Managing Innovation: Theory, Application, and Zipcar Analysis

This report provides an in-depth analysis of innovation management, focusing on the diffusion of innovation theory and its practical application. It begins with definitions of innovation, its principles, processes, and evaluation, followed by an exploration of Zipcar, an American car-sharing company, ...Read More

Managing innovation
report

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
Definition of innovation theory, principals, process and evaluation of theory...........................4
Company background, business models which they use, development of products and
application of theory...................................................................................................................7
Future plans of company...........................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
Books and Journals...................................................................................................................11

INTRODUCTION
Innovation refers to introduction of different products of establishing new things in
market. It is not only related to introducing new products but changes in existing products also
lead to innovation. Marketers can't rely only on existing products so innovation has to be done
whether related new products or existing ones. There are many categories which are considererd
in the concept of innovation like changing existing technologies, any improvement is being done
in the market or a change in process is done. Marketers innovates new products to attract all
customers as every person wants some new and different products. The company initiates new
ideas to generate value of all products. Diffusion of innovation is a theory which means how new
innovations spread throughout society and it indicates how the new ideas which are generated by
marketers are adopted by different people in society. It was developed by E.M. Rogers and he
explained various stages which are followed while performing this theory. It involves Innovators,
Early adopters,Early majority, late majority and Laggards. The below analysis is based on Zip
car. (Agger and Sørensen, 2018)
MAIN BODY
Definition of innovation theory, principals, process and evaluation of theory.
Diffusion of innovation is a process through which all new innovations which are done
by organization is transmitted to the society with the help of various channels. People who
adopts all innovations are members of society, companies.
The process of diffusion of innovation theory involves knowledge, persuasion, decision,
implementation, confirmation. It is explained as below:-

 Innovators:- These are the people who always to introduce new technologies, new
products with advanced features and even if there is high percentage of risk they still feel
of innovating new things. (Alexander and Joe, 2019) Early adopters:- They are the people who comes after the category of innovators and
mostly remain active social media as well as give reviews about new innovation being
done for all the products which they like or dislike. Early majority:- It means when a new product is adopted by most of the people then
they think of spending on those products. As innovators and early adopters don't think
much on spending but early majority people makes sure that resources are used properly
in an efficient manner. Late majority:- These are the people who don't have much money as compared to above
three stages. They only spend on those products which has no risk and are fully tested. As
in case of other adopters they interact with leaders but late majority people don't interact
much with them. (Baldwin and Curley, 2020)
 Laggards:- These are the people who don't have much ides regarding technology and hav
ereally low social status. They do not take opinions from other people. Laggards focus on
traditional methods only rather than digital technologies.
Benefits of diffusion of theory and it is explained as below:- Knowledge:- In this stage, consumers gets an information regarding the product which is
innovated and have some kind of understanding regarding the innovated product. They
have detail regarding the product but don't make and judgement whether product is
perfect for the problems which occurs in organization or not. (Tiwari and Buse, 2020) Persuasion:- In this stage, consumers forms a decision whether new product is
favourable or unfavourable. Consumers in this stage analyse all information regarding
the product that whether product would be useful or it would lead to some problems.
Marketers uses various methods for the innovation which is being don by them and the
most effective and efficient method which is used is through help of catalogues. Decision:- This stage involves two decisions whether to adopt the product or decline it. If
a consumer adopts the product then they should make full use of innovation until and
unless it leads to some problems like lack of money. In the case of decline stage they do

not accept that innovation. In this stage there are also some persons who accepts new
products, fully test it but after some time rejects it . Implementation:- In this stage consumers accepts all new products and start using it. In
this stage, some behavioural traits are also required. There is a marketing plan which is
formed to ensure whether thr product is efficiently and effectively communicated to all
consumers. In an organization coordination is the most important thing which is related to
all distribution of products as well as communication which is done to consumers.
 Confirmation:- This is the final decision which is related to consumers decision whether
they are adopting product or rejecting it. A consumer decision can be changes at any time
if any conflict arises regarding innovation. (Biemans, 2018)
Limitations of diffusion of theory and it is explained as below:- An uphill climb:- It means almost all consumers don't want to take risk so it becomes
very difficult for companies to influence them for trying new products. When an
innovation is done or new ideas are initiated by marketers then there is a risk of failure
also. Marketers cannot ensure that new innovations which are done will lead to success
only. Cultural limitations:- Companies should always consider culture of people while
innovating new ideas. Every customers belongs from different religions, has different
culture so their likes and dislikes also depends on their culture only. For example, if an
innovation in a hotel and new dishes are implemented but it was done according to the
culture of people so it won't lead to success and customers will automatically decline and
they will not even try it. So, it is considered as a limitation because innovation might not
be done according to the culture. (Erdogan, Rondi and De Massis, 2020)
 The numbers are against you:- It is also considered as a limitation because organizations
may have huge majority of people who are early and late majorities and there may be
plenty of laggards too. There are innovators and early adopters also but it's a fact that
more customers don't like to take risks and very few of them initiate to take risks.
Priniples of diffusion innovation theory:- Reinvention:- It is a important principle of diffusion theory of innovation. Innovation can
only be successful for organization if it fulfills needs of almost every consumer. There
are many consumer who demands more related to products so reinvention is done to

fulfill their expectations. It is really important for organiztaions as relying only on same
products won't lead to success. So, changes should be made in existing products and
improvement should be done so that new products can be innovated and spread across the
society. In an organzation, it is essential that development should be done because to
achieve success it is the most important factor. (Espinosa-Cristia, 2019) Peer-peer conversations and Peer networks:- When a company innovates a product then
they spread it across the society through various marketing methods like social media,
advertising and so on. Throgh these marketing methods details about the innovations are
spread across the society. When a new innovation is done it involves high risk also. There
are hundreds of consumers who have different opinions regarding adoption of product or
rejection of product. (Zharov, 2019)Those people who have accepted the innovation
marketers have full trust on them and they assurity to organization that whatever change
they are doing won't lead to negativity. Due to focus on peer-peer communication, it has
led to peer networks. The organization targets those people who can spread new ideas
through social media.
 Understanding the needs of different user segments:- According to the research it is
analysed that there are 5 elements which are involved in theory that are innovators, early
adopters, early majorities, late majorities and laggards. So, marketers have to focus on all
users. It is very important for organizations to fulfill all the needs of consumers and
understand them because only focusing on adopters should not be done. There are many
people who may try new products but can also reject it so marketers should innovate
products according to their preferences also. (Kelliher, Kearney and Harrington, 2018)
Company background, business models which they use, development of products and application
of theory.
Zip car is the american car sharing company which provides auto mobile reservations to
all of its members. The company was founded in year 2000 by Antje Danielson and Robin chase.
(Tidd and Bessant, 2020)There are around 500 employees working with the organization and its
parent organization is Avis budget group. If a person wants to have a membership then there are
many requirements which should be fulfilled like minimum age of person should be 21 years,
driving license should be valid, no accidents should be done by the person since 3 years.

Business Models that Zip car uses:-
Zip car follows two business models; subscription business model and pay-per-use
business model which is also called as on demand business model. Economic benefits:- Subscription model as well as pay per use busines model both have
certain economic benefits. These benefits are related to the fact that all consumers save
while buying, maintaining their cars. It is used by those consumers who don't use their
cars on a frequent basis. According to a research it is analysed that in US, to own a car it
costs around $8558 per year. (Kerzner, 2019) Asset management:- According to Zipcar, they have all their products which they
provide to consumers. The company has to manage all aspects related to their operations
which includes providing services, assets and so on. The company gives the
responsibility of managing the car, keeping it clean to all consumers. In the case of
Zipcar, whatever they provides are expensive in comparison to other companies and due
to this they are not much competitive than others. Product or service distribution:- Zipcars main target has always been students. So, they
put their cars which is nearest to their campuses. They locate their car at fixed spot which
can be even seen through their app also. It was considered as the good improvement in
comparison to other car sharing companies because most of them locate their cars near
the airport. Transaction costs:- It is very important for the company to minimise costs especially for
those who do frequent transactions. To coordinate all tasks in the company, Zip car does
it with the help of technology instead of people to coordinate everything. The company
owns their product themselves so due to this they don't being peers too.

 Trust:- This element is important for all the organizations especially for those companies
who are not so famous across the world. Trust can be generated more through use of
advertisements, social media and so on but it may not be possible for small companies. Safety:- In the case of car sharing companies it is very much necessary to follow all the
safety measures which are required. They should have full information of drivers so that
people also feel safe while travelling. (Mousavi, Bossink and van Vliet, 2018) Quality and customer experience consistency:- According to the model of pay-per-use,
the companies own their assets which they provide so it was same in the case of Zip car.
The company has various cars of which they are owners but the cars which they provide
for students and cars which they locate near airports are completely different. Business model:- There are two types of businesses like common sharing as well as
market sharing. In case of common sharing business, it refers to the real idea of sharing
economy that is related to community and in case of market sharing businesses they
usually focus on making profits.
 Funding and growth:- Zip car is still the most successful as well as largest car sharing
company and even if the company keep their car on lease, they get the payment of their
ownership which has led to their growth. (Naqshbandi, Tabche and Choudhary, 2019)
Development of zip-car products through years and to what it is now.
Zip car has always been successful among all other car sharing companies. According to
the success story of Zip car, it started its working in may 2000 and within four months only they
provided services to around 600 customers. The new office was started in San Francisco and one
more office was opened by them in Toronto which led to huge growth for the company. The
company launched an app which had some advanced feature like honking the horn or unlocking
zipcars. In 2013, the company was acquired by Avis budget group and expanded its organization
in most of the cities like Paris, Spain. (Tidd and Bessant, 2018) It introduced new products as
well as new services which was floating car sharing service. Zip car became successful because
they used their resources very well as well as invested much in innovating advanced
technologies. It is used by many customers because they provide them better services as well as
benefits too. It is explained as below:-

 Cost- effective:- Customers only have to pay till they are using the vehicle and they are
not responsible for payments regarding parking, taxes, maintainence and so on. Due to
this customers feel good because they are not paying much while using the car. Convenient:- Zip cars are very much convenient especially for students because they
locate their cars near their campuses and they can go to the parking place even through
walking. Consumers gets the benefit of choosing cars according to their needs and select
them accordingly. (Ottosson, 2019)
 Freedom:- There are many public transports which drives only on specific routes which
creates problem for those users who may not abe able to come at that specific location so
Zipcar provided this benefit to all users that they can do booking at whatever location
they want car to reach and at whatever time.
Application of diffusion of innovation theory. Relative advantage:- It means when a company thinks of some enhanced advantage than
the advantage occurred in the past. When company makes use of advanced technology
then it should be more efficient as well as more effective. To involve new technologies
some things should be kept in mind by consumers like production should be increased
with the help of new technologyand at the same time cost should be less. (Prange and
Schlegelmilch, 2018) Compatibility:- Innovation should always be matched with the current conditions that
companies are facing. If products would not be much innovated according to the values
as well as desires so consumers will not accept the product. So, organization should make
sure that all the innovation is done according to consumers. Complexity and simplicity:- When any product is innovated it is not at all easy to use that
product. So, companies should innovate those products which are simple in usage as well
as decrease its difficulty. To be able to attempt:- When any innovation is done by company then it is first tried and
tested. So, innovation should be done in the way that it should be easily attempted by
both consumers as well as by companies itself. (Ratten and Usmanij, 2020)
 Observability:- When a customer expects a new product and company innovates the
product then it should be observed exactly the same they wanted because if it would be
same then adoption would be done easily by consumers else they may reject it.

Future plans of company.
For the development of company, Zip car made various plans to achieve success and it is
explained as below:-
Zip cars made a plan for future development in which they will be providing efficient and
effcetive vehicles which will be available to consumers at any time they want. If any individual
wants that they need a luxury vehicle then zip car would provide that also. The company is also
rolling out on Volkswagen in London through which they are regarded as largest electric cars in
a single city. The company also ensures that their vehicles would be available in summer also.
As company has made a plan for their future development in context with introducing electric
cars which will be a great experience for the members and this strategy is not been applied by
any of the competitor. They also introduced the concept fo new mobility option in those cities
where members needs the vehicle during whole week right from going to work and coming from
that. They expanded its company in latin amerca too as they launched Costa rica. (Tiwari and
Buse, 2019)
CONCLUSION
According to the above analysis it is concluded that innovation is done to attract all
consumers because everyone wants products with latest technology. The concept of diffusion
theory states that whatever innovations are done by the company it is transmitted to society as
well. There are innovators, early adopters, early as well as late majorities as well as laggards and
according to them the theory is implemented in the organziation. While innovating any product it
considers two decisions whether to accept the product or just decline it. These decisions lies in
the hand of consumers because if they will not like any innovation which is being done by the
company they will decline that product and due to this the company will have to face loss. The
diffusion theory is beneficial for the company but at the same time it has certain limitations
which affects the company. As there are different customers, some people is ready to take risks
but some may not. If people are ready to take risks then they will easily adopt the product but at
the same time if they are not ready to take risks then they may decline the product also.

REFERENCES
Books and Journals
Agger, A. and Sørensen, E., 2018. Managing collaborative innovation in public bureaucracies.
Planning Theory,17 (1), pp.53-73.
Alexander, B. and Joe, T. eds., 2019.Managing Innovation: Internationalization of
Innovation(Vol. 34). World Scientific.
Baldwin, E. and Curley, M., 2020.Managing Innovation in the Digital World. De Gruyter.
Biemans, W., 2018.Managing innovation within networks(Vol. 7). Routledge.
Erdogan, I., Rondi, E. and De Massis, A., 2020. Managing the tradition and innovation paradox
in family firms: A family imprinting perspective.Entrepreneurship theory and
practice,44 (1), pp.20-54.
Espinosa-Cristia, J.F., 2019. Managing innovation based on studies on science, technology, and
society: toward a constructivist and critical perspective of innovation
management.Cadernos EBAPE. BR 17 (1), pp.68-83.
Kelliher, F., Kearney, A. and Harrington, D., 2018. Managing innovation in the hospitality micro
firm: A framework for sensing, seizing and reconfiguring dynamic
capabilities.Hospitality & Society, 8 (2), pp.159-178.
Kerzner, H., 2019. Innovation Project Management: Methods, Case Studies, and Tools for
Managing Innovation Projects. John Wiley & Sons.
Mousavi, S., Bossink, B. and van Vliet, M., 2018. Dynamic capabilities and organizational
routines for managing innovation towards sustainability. Journal of Cleaner
Production, 203, pp.224-239.
Naqshbandi, M.M., Tabche, I. and Choudhary, N., 2019. Managing open innovation.
Management Decision.
Ottosson, S., 2019. Developing and Managing Innovation in a Fast Changing and Complex
World.Springer Books.
Prange, C. and Schlegelmilch, B.B., 2018. Managing innovation dilemmas: The cube solution.
Business Horizons,61 (2), pp.309-322.
Ratten, V. and Usmanij, P., 2020. Entrepreneurship and Organizational Change: Managing
Innovation and Creative Capabilities. In Entrepreneurship and Organizational Change
(pp. 1-6). Springer, Cham.

Tidd, J. and Bessant, J., 2018. Innovation management challenges: From fads to
fundamentals.International Journal of Innovation Management, 22 (05), p.1840007.
Tidd, J. and Bessant, J.R., 2020. Managing innovation: integrating technological, market and
organizational change. Wiley.
Tiwari, R. and Buse, S. eds., 2019. Managing Innovation in a Global and Digital World:
Meeting Societal Challenges and Enhancing Competitiveness. Springer.
Tiwari, R. and Buse, S., 2020. Key Issues in Managing Innovation in a Global and Digital
World: An Introduction to the Festschrift in Honor of Cornelius Herstatt. In Managing
Innovation in a Global and Digital World (pp. 1-13). Springer Gabler, Wiesbaden.
Zharov, V., 2019, July. Methodological foundations of managing innovation-effective
development of industrial production of the Arctic. In IOP Conference Series: Earth
and Environmental Science (Vol. 302, No. 1, p. 012132). IOP Publishing.