Product and Service Innovation and Framework Application Report

This report delves into the critical aspects of product and service innovation, emphasizing its importance in maintaining competitiveness and customer satisfaction in the business world. The report begins by defining innovation and its various types, including architectural, radical, incremental, and disruptive innovation. It then introduces the Value-Added Corporate Innovation Management Framework, a five-layered model used to analyze and enhance an organization's innovation capabilities. The report applies this framework to Woolworths, an Australian retail giant, identifying areas where innovation can be implemented to address challenges such as cybersecurity, food preservation, and customer feedback. The analysis highlights the strengths and weaknesses of the company's innovation strategies, providing recommendations to improve its overall performance and achieve its strategic goals. The report concludes by emphasizing the need for continuous innovation to adapt to market changes and maintain a competitive edge.

Running head: MANAGING PRODUCT AND SERVICE INNOVATION
Managing Product and Service Innovation
Name of Student
Name of University
Author Note

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MANAGING PRODUCT AND SERVICE INNOVATION
Table of contents
Introduction................................................................................................................................2
Background of the company......................................................................................................2
Concept of innovation................................................................................................................3
Types of innovation....................................................................................................................4
Developing an innovation framework........................................................................................6
Application of the innovation framework..................................................................................8
Gaps in the application.............................................................................................................10
Addressing area of weakness in organisations.........................................................................12
Conclusion................................................................................................................................12
Reference..................................................................................................................................13

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Introduction
In the age of competitiveness, it is necessary that every organisation develop
innovative techniques that can help it to satisfy customers and gain global recognition.
Drucker (2014) stated that product and service innovation is important so that customers do
not feel monotonous about buying the same product or using the same service. The
assignment focuses on the development of an innovation framework necessary for gaining
success in the business market. For the purpose of the assignment, Woolworths has been
considered. Woolworths is an Australian retail store specialising in various types of products
used for daily life (Woolworthsgroup.com.au, 2018). The assignment sheds light on the
concept of innovation along with its types and provides an overview of the application of the
innovative framework in Woolworths. The gaps in the application are identified and the area
of weakness of Woolworths is discussed. Recommendations are provided to bridge the gap
that exists and improve on the weakness of the company.
Background of the company
Woolworths is a famous and major retail company situated in New South Wales,
Australia. The greatness of the company is determined by the fact that it has over 995 stores
all over the country. The number of employees in the company is about 202,000 with team
members exceeding over 115,000 (Woolworthsgroup.com.au, 2018). The company looks
after the welfare and health of the people in the country and because of this; it manufactures
and produces fresh vegetables and fruits. The mission of the company is to produce and serve
the best quality food to the customers so that they remain satisfied. This strategy allowed the
company to set up Woolworth’s Australia’s Fresh Food People (Woolworthsgroup.com.au,
2018). It is considered as a type of social responsibility of the company wherein the company
strives to maintain its mission. At the same time, Woolworths indulges in innovative factors

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to help in the satisfaction of the customers. In this regard, it can be seen that the vision of the
company is to gain international recognition in the market and promote unity among the
employees (Woolworthsgroup.com.au, 2018).
Concept of innovation
According to Johnston and Marshall (2016), innovation is a process to develop new
ideas, devices and methods. At the same time, innovation is also considered as the application
of solutions that are better than the existing solutions so that new requirements of an
organisation can be met. The needs of the market, as well as the customers, are met with the
advent of innovation in the market. Innovation can be achieved by using a more effective
approach towards marinating the products, process, service and technologies. Innovation is
mainly created in the models that are available in the market, Government policies and in the
society in which an organisation functions. However, Christensen, Raynor and McDonald
(2016) pointed out the fact that innovation is different from invention.
This mainly because of the fact that invention deals with the discovery of a new thing
or process that can help an organisation or individual get the desired recognition in the
society. Innovation, on the other hand, makes changes to an invention once it is monotonous
to the people. The originality of ideas of individuals that highlights the effectiveness of their
skills is considered an innovation. Dutta, Lanvin and Wunsch-Vincent (2015) is of the
opinion that in management science innovation is considered as a process that unites various
ideas of individuals so that satisfaction of customers can be attained with an increase in profit
for the organisations.

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Types of innovation
According to Tukker et al. (2017), innovation can be of various types that can help
organisations to pursue their objectives. To understand the types of innovation that exist in a
market it is necessary to break down innovation into two dimensions. These include market
and technology. The breakdown can provide four major types of innovation that
organisations apply depending on the situation of the market. These include:
Architectural innovation: Lusch and Nambisan (2015) observed that architectural
innovation involves the application of lessons, skills as well technological advancement in a
different market. The positive point of this particular innovation is that it helps in increasing
the customers as long as the market in which it operates is responsive. The risk involved with
the application of this type of innovation is low mainly because of this innovation relies on
the use of technology that is already proved. The technologies that are required to be
introduced in the market are reintroduced in the companies. However, on most occasions, it is
necessary that the requirement of the new markets be met with the manipulation of certain
activities (Gawer & Cusumano, 2014). For example, the research centres of NASA attempted
in improving the safety of the aircraft cushions.
Radical innovation: This type of innovation is the most common thought that arises
while considering innovation in organisations. This form of innovation gives rise to new
industries and involves the creation of technologies that can revolutionise the technical
aspects as well as the market. An example of this can be provided by tracing the origins of
aeroplanes as it was not designed to provide transportation to the people. However, with the
increase in population and the demand for people to continue to travel quickly, customer
carrier planes were developed.

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Incremental innovation: According to Chesbrough, Vanhaverbeke and West (2014),
incremental innovation is considered as the most popular form of innovation as organisations
remain keen to apply this type for its success. The existing technologies are utilised and the
value of the customers are increased. This type of innovation usually consists of the features
of an organisation along with its design and changes it has made in the products and services.
The existing markets are analysed so that the changes can be made and effectively utilised in
the organisations. Bain and Kleinknecht (2016) stated that most organisations engage in
incremental innovation at one point of its business tenure. An example of incremental
innovation is the inclusion of new features in an already existing product or service.
Disruptive innovation: Disruptive innovation is sometimes called stealth innovation
as it involves the application of new technology and processes to a current market of a
company. According to Christensen, Raynor and McDonald (2015), the reason for this type
of innovation being referred to as stealthy is that new technologies that are developed can be
superior and expensive for the existing markets to implement. Newer markets can implement
disruptive innovation to pose threats to the already existing markets in a business. Some of
the examples of companies that indulge in disruptive innovation include the distribution of
the iPhones of Apple. This is because prior to the launch of iPhone most of the mobile phones
relied on the use of buttons and backdated safety patterns for the phone. However, the latest
technology applied by Apple has provided new ventures to the use of mobile phones in the
modern generation.

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Figure 1: Types of innovation
(Source: Drucker, 2014)
In this regard, it can be said that the areas related to the capabilities of innovation can
have strength and or weakness. The strength lies in the fact that innovation can help provide
organisations with an ability to remain creative and access the areas of development. On the
other hand, the weakness being that an organisation may have to spend a huge sum of money
to recruit employees that have the capability of being innovative. Not only that, the
technology required for being innovative also required huge investments. For example, in a
company like Woolworths, innovation can help in ensuring that customers get to experience
new form business from the company. This can be considered as strength for the company as
innovation can bring about changes in the company and ensure that Woolworths achieve their
number one rank in the Australian business. At the same time, the cost of purchasing the

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technologies required for innovation may be huge and Woolworths need to maintain its
revenue.
Developing an innovation framework
Smith et al. (2017) stated that organisations innovate to create competitiveness and
enhance the opportunities for maintaining effective production in the industry. The attitude of
the organisations towards innovating products and the level of risks that are involved in the
acceptance of products direct the innovative nature of managers and organisations. Thereby, a
market for size and growth that is sufficient for innovation need to be analysed by the
managers. Thereby it is necessary to implement certain frameworks that can help managers
gain the maximum productivity from the market. One such framework that can be used is the
Value-Added Corporate Innovation Management Framework. This framework makes a
comprehensive analysis of the multi-dimensional reality involving various domains of
innovation (Kleinknecht, 2016). This framework is basically composed of five layers that are
required for the effective innovation of business. These domains include:
Business base: As the name suggests, this particular domain covers the overall
market activity of an organisation and analyses the business goals of an organisation. The
business base is the foundation domain and based on this domain, organisations can cover the
overall market of an organisation and analysis its strategic imperative and dynamics (Adams
et al, 2016).
Resources: The second domain is the people and machines that an organisation
possesses. As stated by West and Bogers (2014) employees are the main resources of an
organisation and it is necessary that managers maintain the interests of the employees by
motivation. In the modern day, technology, business partnerships, collaboration with the
external market and open innovation are considered for conducting innovation.

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Will and culture: This is used to address the leadership ability of an organisation and
the employees. The governance of an organisation and the culture are analysed so that
effective innovation can take place. This particular domain defines the innovation complex
and the importance of leadership in creating innovation in the organisations.
Solutions: This is one of the important domains as it helps in identifying the
processes used to be imaginative and creative in the organisations. It analyses the process
used by an organisation along with the tactics used for developing the products (Kogan et al.,
2017). The management of innovation is considered as a critical process in organisations as it
covers various aspects of an organisation.
Value: This is considered as the topmost domains that analyse the portfolio of the
innovations undertaken by a company. Matters such as financial stability, number of
customers, brand and environment of an organisation are considered in the domain that helps
in understanding the value of a company. Thus, having considered the framework, analysis
can be made to understand the manner in which Woolworths applies this framework.
Figure 2: Value-Added Corporate Innovation Management Framework
(Source: Kleinknecht, 2016)

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Application of the innovation framework
In reputed organisations, the application of the innovative framework can help
organisations strengthen its resources. This is mainly because of the fact that the framework
helps in analysing the capability of an organisation and consequently frames strategies for
innovation. According to Shalley, Hitt and Zhou (2015), the Value-Added Corporate
Innovation Management Framework can help an organisation like Woolworths to identify the
potential gaps that exist in the company. The five domains act as a means of a supporting
pillar of the organisation so that it can improve its capabilities and ensure that it achieves its
mission and vision. As such, the application can be determined by identifying the areas in
which innovation is required.
The analysis of the company shows that Woolworths have issues in maintaining
cybersecurity, preserving food and gaining feedback from the customers. These issues can
create problems for an organisation, as these factors are essential to the success of an
organisation. To spread the market with the application of online marketing, Woolworths
need to strengthen the IT security of the company. Anderson, Potočnik and Zhou (2014)
stated that Woolworths does not have sufficient security protocols that can help the
organisation maintain the security of the customers and the private information. Hence, it is
necessary to strengthen the IT sector and ensure that the application of the framework can
help in developing such security. Innovation framework that can be used in this case includes
installing firewalls for the unauthorised access. The firewalls can come in the form of various
animated shapes that track the IP address of the hackers before exposing them to the relevant
authority.
In the case of the dealing with the food preservation of the customers, it can be said
that the vision of the company is to provide good and fresh quality food to the people in
Australia (Woolworthsgroup.com.au, 2018). Hence, it is necessary that the company serve

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vegetables and fruits that are freshly grown in the market and in the backyard of the
company. According to Vargo, Wieland and Akaka (2015), for maximising profit, it is
necessary that Woolworths produce fresh food items so that the customers are not harmed.
However, the challenge lies in the preservation of the food items and the manner in which the
customers are protected from harm. Woolworths need to innovate in this area by
implementing techniques that are useful for the conservation of food. Innovative can be made
in the manner of producing the food by using ingredients that are new on the market. For
example, if Woolworths is to use canning techniques for preserving the food, it can make the
cans in a manner that it allows free flow of air but at the same time keeps the harmful
particles away. The filtration can be done in this format.
Bernstein (2015) stated that the issue related to the customer feedback might cause
serious problems for an organisation. This is mainly because the feedback of the customers is
necessary for an organisation to improve. In this regard, it can be said that Woolworths need
to maintain the customer feedback process by continuously interacting with the customers.
This particular innovative tactic will remain in the value domain of the company, as the
customers and brand are a part of the domain. The marketing territory and the social factors
governing the organisation may help in creating areas of progress in the organisation. Hence,
Woolworths can address innovation for this particular issue by ensuring that the customers
are approached via social media in a playful manner. Woolworths can arrange gaming
activities in the social media or create an application that allows customers to indulge
themselves in the reality of shopping while enjoying browsing in the social media.
Gaps in the application
Thus, it can be said that after the analysis of the innovation framework and the
application of it in Woolworths, certain gaps have been identified that needs to be addressed.

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These gaps are identified from the analysis of the situations and the current secondary
resources that are available for understanding this gap. The focus is on the three critical
factors that affect the organisation and the manner in which innovation can be used to address
the satisfaction of the customers. One such gap that has been identified is the lack of
resources that can be used for mitigating the threat caused in the cyber department of
Woolworths. According to Barrett et al. (2015), in the modern day, cybercrime is the most
threatening factor that poses risk to business organisations. Woolworths lack the technical
expertise necessary to prevent the website of the company being attacked by hackers and
thereby prevent professional information of the company.
Other gaps include the lack of partners. Woolworths is a parent company and lacks
the aid of any partners. Although the company have managed to achieve top rank among the
retail organisations in Australia, sometimes partnership can help in providing necessary
stability in terms of finance and managerial advice. Therefore, this can be considered as one
area in which Woolworths lacks in the effective application of innovative factors (Etzkowitz
& Ranga, 2015). The third gap that has been seen is the fact the interaction with the
customers is a big drawback for the company. In the modern day, this is also another huge
factor that needs to be addressed by Woolworths so that feedback from the customers can be
generated. Thus, these gaps can create serious problems for Woolworths as the factors that
are involved in the innovation of the organisation need to be addressed in a proper manner.
Therefore, these areas need to be improved so that Woolworths can maintain
innovative tactics in the organisation. To ensure that these areas are addressed in a proper
manner, the managers of Woolworths need to undertake certain methods that can help in
addressing the gaps. For example, the managers of Woolworths can indulge in adopting the
disruptive method of innovation (Woolworthsgroup.com.au, 2018). This is mainly because of
the fact that with the indulgence of this method, Woolworths can make rapid changes by