Detailed Report: Managing Product and Service Innovation in Woolworths

This report provides a comprehensive analysis of managing product and service innovation, using Woolworths as a case study. It begins with an introduction to the concept of innovation and its importance for organizations, followed by an overview of Woolworths, a major Australian retail company. The report then explores various types of innovation, including architectural, disruptive, incremental, and radical innovation, discussing their characteristics and applications. An innovation framework, the Value-Added Corporate Innovation Management Framework, is introduced and applied to Woolworths to identify areas for improvement and potential gaps in its innovation processes. The report also includes a discussion on researching areas of weakness within Woolworths, providing insights into how the company can enhance its innovation strategies. The conclusion summarizes the key findings and recommendations, emphasizing the significance of continuous innovation for organizational success. The report is a student submission available on Desklib, a platform offering AI-powered study tools for students.

Running head: MANAGING PRODUCT AND SERVICE INNOVATION
Managing Product and Service Innovation
Name of Student
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MANAGING PRODUCT AND SERVICE INNOVATION
Table of contents
Introduction................................................................................................................................2
Overview of Woolworths...........................................................................................................2
Understanding the concept of innovation..................................................................................3
Analysing the types of innovation..............................................................................................4
Identifying an innovation framework.........................................................................................7
Applying the innovation framework in Woolworths.................................................................9
Identifying gaps........................................................................................................................11
Researching the areas of weakness in Woolworths.................................................................13
Conclusion................................................................................................................................13
Reference..................................................................................................................................14

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Introduction
Organisations need to develop techniques that are necessary to ensure that innovation
takes place. Innovation helps in the satisfaction of the customers and ensures that every
organisation gets the global recognition due to the proper innovation of products and services.
In the word of Etzkowitz and Ranga (2015), innovation in product and services can be
important for customers so that the monotonous feeling can be curved and uniqueness in the
products and services can be maintained. The focus of the assignment is to develop a
framework that can help in maintaining innovation in organisations. The framework used can
help organisations conduct a systematic analysis of the innovation process and develop its
framework. The assignment focuses on Woolworths, which is one of the biggest retail
markets in Australia. The company specialises in selling products that are used for
maintaining daily life purposes (Woolworthsgroup.com.au, 2018). A detailed overview of the
company is provided along with the concept of innovation. The various types of innovations
are analysed and recommendations are provided about the type of innovation that can be used
by Woolworths. The gap in the application of the framework is also analysed in the
assignment.
Overview of Woolworths
Woolworths is one of the biggest companies in Australia that contribute about 50%
growth of the economy of Australia. Woolworths is one of the companies that own certain
companies as subsidiaries. Woolworths was established in 1924 in the city of New South
Wales. The company along with Coles form a duopoly that contributes to the growth of the
Australian retail market by about 80%. One of the biggest advantages of the company is the
fact that it has over 995 physical stores all over the country and is one of the best local stores
in the region of its production. As such, it can be said that the number of employees working

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in the company is about 202,000. This contributes to having employees working as a team in
an effective manner (Woolworthsgroup.com.au, 2018). The aim of Woolworths is to ensure
that fresh materials are produced that can satisfy the customers. Hence, the company grows
fresh fruits and vegetables. The mission of the company is to expand itself in other countries
so that it can remain the best in the retail sector in Australia (Woolworthsgroup.com.au,
2018). Woolworths has also formulated a strategy that can help in maintaining the fresh
produce in the company. The strategy undertaken by the company is the setting up of
Woolworth’s Australia’s Fresh Food People. This act is considered as a corporate social
responsibility for the company and helps in maintaining the satisfaction of the customers.
Understanding the concept of innovation
Innovation is considered as a process that can be used to develop new ideas and
promote changes in an organisation. In the words of Drucker (2014), innovation can help in
developing solutions that can be used to address the changing needs of the customers and
ensure that every customer is satisfied with the result that emerges from the innovation
process. Innovative solutions are usually better than the solutions that existed and as a result,
the new requirements of an organisation can be met by the application of new changes. Most
organisations apply innovation to meet the needs of the customers as well as maintain
competitiveness in the market in which it works. The key to ensuring that proper innovation
is achieved is by following trends that are related to products, process, services and
technologies. In this regard, it can be said that the managers consider innovation as an
entirely different approach. In fact, Bain and Kleinknecht (2016) are of the opinion that
differences exist in the process of innovation and invention.
The biggest difference that can be seen is the fact that invention includes the
discovery of the new things. New ideas to ensure that development takes place in an

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organisation are done with the help of invention so that competitors find it complex to
continue with maintaining the trend. On the other hand, innovation deals with maintaining
changes in an organisation after the application of a process (Bernstein 2015). The changes
are made keeping in mind the monotonous and emergence of new business requirements in
the market. Thus, innovation can be considered as the original ideas that can help in the
development of the process in an individual. However, various scholars have managed to
portray innovation in a number of other ways. For example, Vargo Wieland and Akaka
(2015) are of the opinion that management science defines innovation as a process that can be
used to create various ideas that are useful for the satisfaction of the customers.
Analysing the types of innovation
Like other managerial concepts, innovation can also be of various types that help in
ensuring that organisations gain the effective results required for success in a business. In the
words of Gawer and Cusumano (2014), innovation can be designed into two broad categories
that provide different dimensions in the business. These dimensions are important for the
well-being of an organisation in the business market so that it can flourish in the competitive
market. The two dimensions include market and technology that are inconsistent and can
change on a regular basis. The division of the dimension of innovation opens up the
opportunity to analyse four types of innovation that can be used by managers.
Architectural innovation: Dutta, Lanvina and Wunsch-Vincent (2015) are of the
opinion that architectural innovation is the proper application of the various lessons that have
been learnt in the training and induction process in an organisation. The application of the
methods of work and the manner in which technology can be applied in different markets are
analysed and applied so that organisations can develop a clear understanding of the concepts
of innovation. One of the biggest advantages that can be obtained from this type of

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innovation is the fact that it can attract customers in the existing market, Most of the times,
the customers that exist in a responsive market is targeted by the companies. However, Van
Oort (2017) stated that certain risks are involved in the application of the innovation. The fact
that this type of innovation can be applied in areas that are already proven by technology adds
to the disadvantage in the market. At the same time, it is necessary that the requirements
related to the development of organisations be met. An example of architectural innovation
can be the attempts made by NASA to improve the aircraft cushions and make the aircrafts
safe.
Disruptive innovation: This is a more common type of innovation method and
involves a complete and outright change in strategies of an organisation. Disruptive
innovation is often referred to as the stealth form of innovation that is practised in an
organisation. According to West and Bogers (2014), a disruptive method usually involve
technology and managerial developments in an organisation so that the current requirements
of a market can be analysed. However, the development of the new technologies can be
superior as well as expensive for most companies. Despite this, existing companies and new
companies benefit from this type of innovation as the technologies can be easily replaced in
these companies. Thus, threats to markets can be implemented with the application of
disruptive innovation (Adams et al., 2016). One such example of a company that has used
disruptive innovation is Apple. The introduction of smartphones has made users refrain from
using buttons to deal. Instead, the new ventures in case of mobile phones have helped in
using phones without the application of buttons.
Incremental innovation: Incremental innovation is often considered as the most
popular and simple type of innovation. In the words of Kleinknecht (2016), this type of
innovation can be used by organisations in every manner and at any type of time in the
organisation. This uses the technologies that exist in an organisation and tries to increase the

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value of the customers. The application of incremental innovation takes into account the
features of an organisation and the designs it undergoes in the products and services. The
effective analysis of the changing markets is conducted so that the innovation technique
implemented can address the requirements of the market. Bernstein (2015) is of the opinion
that organisations engage in incremental innovation at any point of business so that instant
changes can be made in an organisation by considering the market.
Radical innovation: Camisón and Villar-López (2014) is the most common type of
organisation that can be considered while considering innovation in an organisation. The
advantage of this type of innovation is the fact that it helps in the creation of new industries in
the market that can help in increasing the economic condition of a country. Radical
innovation utilises the technical aspects that exist in a market and applies it to success in an
organisation. For example, aeroplanes were first made to be used only in combat with the
enemies. However, with changes in the market and development of new routes, an aeroplane
was utilised to provide services to people and help them to travel from one place another.
Thus, a new industry emerged in the market that helps people with opportunities for
employment.

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Figure 1: Types of innovation
(Source: Adams et al., 2016)
Identifying an innovation framework
One of the main reasons for the innovation of organisations is that it helps in
maintaining competitiveness in the market and increases opportunities to increase
productivity in the market. As such innovation frameworks can be developed that highlights
the importance of the innovative technique that is used and consequently ensured that an
organisation maintain its identity as an innovative competitor. Chesbrough, Vanhaverbek and
West (2014) pointed out that organisations tend to make innovations on products by assessing
the level of risk involved and the manner in which the products and services are accepted in
the society. Therefore, it is necessary that managers manage to identify a market that can help
in the growth and expansion of the organisation through innovation. Hence, the application of
frameworks can be done to ensure that such growth takes place. In this regard, the application
of the Value-Added Corporate Innovation Management Framework can be used for analysing
this expansion. According to Christensen, Raynor and McDonald (2015), the framework
provides a comprehensive analysis of the five layers that are used for the effective innovation
of business. This includes:
Business base: The business base is used to gain knowledge of the market and covers
the overall activity in the market. This can be used to conduct a market research and develop
business organisational goals necessary for an organisation. This is the foundation of the
domain and based on the analysis conducted in this particular field, organisations can develop
an innovation strategy that can help in addressing the requirements of the customers and the
relevant goals (Johnston and Marshall, 2016).

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Resources: This includes the resources such as the employees and the equipment used
by an organisation to conduct business. It is universally considered that without skilful
employees, organisations cannot function well in the industry. Therefore, the people along
with the facilities need to be developed for the proper conduct of daily activities in the
organisations.
Culture and Organisation: This particular domain is necessary for analysing the
leadership skills that exist in an organisation. The employees in an organisation develop
leadership skills that are necessary for conducting the activities of an organisation in an
effective manner. Furthermore, Smith et al. (2017) opined that an organisation need to remain
true to its culture so that customers do not have to form the wrong impression on the
company.
Solutions: The solutions help in the process for employees to remain imaginative
while performing work in the organisations. One of the most important factors for
organisations is to ensure that the employees remain imaginative so that proper innovation
can take place. The process used in organisations are scrutinised along with the tactics to
consider the critical factors that affect an organisation.
Value: The value is the final domain and exists at the top of the hierarchical
framework. The value determines the brand and recognition received by an organisation from
the customers. Delicate matters effective for proper business in organisations are effectively
analysed so that innovation can place and the value of an organisation increases. Thus, the
application of this particular framework can be judged by analysing its effectiveness in a
company like Woolworths.

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Figure 2: Value-Added Corporate Innovation Management Framework
(Source: Kogan et al., 2017)
Applying the innovation framework in Woolworths
Lusch and Nambisan (2015) opined that most reputed organisations tend to use an
innovative framework that helps in strengthening the position it holds in the market. This is
mainly because of the fact that the frameworks used help in analysing the manner in which
organisations use its capabilities and forms strategies necessary for conducting effective
innovation in business. The application of the Value-Added Corporate Innovation
Management Framework can be useful for any organisation as it can help in a systematic
conduct of innovative practice that needs to be followed with the help of every domain.
Therefore, Woolworths can use it to improve its capabilities and become the number one
organisation present in Australia. Hence, three areas of issue are identified in the company,
which require the effective application of the framework.
It has been seen that Woolworths suffers from three major issues that may hamper the
existence of the company as the best organisation in Australia. These issues include an
absence of an appropriate process in the organisation, rapid transformational change and

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resistance to change. These issues are common in organisations and mitigating of these issues
is required so that Woolworths can fulfil its objectives along with its mission and vision.
According to Manzini and Coad (2015), Woolworths need to develop a process that can help
the company reach out to its customers. In the modern world, an opinion of the customers is
an important factor for organisations to develop. Hence, a process such as the development of
the IT factors for engaging in conversation with the employees is required for Woolworths to
maintain. This can help the company to understand the reactions and thoughts of the
employees. Thereby, strategies can be maintained to address the innovations in the
organisations.
The second issue that has been identified is the rapid transformational change that is
undergone in a company. Shalley, Hitt and Zhou (2015) are of the opinion that changes are
required in an organisation so that improvement can be made in the production and supplies.
Without proper change, it can be difficult for organisations to implement innovative tactics.
However, Woolworths undergo a rapid transformational change that includes transforming
the entire organisation to a certain level of work. This causes hindrance in an organisation, as
a proper method of settling into a rhythm of work cannot be maintained. Thus, it is necessary
to implement changes only in the time of requirement. Innovation, in this case, is necessary
by analysing the third domain of the innovation framework that suggests that the culture of an
organisation need to be maintained. In the case of Woolworths, the culture of the organisation
is formed mainly due to its popularity with the people. Hence, it is necessary for the company
to implement innovation so that transformational changes can be prevented
(Woolworthsgroup.com.au, 2018). Thus, it can be said that the application of the innovation
framework can help in addressing this particular issue of Woolworths.
The third issue that has been identified in Woolworths is the result of the rapid
changes in the organisation. This includes the resistance to the changes in the organisation.

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Anderson, Potočnik and Zhou (2014) stated that excess exposure to a particular thing might
cause it to lose value. This is considered as the case that Woolworths have to suffer as the
rapid and continuous changes in the organisation have made the employees resistant to it.
Employees do not react to the changes that are implemented in the organisations, as it is a
known fact that the changes taking place cannot have much effect on the organisation.
Therefore, it is important that innovation is developed to mitigate this threat in the
organisation. The innovation framework can be applied to this issue is by understanding the
factors that drive the changes in the organisation. The resources need to be maintained so that
Woolworths can understand the manner in which the employees react to the changes
(Woolworthsgroup.com.au, 2018).
Identifying gaps
After the analysis of the innovation framework that is the application of the Value-
Added Corporate Innovation Management Framework, it can be said that the framework
provides certain gaps that are necessary to be researched. The application of this framework
in a company like Woolworths has also managed to identify certain gaps that can be the cause
of hindrance in the company. These gaps need to be addressed so that Woolworths can
maintain its position in the retail markets of Australia. As such, the focus of analysis needs to
be on the three issues that have been identified in the context of the business in Woolworths.
For example, in the case of developing an appropriate process, Woolworths need to aim at the
development of a particular process for a particular department. Barrett et al. (2015) stated
that in the modern world, identifying an appropriate process for could mean applying the
process in every department. Hence, the process needs to be in line with the objectives and
culture of Woolworths. Woolworths can develop the application of customer interaction as a
process, after the analysis of the market in which it works (Woolworthsgroup.com.au, 2018).