Strategic Innovation Management: A Case Study of Tesco in Retail

This report examines innovation management within Tesco, focusing on the future of the retail industry and the company's innovation requirements for sustained success. It highlights key trends such as online offerings, omnichannel customer connections, and social media commerce. The report emphasizes the need for Tesco to adopt innovative techniques, enhance online presence, and improve operational efficiency. Furthermore, it explores building future innovation capabilities through increased investment in idea generation, customer understanding, executive-level sponsorship, a positive organizational culture, external idea sourcing, supplier partnerships, and employee incentives. The analysis underscores the importance of leadership in fostering a culture of innovation and creative abrasion to drive successful outcomes for Tesco in the competitive retail market.

Managing Innovation in
Business

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Future of the retail industry-........................................................................................................3
The Organisations Innovation Requirements 2022-....................................................................4
Building the Future Innovation Capabilities for the Organisation-.............................................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

EXECUTIVE SUMMARY
This report will discuss the future of the industry in the year 2022 and beyond this as well as the
innovation requirements of the organisation for making threw effective innovation in the
organisation. Along with this, the report will also illustrate the building of the innovation
capabilities for the organisation as this will help them in implementing the innovations which
will help them in becoming successful in the future.
INTRODUCTION
Innovation management can be described as the process of managing the innovation procedure
of the organization from the initial stage till its final stage of the successful implementation. It
involves taking the decisions, activities as well as the practices for devising and implementation
of the innovation strategy. Innovation management is basically handling of the overall activities
which are needed while introducing new things by the organization (Pantano and Gandini, 2018).
The things here mean coming up with the new ideas or thoughts, developing as well as
implementing them and putting them into the practice. Tesco is the British Multinational
company which engaged in dealing the groceries as well as the general merchandise retailer.
This company is headquartered in the Welwyn Garden City in England and this company is
considered as the third largest retailer in the world as this is measured by the gross revenue. The
main purpose of this report is to convey as well as learn the future of the retailing industry. This
report will discuss the future of this industry as well as the organization requirements for the
innovation. Along with this, the report will also cover the future innovation capabilities for the
organization.

MAIN BODY
Future of the retail industry-
The year 2022 is considered as the interesting year for the retail sector or industry after
overcoming the challenges of the last two years due to the coronavirus. The future of this
industry is looking very exciting as using the technology has paid several ways for the good and
effective online experience, changes in the consumer behaviour as they are driving both product
and business model of innovation as well as the biggest brands of the world are taking the
responsibility of handling the issues and the problems which are been faced by the society and
the overall planet because of the businesses. The biggest trends of the retail industry in UK are
the online offering of the products and services, connection of the online and offline customers,
social media business or trade is boosting, efficiency improving due to inventory management
through technology as well as following the safety measures for staying (Alexander and Cano,
2020).
Figure 1: Future trends in retail industry
(Source: Grewal, Roggeveen and Nordfalt, 2017)
Almost, 97% of the customers are now preferring purchasing from online platforms and in this
53% of the shoppers are in between the age of 25 and 44. From the various surveys it has been
found that the around 87% of the retail companies are now shifted and are shifting towards

selling the products online. Businesses in this industry have suffered much loss in the pandemic
so it becomes very important to connect the offline as well as the online worlds. The 67% of the
customers are trying or willing to use new ways of the shopping and 30% of the retailers are
planning to introduce the virtual reality shopping along with 35% are highly interested to see
this. The high competition in the retail industry is pushing the retailers for the innovation through
the social media as well as adapting the technology for their online presence (Swaffield, Evans,
and Welch, 2018). 73% of the consumers of the UK are buying the products directly from the
social media platform as this shows the strong connection between the brands as well as the
online communities.
Around 53% of the independent retailers have already shifted towards selling their products
through the social media platforms and 32% of the retail companies are trying to shift towards
this. The retail industry in UK is growing much that it has contributed very large amount of the
revenue to the GDP of the company (Weber and Schütte, 2019). The current trends in the retail
industry indicates that the future more emphasis will be given to the money value as well as the
safety of the consumers then the current time. The retail industry in the UK Has always had been
the largest private sector for the employment in the UK. The online shift has made many
negative impacts on the retail businesses as well as the growing economy of the country. So it is
very important for the retail businesses to adopt the advance technology that is to shift towards
the online websites. In future retail industry will observe increasing involvement and
interference from the artificial intelligence. Organisations will tend to us more AI based
technology to predict and alter the customer behaviour and purchasing decisions. Along with this
retail organisation like Tesco will also have to upgrade their ICT devices and technology so that
they can manage big data. For this cloud computing technology and other data management
platforms will become an essential component in the retail sector. In addition to technology,
future retail sector will also have changing pattern of supply chain. For instance, advance
delivery systems through drones will lead to same day delivery so that on just one single click
customers can receive their products within few hours. The user interface and the display of
brand will become phenomenal as competitors will use high quality and effective options for
promotion and delivery of services.

The Organisations Innovation Requirements 2022-
From the current trends in the retail industry, it becomes very necessary as there are very serious
innovations which are required by the Tesco Company to sustain and survive ion the highly
competitive market. The companies entering into the retail industry the more competition will
rise for the Tesco Company. The consumer’s trends have been shifted to the online shopping as
they highly prefer the convenience so there are many companies in the industry who have
already been ready and started shift towards making online presence so that they can survive in
the market. The Tesco Company has to shift towards the online presence for sustaining in the
market and for this they have to adopt the innovative techniques by this they will be able to make
the online presence and the customers will be easily buy the products online (Sørensen and et.al.,
2019).
It is very important for the Tesco Company to make the effective and proper management as this
will help them in making better teams and increase in the productivity level of the overall
organisation. The organisation has to adopt the new ways for the operations of the business as
well because this will help them in cost cutting and increasing the quality of the products
manufactured by the company for its customers. As the Tesco Company has diversified products
such as the books, clothing, electronics, furniture, toys and many more so it is very important for
this company to adopt the technology and make the online presence that is by making the
websites, social media platform. The consumers are spending much time on the internet as this
will help their customers in buying the products from the online website and they will not be
having to visit the stores for shopping (Pister, 2021). Tesco must implement the strategies which
will enable the employees of the organisation by coming up with the new idea’s for the
successful innovations which will help the organisation in surviving in the future retail industry.

Figure 2: Innovation map for retail industry
(Source: Retail Innovation Map Reveals Emerging Technologies & Start-ups, 2022)
The current trends of the retail industry have created the necessity for Tesco to adopt the
effective innovations which will help in survival in future and to make the leading position in the
organisation. The Tesco Company has to use the digital marketing strategies which will help
them in generating the large revenue by allowing the customers to shop online and the delivery
of the products will be provided to them.
The several fundamental elements which will help the Tesco Company in implementing the
innovation effectively are such as-
Curious Employees: The employees which are interested and curious to do new things will help
Tesco in coming up with the new ideas which will help the company in surviving as well as
generating the large revenue for the company.
Recognition and rewarding: The Tesco Company creating the environment which is having the
culture of the recognising as well as rewarding the employees who has done may efforts and hard
work for the organisation will help the employees to stay motivated and work more effectively.

Training programmes: The Tesco Company should consistently conduct the training
programmes as this will help in increasing the productivity level of the organisation ns they think
innovatively. Providing training to employees can help Tesco in the professional development
and assurance that talented candidates are in continuous process of learning new things (Ahmet).
These are the requirements of the innovation which will help the Tesco Company in effectively
implementing as well a generation of the new ideas by the employees.
Innovation road map for future can be planned as below:
Task Name Duration Start Finish
Idea generation 10 days Wed 6/1/22 Tue 6/14/22
Analsyis of customer and
market trends 3 days Wed 6/15/22 Fri 6/17/22
Screening of innovative
ideas 2 days Mon 6/20/22 Tue 6/21/22
Feasibility analysis 4 days Wed 6/22/22 Mon 6/27/22
Development and
implementation of
innovation
15 days Tue 6/28/22 Mon 7/18/22
Testing of inovative product
and service 20 days Tue 7/19/22 Mon 8/15/22
Improvement 5 days Tue 8/16/22 Mon 8/22/22
Launching into new market 2 days Tue 8/23/22 Wed 8/24/22
Feedback and performance
analsyis 30 days Thu 8/25/22 Wed 10/5/22

Building the Future Innovation Capabilities for the Organisation-
Innovation capabilities can be defined as the ability of the company for identifying the new ideas
as well as transforming these ideas into the new or the developed products and services as well
as the processes which are highly beneficial for the companies. There are many ways through
which the innovation capabilities of the Tesco organisation can be increased such as-
 Increasing the investments for the generation of the ideas
 Developing the thorough understanding of the customers
 Focusing on executive level as well as on sponsorship
 Establishment of the effective and positive culture of organisation
 Using the outside sources for finding the new ideas
 Partnership with the suppliers for the generation of new and innovative ideas
 Providing incentives and rewards to employees for successful innovation
These steps when ensured by the Tesco Company will help them in increasing the innovation
capabilities of the company as this will lead to successful innovation (Lewis, Ricard and Klijn,
2018). The current trends of the retail industry have made very necessary for Tesco to adopt the
advanced technology as consumer trends are shifting towards the convenience and they want that
Tesco must provide the platform from where they can but the products of the company from
home rather than visiting the stores.

The management of the Tesco Company uses the Democratic style of leadership as in this, the
employees are also listened and their opinions are also taken before taking any decisions in the
organisation. The effective leadership helps Tesco in consistently building the innovation
capabilities of the organisation. Leaders of Tesco play vital role in increasing the innovation
capabilities of the organisation as when the leaders crate the culture of the innovation in the
organisation this helps the employees in thinking innovatively and creatively.
There are three capabilities of the innovation which helps Tesco to innovate successfully are
such as-
Creative Abrasion: This is considered as the ability of generating the ideas through the discourse
as well as debate. When there are diverse employees in Tesco, this helps in gathering the
different viewpoints with the expertise, experience as this will help Tesco take the effective
innovation from the different options. The creative collaboration of Tesco employees facilitates
the innovation.
Creative Agility: This is the ability of testing and experimenting through the reflection, pursuit as
well as the adjustments. The innovation is considered as the problem solving process which
proceeds by the trial and error and it is very lengthy process because the idea is generated and
then tested and after this it is revised and retested. It is very important for Tesco to prepare for
the innovation activities in advance as this process is messy and unpredictable (Akman and
Yilmaz, 2019).
Creative Resolution: This involves the ability of making the integrative decisions which
combines the disparate and also the opposing ideas of the innovation. This process is of
integrating the ideas as the best option among for creating the something unique and new option.
To attain the something innovative ideas, Tesco must put both the ideas on the table and make
the new one but it is very difficult to do.

Figure 3: Innovation capabilities
(Source: Innovation capability, 2022)
It is very true that well-designed innovation system of Tesco can change the organisation
positively. The innovation management of Tesco determines the future as the modern
organisation innovation system is consists of the network structure which helps in encouraging
the flow of the information as well as the knowledge within the organisation. Innovation plays
the crucial role in the prediction of the long term survival of Tesco in the future as well as helps
in determining the success in the highly competitive global market. The innovation capability of
the Tesco Company is very essential fundamental as this will help them in efficient management
of the idea and the innovation as well as the effective implementation of the disruptive
innovation (Warner and Wäger, 2019).
The future Innovation capabilities is much important for the Tesco Company as this will help
them in-
Interaction with stakeholders: When the stakeholders of Tesco are integrated in the decisions of
the organisation, they make the full use of the organization. This helps them in generating the
higher level of the leverages for the Tesco company as well as this helps them in securing and
achieving the highest possible level of the profits for the company. The organisation having the
effective teamwork helps them in giving the good opportunities to the employees and this leads
to the continuous innovation in the organisation.

Transmission of knowledge and management: Innovation is the process of managing the work
in the more effective and efficient way. Transmission of knowledge is very important for the
successful innovation in Tesco as this helps them in development of the innovation ideas. The
complexity level has increased the need of the growth of the enough knowledge for the better
innovations in Tesco. The good knowledge is considered as the basis for the innovation within
Tesco as well as it is also considered as the transferable and inevitable resources which help in
creating the innovations in the organisations. The innovation system must have to support the
knowledge management and this is the reason why the innovation and the knowledge work side
by side.
Knowledge transfer through cross functional cooperation: One of the effective ways to share
knowledge is by means of encouraging cross functional cooperation. When individuals from
different cultural backgrounds work as team to solve a problem then their individual perception
and creativity enhances the innovation in outcomes. Diversity among team members or different
functional units used to ensure that different type of knowledge is exchanged and shared from
every individual and others also used to get its glimpses. If organisations do not engage cross
functioning teams, then individuals may not be able to understand the diversity which is
mandatory for meeting the business needs and preferences of various types of customers.
Changing management issues as well as the implication of strategies: For building the
effective and the better future, it is very essential to take rage logical approach and the step by
the management for the managerial issues of Tesco as well as implementing the effective
strategies which will help the Tesco company in effectively making the changes by the
innovations (Chen, Yin and Mei, 2018). The company must focus on the managerial issues such
as quality of the products and services of the company. Due to the current rends in the retail
industry, it is very important for the Tesco Company to make the changes in the operations of the
company as this will help them in survive in the highly competitive market.
Organisational culture and leadership techniques: The leadership techniques of Tesco have
also many impacts on the innovation capability of the organisation. The company having the
effective leaders help them in thinking innovatively and creatively. The leadership style of the
Tesco Company must be effective as thus will help them in coming up with the new and unique
ideas for the successful innovations. Along with this, the culture of Tesco also helps in the
effective ideas for the successful position in the future.

The innovation capabilities help Tesco in achieving the leading position in the highly
competitive market. The innovation of the Tesco Company is continuously being investing the
capital in the technology for developing the Omni channel experience of the customers as well as
to maintain the competitive edge in the increasingly digitised country UK. The Tesco Company
has always been ready and quick to adopt the highly advanced technology so to improve the
efficiency level of the operating model of the Tesco Company the company then started
investing in the Digital in store initiatives (Elsbach and Stigliani, 2018). The company started the
process of the scan as the customer’s shops as well as self-check-out stations were placed with
the adjacent employee of the company for facilitating the customers for performing the checkout
functions without involving the employees of the Tesco Company. The Tesco Company
consistently increasing the innovation capability and because of this only the company is
effectively making the innovations in the highly competitive market.
This has resulted positively for Tesco as they were able to reduce the cost as well as very less
employees were required for performing the manual checkout. The store in video cameras was
set which enables the floor employees for changing the foods and the vegetables which has
become depleted as for the immediate replenishment. The Tesco Company has started focusing
on the four main areas for the innovation are food and drinks products as well as the technology,
data robotics and automation and the packaging of the products (Ashrafi and et.al., 2019).
The new group of the innovation team will help the Tesco Company to access the most exciting
innovators from the across the globe. The innovation team of the Tesco Company uses the
strategy of initial idea to the minimum viable products in the six weeks of the time period. The
innovations made by the Tesco Company have the huge impacts on their success of the overall
organisation. This shows that the Tesco Company is continuously building the innovation
capabilities for the organisation.
CONCLUSION
From the above report it can be concluded that it is very important for the businesses to go for
the innovations regularly as this will help them in determining their position in the future as well
as this help them in surviving in the highly competitive market. It has been found that the
innovation has always been the challenging factors while taking the decisions for the changes in

the organisation. Innovation accelerates the business which helps them in speeding up as
compared to other companies. In the case of the Tesco Company, the innovation has been made
in the online presence by adopting the highly advanced technology helped them in becoming
more effective and efficient as they were able to save the cost and helped in making the
developments in the different range of the products of the company. The Tesco Company has
realised that the need of the innovation in the company is not temporary as rather than this will
help them in surviving in the highly competition in the retail industry of the country. This report
has discussed the future of the industry in the 2022 and beyond as well as the innovation
requirements of the organisations. Along with this, the report has also covered building of the
future innovations capabilities for the organisations as this is highly important for the Tesco
Company as well for sustaining in the market as the current trends in the retail industry is shifted
much.

REFERENCES
Books and journals
Ahmet, E.F.E., IT BASED INNOVATION AT THE MANAGEMENT MINDSET OF
ORGANISATIONS. Journal of Business in The Digital Age, 3(2), pp.136-148.
Akman, G. and Yilmaz, C., 2019. Innovative capability, innovation strategy and market
orientation: an empirical analysis in Turkish software industry. In Managing
Innovation: What Do We Know About Innovation Success Factors? (pp. 139-181).
Alexander, B. and Cano, M.B., 2020. Store of the future: Towards a (re) invention and (re)
imagination of physical store space in an omnichannel context. Journal of Retailing
and Consumer Services, 55, p.101913.
Ashrafi, A., and et.al., 2019. The role of business analytics capabilities in bolstering firms’
agility and performance. International Journal of Information Management, 47, pp.1-
15.
Chen, J., Yin, X. and Mei, L., 2018. Holistic innovation: An emerging innovation
paradigm. International Journal of Innovation Studies, 2(1), pp.1-13.
Elsbach, K.D. and Stigliani, I., 2018. Design thinking and organizational culture: A review and
framework for future research. Journal of Management, 44(6), pp.2274-2306.
Lewis, J.M., Ricard, L.M. and Klijn, E.H., 2018. How innovation drivers, networking and
leadership shape public sector innovation capacity. International Review of
Administrative Sciences, 84(2), pp.288-307.
Pantano, E. and Gandini, A., 2018. Shopping as a “networked experience”: an emerging
framework in the retail industry. International Journal of Retail & Distribution
Management.
Pister, M., 2021. Leadership and Innovation-How Can Leaders Create Innovation-Promoting
Environments in Their Organisations?. European Journal of Marketing and
Economics, 4(2), pp.55-65.
Sørensen, S.N and et.al., 2019. Evaluating environmental risk assessment models for
nanomaterials according to requirements along the product innovation Stage-Gate
process. Environmental Science: Nano, 6(2), pp.505-518.
1

Swaffield, J., Evans, D. and Welch, D., 2018. Profit, reputation and ‘doing the right thing’:
Convention theory and the problem of food waste in the UK retail
sector. Geoforum, 89, pp.43-51.
Warner, K.S. and Wäger, M., 2019. Building dynamic capabilities for digital transformation: An
ongoing process of strategic renewal. Long range planning, 52(3), pp.326-349.
Weber, F.D. and Schütte, R., 2019. State-of-the-art and adoption of artificial intelligence in
retailing. Digital Policy, Regulation and Governance.
Online
Grewal, D. , Roggeveen, A., and Nordfalt, J., 2017. The future of retailing. [Online]. Accessed
through < https://www.sciencedirect.com/science/article/pii/S0022435916300872>
Innovation capability, 2022. [Online]. Accessed through <
https://innolytics-innovation.com/innovation-capability/ >
Retail Innovation Map Reveals Emerging Technologies & Start-ups, 2022. [Online]. Accessed
through < https://www.startus-insights.com/innovators-guide/retail-innovation-map-
reveals-emerging-technologies-startups/ >
2

3