Managing Innovation: Blue Ocean Theory and Organisational Service

This report provides an in-depth analysis of innovation, specifically focusing on the Blue Ocean Theory. It begins with a definition of innovation and its importance for organizational success, highlighting the need for collaborative and open-minded leadership. The main body of the report delves into the Blue Ocean Theory of Innovation, explaining its core principles such as reaching beyond current demand, reconstructing market boundaries, emphasizing the big picture, and getting the strategic sequence right. The report also discusses the tools of the theory, including the Strategy Canvas and the ERRC grid. The report further applies the theory to the historical development of organisational services, using Deliveroo as a case study, and recommends possible future development pathways. Finally, the report evaluates the benefits and limitations of the Blue Ocean Theory, emphasizing its strategic planning capabilities, value innovation aspects, and potential for creating new market spaces, while also acknowledging the complexities of identifying untapped markets and educating customer bases. The report concludes by summarizing the key findings and implications of the Blue Ocean Theory for managing innovation.

Managing
Innovation

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Description of innovation theory.................................................................................................1
Application of innovation theory for explaining historical development of organisational
service..........................................................................................................................................5
Application of theory for recommending possible future development pathways of
organisational service..................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Innovation is defined as deliberately implementation of imagination, information together
with initiatives for deriving different values from available resources and involves processes to
generate new ideas along with converting them into functional products. It is viewed as applying
better solutions which gave capabilities to meet unarticulated demand, new requirements and
emerging market choices (Biemans, 2018). It takes place through provisions related to more
effective products, business models, services, technologies etc. innovation creates bigger
opportunities along with are necessary for success, survival and growth of enterprise. For
realising leaders, it is crucial for leaders to be collaborative as well as open minded. For any
business, innovation is crucial as innovating something means introducing new addition to
improved merchandise, processes and methods with the hope of improving productivity, building
brand values, increasing turnover, reducing costs and establishing new relationships. Moreover,
innovation can be done through launching new technologies, working practices and process for
giving more consistent product quality. In this report, chosen innovation theory is Blue Ocean
Theory of Innovation. The theory is simultaneous pursuit of low cost as well as differentiation
for opening in new market space as well as creating new demand. The theory is executed across
industries and businesses. It captures new demand and make competition irrelevant through
applying better solutions in exiting products that meets new requirements, current needs and
unarticulated choices.
MAIN BODY
Description of innovation theory
Innovation theory is defined to the framework which explains the ways in which
advancements gain traction along with over time spread within particular situation. In an
organisation, innovation is managed by superiors through appropriate framework of innovation
management (Blue Ocean theory of innovation, 2015). The theory comprises of market creating
innovation. In modern world, the theory is adopted by various companies such as Ocado, halo
Fresh, Yellow tail, Cirque du Soleil, iTunes, Backroads etc for having more success, enhanced
profits along with fewer risks in blue ocean market. Deliveroo follows Blue Ocean Inn ovation
theory that generates uncontested market space, emphasis on larger picture and getting strategic
sequenct accurate for innovation of services in online food industry. The company time to time
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innovates its services through adding mew methods or elements in the working that meets needs
of customers for timely delivery and many more. Following are some innovation theories
through which the entity can use for innovation aspects:
Blue Ocean theory of innovation
The theory is based on the principle of value innovation. It was propounded by W. Chan
Kim along with Renée Mauborgne. The theory majorly deals with competition within market
space which are unrecognised with instates customer preferences and are required to realise and
further developed (Agnihotri, 2016). The theory revolves around finding for company wherein
few businesses operate and have limited pricing pressure. The aim of the innovation theory is for
creating something innovative which makes competition irrelevant for business. It offers
systematic together with reproducible processes in context to innovation to both either new or
established organisation. Its frameworks are designed as per visualisation for not only building
effective collective wisdom of firm but to properly implement easy communication. The key
principles of Blue Ocean theory of innovation are as follows:
 Reaching beyond current demand: Blue ocean theory assists organisations to reach
beyond the demand of market and customers in present state so that products gains
recognition in dynamic business environment. The principle assist managers of Deliveroo
to work hard and offer services that are beyond current demand. The entity emphasis on
the ways to gain potential further customers which are not existing buying from market
for some of the reasons. This also suggests in emphasising on understanding which keeps
potential buyers out of industry and work to make strong position in the large growth
sector.
 Reconstructing market boundaries: Blue ocean theory reconstruct market boundaries
for a business in order to perform outstanding activities by adding something new in
methods or processes of business. The principle suggest that organisations are required to
look towards what the market is performing, competing and devising strategy which are
vastly distinct that others. The principle helps Deliveroo to use aspects such as eliminate,
reduce, create and raise framework for developing effective strategy which will generate
uncontested market space and reconstructing market boundaries.
 Emphasis on big picture: Blue Ocean theory has principle of focusing towards big
picture despite of numbers. It helps in attaining set targets with huge values and
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acceptance of support from customers and top management of business (Ramli, Ahmad
and Harith, 2016).
 Getting strategic sequence right: Blue Ocean theory also have principle of getting
strategic sequence correct so that firm are able to achieve the unarticulated needs and
existing market needs promptly. The principle of Blue Ocean Theory of innovation
recommends Deliveroo to focus on understanding about wants of customers, current
marketing provides and what are wants from existing marketing. With this principle, the
company is able to focus on innovation which will be successful in market.
Tools of Blue Ocean innovation theory: There are two tools of the innovation theory that
are as follows:
 Strategy canvas: It is central diagnostic along with action framework to build
compelling blue ocean tactic for business. It has two axis, one of horizontal axis and the
other is vertical axis. In horizontal axis, range of factors are captured which company
competes on along with invests in. In contrary, vertical axis captures level of offering
which buyers receives from key competing factors. It has been identified that the tool
serves various purposes (van Someren and van Someren-Wang, 2017). The key purpose
is to capture existing state of plat within known market space. It allows organisational
managers to understand the things on which the competition is investing in current
scenario and the factors on which competition is based on. The other purpose is for
propelling businesses to action through reorienting emphasis from competitors to options
along with from potential customers to prospective people in market. ERRC grid: It is the tool which helps businesses in identifying new opportunities along
with products of services to offer in market. It also involves business model of company
to differentiate itself among rivals in market. ERRC Grid facilitates identification of
several elements on which an entity must work for making competition irrelevant. The
elements are as follows:
Eliminate: It covers the factors which a sector has long completed on. However,
population takes it for granted as well as must be eliminated as they do not adds vaues for
longer time (Ojasalo and Ojasalo, 2018).
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Reduce: Factors which must be reduces below standards set by industry as they come
with additional or higher costs. They also do provide little profit addition to competitive
advantages.
Raise: Dimensions which must be raised that are above industrial standards addition to
add values for current customers are under the element.
Create: Factors which have potentials to attract new customers as well as never being
offered by others must be created for making competition irrelevant between companies
in industry.
Process of the theory: Kim along with Mauborgne have articulated strategic sequence or
steps for creating commercially viable idea of Blue Ocean (Koontz, Weihrich and Cannice,
2020). When Deliveroo entered in online food delivery market, it solved delivery of food related
problems of consumers through addressing their demands for fresh and tasty food at their
doorstep. Organisation’ Blue ocean strategy created an entirely different way of making food
available for people which allowed various guardians to stay tension free for food and students to
buy variants of dishes at affordable rates. Deliveroo has dominated the market space and is
largely driving growth of the pertaining sector through Blue Ocean theory of innovation. In order
to manage innovation with Blue Ocean theory, an organisation has to adopt following processes
or steps in sequentially manner:
 Analysing buyer utility: It is first stage of the theory in which organisational managers
have to think that whether they offer unlocking exceptional utility or is there any
compelling reason available with mass population to purchase the innovative offering. In
this stage, marketing team of Deliveroo analyses utility of buyers and accordingly plans
to innovate offerings for prospective and potential customers.
 Setting and offering price: Once buyer utility is identified then the next is for devising
and offering prices of innovative products or services that can attract mass atraggted
population in order to have compelling ability for paying to the offerings. If buyers have
no compelling utility then they won’t buy the offering of company nor the offering can
create irresistible buzz in market. In this stage, main working performed by Deliveroo are
to set price for innovate service and offering it in the market that distinguish it from other
online food delivering businesses.
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 Cost: The first two process addresses revenue aspects of organisational business model.
With this, managers of business ensure to create leap within net purchaser value. In order
to secure revenue side. It is important to assess third process that is cost. The process
involved in business model ensures to build leap in values in profit forms. In this, price of
offering is deducted from production cost and the main question arises that whether an
organisation can innovate offerings at target costs as well as still generate healthy profit
margin. The stage insist Deliveroo to generate leap in net buying value and calculating
cost involved in production to distribution of innovation.
 Addressing adoption hurdles: It is last step in Blue Ocean theory in which adoption
hurdles are addresses properly (Anthony, 2017). In this, manager of form identifies
adoption hurdles that are rolling in innovative ideas and addresses them effectively.
Construction of blue ocean theory is complete when the business achieve success in
addressing adoption hurdles which ensures successful actualisation of the innovative
idea. Herein, Deliveroo marketers addresses adoption hurdles and ensure that other
process are also performed in well sequential and proper manner.
Evaluation of theory: There are certain benefits and limitations of the Blue Ocean theory of
innovation. By using the theory, companies experiences various benefits and limitations that are
as follows:
Benefits:
 The theory majorly focuses towards strategic planning then helps the business in devising
strategies for innovation in effective manner.
 It assist businesses such as Ocado and iTunes to move from impediments of rivalry in
current market along with cost structure to migrate towards improvements in constructive
values. It explains about the ways to break free from traditional techniques and towards
making attempts for profitability and making demand through analysis.
 Value innovation is key of Blue Ocean Innovation Theory which helps organisations in
agreement of innovation with cost positions, price addition to utility. This creates new
demand as well as values for targeted population and helps in expanding growth
potentials (Attri, 2018).
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 Creating ideas with blue ocean theory is effective means with non zero sum having high
payoff possibilities. By using Blue ocean theory of innovation, halo Fresh, Yellow tail,
Backroads etc create unique ideas that results in higher possibilities for success.
 Commodities or innovative ideas devised through bleu ocean theory do not make
consumer base selecting among value and affordability as it is immediate pursual for low
cost theorem to that of differentiation.
Limitations:
 It is complex to come with futuristic ideas along with recognising colossal as well as
untapped markets through the theory.
 Producing new market becomes difficult with blue ocean theory as an entity have to be
clear together with smart for identifying its customer base addition to the methods for
imparting education for new processes, solutions and ideas. Entities like Halo Fresh,
Yellow tail, iTunes etc are required to be more clear and informed about obstacles,
workforce etc that all organisations may face complexities in identifying appropriate
customer base (Gassmann, Frankenberger and Csik, 2016).
 The theory also requires huge persistent trust, preparation, faith and patience level which
is extremely not available with business while looking towards beginning indicators to
confirm the innovative facts.
Application of innovation theory for explaining historical development of organisational service
Organisational background: Deliveroo is established by William Shu in the year 2013 at
London UK. It is one of popular food delivery entity that operates in more than 200 cities in
United Kingdom, Spain, Italy, The Netherlands, United Arab Emirates, Kuwait, France etc. it
works with biggest chain restaurants along with huge independent restaurants. Its target market is
household consumers who have no time for cooking meals and prefers to eat delicious meals.
The mission statement of Deliveroo is to bring best local restaurants direct at the doorstep of
people and transforming the manner in which they eat. The entity is specialised in delivering
ready to eat meals with healthy options available on its app (Deliveroo, 2020). As per the statics,
it is analysed that Deliveroo is currently delivering around 60 million meals per year to around
2.8 million households. It has seen revenue growth of more than 650% year of year. Through
observing organisational growth and expansion in market, it is seen that the entity has used Blue
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Ocean Theory of Innovation properly. The Company has taken itself away from red ocean of
popular restaurants as well as generated new demands within targeted population for delivering
dishes for their breakfast, lunch and dinner at their houses. The business model that Deliveroo
has adopted is simple as well as distinct from traditional start-ups. The main business models that
are used by Deliveroo in many countries includes advertising business model which revolves
around devising content which people prefers to watch and further display ads on viewers screen,
concierge business model wherein it takes its existing services and adds custom element in
transaction which makes its sales unique for customers. With advertising business model,
Deliveroo company satisfies its customer groups and also combines workings with
crowdsourcing in which the company gets its content for online food delivery services for free
and attract large targets. Moreover, the entity makes money with the business model through
charging percentage fee for each sales which is facilitated by its platform. that are From its
establishment till date, the entity has executed huge innovations in its practices, activities etc. the
latest business model of Deliveroo is as follows:
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Key Partners
 Grab,
South east
Asian ride
hailing
company
 Norwich
City
Football
Club
Key activities
 Delivery
service
 Maintain
ing
platform
Value
proposition
 Accessi
bility
 Conven
ience
 Risk
reducti
on
 Status
of
brand
 Price
Customer
relationships
 Self
service
 Automat
ed nature
Key resources
 Proprieta
ry
software
platform
 Human
resources
 Financial
resources
Customer
segments
 Restaura
nts
 Consume
rs
Channels
 Website
 Social
media
pages
Cost structure
 Recycling packaging
 Bulk delivering
 Market expenses
 Other drivers
Revenue streams
 Commission charged from
restaurants for each order.
 Usage fees
 Meal kit
 Advertising
The above business canvas model is Deliveroo is self created and is based on its
innovations done in business operations and many more since its establishment.
Historical development: Since 2013, Deliveroo has attained huge success in devising and
implementing new services as per customer needs. Earlier, the company was only delivering
ready to eat food in cities of UK but with development on services and passage of time, it has
achieved huge success to offer fast addition to reliable delivery that customers can track from
their phone (Morgan and Woodriff, 2019). One of service which the company has innovated is
Deliveroo Plus which is subscription service that offers customers of the company unlimited
free delivery. The company have done various changes in its packaging, prices and services.
From its historical duration, the company have quality assured packaging, stress free services,
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guaranteed and best prices. In the year 2019, number of employees working with the entity were
5699 that is huge from the number of employees it has on historical times. Deliveroo has taken
itself out of Red Ocean of large stores as well as well-liked restaurants and produced a new
demand of delivering multiple number of dishes or food items among its customers. All this is
possible through application of Blue Ocean Theory of innovation. Furthermore, it is also
assessed that application of Blue Ocean Theory have allowed Deliveroo to gain positive
feedbacks from customers and receive various beneficiaries in competitive market. With the
innovation, the company delivers free food for the orders that are above £10, 24*7 services and 7
day free trial test that have enhanced its customer base and made it most popular online food
delivery company. With application of the innovation theory, the start up has become large sized
company which has increased its profit proportion in huge numbers (Kodama, 2018).
Strategy canvas of Deliveroo:
In the year 2013, Deliveroo entered in online food delivery market, it has recognised a
niche market of families of United Kingdom that have limited time for cooking and also have
urges to taste different types of dishes. By recognising the needs of customers for healthy meals
timely delivery and integration of customers and restaurant, it is depicted that all this are done
through strategy canvas which enabled it to stand out of rivals (Schober, 2019). The historical
strategy canvas of Deliveroo is as follows:
Figure 1: Self created, 2020
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The mentioned strategy canvas is of Deliveroo when it entered in the industry that is in
the year 2013. From the canvas strategy it is analysed that the competing factors or elements in
food delivery industry includes high customisation cost, lower nutritional value in foods of fast
food chains. In contrary, while delivering food, the companies charge high delivery cost and also
uses plastic material in packaging dishes. After some time of establishment, Deliveroo has
reduced its prices as well as started using recycled materials which implies positively on it.
ERRC grid of Deliveroo
Deliveroo has recognised and designed its own target market that is consumers preferring
tasty and delicious food of different restaurant. Implementation of Blue Ocean Theory has
innovation has helped the company in making relevant changes in its ERRC Grid as per
changing market trends and choices of customers (Ngao, 2019). The ERRC grid of Deliveroo in
the year 2013 is as follows:
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