocery retail around the world. The respective company is founded in 2000 by
Jonathan Faiman, Tim Steiner and Josan Gissing. Its head office is situated at the England,
United Kingdom as well as they provide services related to groceries and consumer goods. The
respective company also offers their own brand groceries item from Waitrose supermarket chain
as well as their own brand i.e. Ocado (Nabiullina and et. al., 2020). The respective store
warehouse is developed or builds in a giant 3 D shape inside which groceries are stores. In
context of conducting business respective company didn’t have any chain of stores as well as
they generally deliver products directly to the home from its warehouses. Respective company is
also member of FTSE 100 Index as well as they also floated or include in the London Stock
Exchange at 2010. There are several business model of respective company from which some are
mentioned below:-

 Company inputs – The respective business model of respective company will include
several factors such as people who help in conducting business by developing new and
innovative ideas. Then next is technology through which respective company can conduct
work easily and effectively for attainment of predetermined visit and aim as well as
another factors of this business model is intellectual property which help them in
attaining competitive advantage at the marketplace by introducing new products and
services ( Ratten and Usmanij, 2020). The last factor is finance which helps them in
attaining desire goal successfully as through finance they can adopt resource properly.
 Company smart platform – The respective modular help in automating online retail
services and delivering solution. It is also considered as highly scalable along with the
capabilities of always being flexible for their partner’s needs and requirement. Respective
company conducts regular research in order to support their current as well as future
partners. It is also considered as effective solution for both customer experience as well
as operational economics.
The business model canvas of Ocado:-
Key Partnerships Key Activities Value
Propositions
Customer
Relationships
Customer
Segments
Local farm market
food cooperatives
Federal.
State and local
government health
and food
departments.
Merchants who
process payment.
Colleges
Process online
orders.
Do delivery on
same and next
day (Strategic
analysis of
Ocado, 2020).
Provide
customers
support.
Easy access
through internet
as well as mobile
application.
Offer competitive
price as compare
to the brick and
mortal store.
Provide same day
delivery for
Social media sites
Mobile
application
Web chat box
State of art
website
Professional who
have busy
schedule and face
challenge in
conduct shopping
at brick and
mortar store.
People who have
disabilities and
elder or old age
people.

Universities.
Boarding schools.
saving time.
Offer
membership
offers and
discounts.
Sororities at the
University and
Colleges.
Key Resources Channels
Interactive,
intuitive and
secure site as
well as mobile
application.
Great
management
team.
Cost effective
logistics and
updated contacts
with suppliers.
Do contract with
retirement home
communities.
Contract with
fraternities and
sororities in
university and
colleges.
Cost Structure Revenue Streams
Cost related to business website and mobile
application development as well as
maintenance.
Acquiring intellectual property rights for
securing contracts with food suppliers,
management team, and customer support and
so on.
Sales of goods Advertisement
Licensing line of credit with bank.
Venture capital
Buy outs
Historical development – At the initial stage Ocado is run by the Faiman, Steiner and Gissing
and they manage each and every part of the company. In 2009 respective release its first
application for the iPhone users named with Ocado on the Go, this will provide opportunities to
users that they can do shopping without using PC (Tan, 2020). Then in 2010 company develop

another stage and launch application for the android phones as well as in 2015 Ocado launch
application of Apple Watch. Then in 2015 respective company introduce Ocado Smart Platform
which is their own software for operating online retail businesses. After that in 2017 respective
company launch application for the Amazon’s Alexa Voice assistant through which customers
can do shopping by giving commands. This shows that respective company has history of
innovative ideas and development which help them in conducting business operations and
practices in successfully manner.
Application of the innovation theory in the future development context
For every company it is essential to adopt innovation in their business process because
through it they can conduct their work in effective manner as well as it also attracts a customer
which leads to growth of business successfully. In order to adopt innovation a company may
develop any product, service or adopt new process as that must lead to growth of firm at the
potential marketplace. While adopting innovation a company needs to consider several factors so
that they can develop proper strategies as well as plan which help in attaining predetermined goal
successfully (Tiwari and Buse, 2020). In respect of Ocado, they also want to adopt innovation so
that they can attract more customers, in respect of this they are planning to launch new section
that is Ocado Electronics which also includes home and kitchen appliances. In order to
understand innovation plan respective company may adopt different innovation theory, so for
this they adopt Business model canvas, which is mentioned below:-
Key Partnerships Key Activities Value
Propositions
Customer
Relationships
Customer
Segments
Local suppliers of
electronics
products parts.
State and local
electronic
departments who
set guidelines.
Conduct
research and
development
related to new
technology and
innovation in
electronics.
Determine need,
Provide easy
access of
electronics
products through
internet as well as
mobile
application.
Price will be set
Social media sites
Mobile
application
Web chat box
Take feedback
through google
People who love
to use innovative
electronic
appliances in their
house, kitchen or
any other place.

Merchants who
process payment.
Colleges
Universities.
Boarding schools.
People
Event companies
requirement and
expectation of
customers
towards the
product.
Take customers
feedback.
low as compare to
the brick and
mortal store.
Give same day
delivery for
saving time with
service man that
will provide
guidance how to
use.
Provide
membership
discounts.
form.
Key Resources Channels
Product quality,
technology used
innovation level,
skilled
employees and
management.
Great
management
team.
Cost effective
logistics and
updated contacts
with suppliers
who provide
electronic parts
at low price.
Conduct contract
with school,
University and
colleges.
Contracts with
event companies
as they also need
to have electric
items for kitchen.
Cost Structure Revenue Streams
Cost incurred in conducting research and Attracting more customers towards the new

development of market to know customers
need, demand and expectation.
Cost incurred in acquiring intellectual property
right in order to secure contract with electronic
parts suppliers customers supports, electronic
department workers, designers and so on.
products.
Do strong advertisement and promotion
activities.
Developing new range of electronic product according to the Business Model Canvas
Ocado will able to attract more and more customers towards their websites and phone application
which help them in increase sales as well as grow business effectively.
CONCLUSION
Through the analysis of above mentioned points it can be conclude that it is essential for
every organization to implement innovation in their business operations and functions as that
will help in attracting more and more audiences or customers toward the business, products and
services. In order to adopt innovation in effective manner a company may adopt different
models, plans and strategies such as blue ocean model, business canvas model, knowledge
creation, knowledge conversion and many more. The selection of appropriate theory and model
is necessary for implementation of innovation in a business as that will help a company in
conducting business effectively. In addition to this innovation also help a company in making
growing future which helps in increasing sales as well as profitability successfully. Moreover
while adopting innovation a company need to evaluate their historical development data as that
will also help in developing strategies properly and effectively.