Revolut Ltd: Disruptive Innovation and Blue Ocean Strategy Report

This report provides a comprehensive analysis of Revolut Ltd's success, focusing on its adoption of disruptive innovation and blue ocean strategy within the financial services sector. It begins with an introduction to the core concepts of disruptive innovation, as defined by Clayton Christensen, and blue ocean strategy, emphasizing how these strategies differ yet share the common goal of business growth. The report then delves into the specific ways Revolut Ltd has applied these strategies, such as its early adoption of cryptocurrency exchange and its competitive currency exchange rates, highlighting how these innovations have contributed to its rapid expansion and market leadership. Furthermore, the report examines the historical development of products and services through innovative theories, providing insights into the benefits, principles, and practical applications of both disruptive innovation and blue ocean strategy within the context of Revolut Ltd's business model. The report also discusses how Revolut Ltd uses the latest technology and mobile app to provide services to its customers.

MANAGING INNOVATION

Table of Contents
INTRODUCTION...........................................................................................................................1
1.Explaining Disruptive innovation theory and blue ocean strategy..........................................1
2 Historical development of product and services with help of innovative theories and
different pathways for future development of these products.....................................................5
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................8

INTRODUCTION
Innovation is not just a word, it is the lifeline for survival and growth of a business. In this
dynamic environment, no business can survive without innovation or modification. The two
crucial innovation theories are disruptive innovation theory and blue ocean strategy. Although,
both the strategies focus on same end result but their way of implementation slightly differs.
Disruption strategy aims towards becoming a leader in competitive market with their consistency
and innovation while blue ocean strategy aims towards entering into a new market with a unique
product where zero competition exists. Both of these are equally important for the growth of
business especially for the start-ups and new entrepreneurs. Headquartered in London, United
Kingdom, Revolut Ltd is a digital banking company founded by Nikolay Storonsky in the year
2015. Although, the company is just 4 years old but the success and growth observed by them is
just unbelievable. Most of the activities and operations of Revolut Ltd. are digitalised which
gives the benefit of easy accessibility to its consumers. Revolut Ltd is truly a revolution in the
history of banking in UK. The banking company adopted a perfect blend of Disruptive and blue
ocean strategy that helped them to become market leaders. In this report we will study about the
role of innovation in the success of Revolut Ltd. and also some information about Disruptive
innovation and blue ocean strategy, their meaning, history, way of adopting them, their benefits
and principles. (Garza-Reyes and et.al., 2017)
1.Explaining Disruptive innovation theory and blue ocean strategy.
Disruptive innovation theory:
Disruptive innovation theory was coined by Harvard business school professor Clayton
Christensen in 1995. The theory was first published in Harvard business review and since then it
has become very popular because of its applicability and adaptability.
Disruptive theory occurs when a newly formed company successfully challenges the leader in
the market by providing products or service that slowly and surely start appealing to larger part
of the market.
Although it is very difficult for the new product or service to overcome the established
incumbent leaders but their consistency and competitive prices ultimately appeals to a large
section of society. The large customer base helps the companies to grow exponentially and
become a multi national company. (Kerzner, 2019.)
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Revolut bank is the perfect example of disruptive innovation theory. Although the
company is just 4 years old but the growth rate has been unprecedented. The services provided
by Revolut Ltd. are unique and innovative and these are the two factors that led the company on
the path of success and within no time it became the market leaders.
Ways to adopt disruptive innovation-
Communication is the essence for survival and growth of business. Therefore, it is imperative to
interact with the right people. Right people are those who are interested in your business. They
can be stakeholders, consumers, shareholders etc. Their ideas and feedback will help the
company to develop an innovative process and this will inspire disruptive innovation.
Disruptive theory can help the company in analysing competitors. It helps in analysing what
competitors are doing, strategies they have adopted. A company can also look for an idea in the
other developing countries that has helped them succeed and if they can apply it as well.
Surveying and searching around will definitely help them in adopting some disruptive innovation
strategy. Organization must analyse that they should not be afraid of failure, it is the trait of an
entrepreneur to fail. Disruptive innovation helps in creating new market and value for the
organization. This innovation process can be used usually by the company who is going to start a
new project. Be it an entrepreneur or a company, they have to be good listeners if they wish to be
successful. Most of the times, certain feedbacks and interactions with the right people help in
innovation policies to the company. (Möller and Halinen, 2017)
The advantages of disruptive innovation in business are significant. The major importance of
disruption innovation is that-
1) Exceeding expectations: Overcoming the incumbent's business model builds an image
in the minds of target customers that the new company is bound to exceed our
expectations. This showcases the level of trust and belief they have for the company.
2) Use of the latest technology: Keeping up with the latest technology is mandatory for
every company. If they do not use modern technology, they will lag behind. Revolut's
success strategy has grown by leaps and bounds and the credit goes to its technology
based disruptive innovation theory.
3) Culture: Disruption innovative model creates an environment of change, agility and
innovation in the organization. All the employees and the leaders of the organization get
used to change and innovate that they always keep on trying new things.
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4) Power to change: Disruptive innovation theory holds the power to change. The biggest
example of disruptive model is internet. The discovery of internet changed the world
forever. Therefore, all it takes is one good idea and it can change the course in which the
business operates.
5) Image building: Disruption innovation helps in image building of the company. It
creates a positive image in the minds of the customers and they always believe in the
company even if it fails while adopting disruptive innovation theory. (Mendi and
Costamagna, 2017)
Blue ocean strategy:
Blue ocean strategy is a business strategy that is concerned with a company entering into
a non-competitive market and creating new demand for its product. This strategy uses innovation
and creativity to create demand for itself. The main objective of this strategy is to kick
competition out of the market. The key objective of the blue ocean strategy is to open up a
market space and create a new demand. It can be developed for a product where there is no
competition or very less competition.
Blue ocean strategy was discovered by W. Chan Kim and Renee Mauborgne in a publication in
2005.
This marketing strategy is new but quite popular, especially among the young
entrepreneurs who wish to create unique products and services with almost no substitute in the
market. All the decisions and their implementation related to blue ocean are generally done by
top level management of the company.
There are multiple reasons for consideration of blue ocean strategy but the most important ones
are-
1. Improved productivity: The core concept of blue ocean strategy is to outgrow its
competition. The unique product of the company helps them in minimizing cost and
increasing productivity. This increases the efficiency and effectiveness of the
organization.
2. Advanced technology: The only reason for success of blue ocean strategy is that the
company used latest technology that helped them create a market for themselves with no
competition. Revolut Ltd used advanced IT technology that helped the company to grow
exponentially.
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3. Profit margin: The companies that adopt blue ocean strategy do not face any
competition. Thus, it creates a monopoly for them in the market and they decide the
prices accordingly. But generally the prices are reasonable and not too high because these
companies are smart enough to realize the adverse effects of over pricing.
4. Manufacturing capacity: The manufacturing capacity of companies that have adopted
blue ocean strategy is great because of absence of any substitute product. Also, these
companies indulge in mass production which give them cost benefits and also increases
their productivity. The sole manufacturer strategy gives them assurance that sooner or
later all the products will be sold out. (Prange and Schlegelmilch, 2018)
Principles of blue ocean strategy-
1. Uncontested market space: the basic principle of blue ocean strategy is that it kills the
competition. The word 'competitor' becomes irrelevant when this strategy is applied.
There are no boundaries of restriction for the company and this strategy helps in building
an all together new customer base.
2. Step by step process: It is a step by step process and skipping any step would have
adverse effects on the organization. Every step takes time, therefore patience is very
important.
3. Win-Win situation: It is a win-win situation for both the company and its customers
because from customers point of view they are offered something new which is beneficial
for them and from business point of view there is a plethora of advantages like profit
maximization, image building, cost minimization and improved productivity.
4. Maximization of opportunities: This strategy maximizes the future prospects and
opportunities for the organization and also minimizes the potential risks. The future
opportunities help the company to counter the potential threats that it may have to face.
5. Pursuing differentiation: The company pursues different industry or different business
opportunity which helps the company to create its own factors and elements of success.
The risks and opportunities faced by the company are completely different from normal
businesses. Therefore, it is important for them to create a different and unique business
plan that can help them to successfully pursue differentiation.
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To implement a blue ocean strategy, a person needs to adopt more practical approach and
he must examine and identify the market, customer needs and wants and also do market research.
Lastly, the person needs to mould his offerings into what customer wants and blend them
accordingly to develop a suitable product or service for its potential customers (Tidd and
Bessant, 2018).
2 Historical development of product and services with help of innovative theories and different
pathways for future development of these products.
Revolut Ltd is financial organisation that offer banking services which includes debit
cards, cryptocurrency exchange, currency exchange and many more the main reason of the rapid
growth and increasing the market share in because the Revolut Ltd believe in investing on
innovation and technology. Innovation helps the business to flow new concept which creates new
opportunities for the business in the market. There are two major theories – Disruptive
innovation and blue ocean theory. These theories help in solving day to day problem faced by the
customers and provide a different and better path for regular customers to revile services from
the company. These theories help Revolut Ltd in the following ways :
Disruptive innovation: Disruption innovation is business theory, in this innovation theory the
business develops a new market and value networks. Disruptive theory occurs when a newly
formed company successfully challenges the leader in the market by providing products or
service that slowly and surely start appealing to larger part of the market. Revolut Ltd used
disruptive innovation theory in these ways(Alderman and et.al., 2015) :
 The banks in United kingdom's market were not at all interested in dealing in
cryptocurrency because of this the investors of the cryptocurrency had faced a lot of
problems as there were no banks which were exchanging cryptocurrency for cash and
vice versa. Revolut Ltd started dealing in cryptocurrency which help them to gain many
customers, this also increased their brand awareness among the customers as it was the
USP of Revolut Ltd.
 The banks in United Kingdom were charging huge commission on exchanging foreign
currency to Pounds, this was huge problem faced by the tourist and the business who
accept foreign currencies. Revolut Ltd introduce currencies exchange services in very
low commission rate. This innovation helps the bank to gain a huge attention of tourists
and step out of the competition in the market.
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 The company also introduce paperless banking services in their business actives this help
company to create a social impact on the market. It also increases the goodwill of the
Revolut Ltd and gain the attention of the potential customers in a positive and effectively
manner(Azis and et.al., 2017) .
 Revolut Ltd also introduce a mobile app which supports functions like online
transactions, ATM withdraws through app in more than 120 types of currencies and also
sending money in about 30 currencies from mobile app. This innovative service of
Revolut Ltd help them to attract business who operate their activities worldwide or
internationally.
 The Revolut Ltd also provide access to cryptocurrency such as Ethereum, bitcoin, bitcoin
cash and many more directly through the mobile this feature was unique as well as
advance because banks where not dealing in cryptocurrencies and Revolut Ltd launch a
mobile app for the customer to access and exchange their cryptocurrencies, which gain
attention of lot of cryptocurrency investors towards the bank(Biemans, 2018) .
 Any banks in United Kingdom were not accepting cryptocurrency so Revolut started
Ltd exchange cryptocurrency, after some time the bank started exchanging
cryptocurrencies in more than 25 fiat currencies, this service attracted customers rapidly
moreover it also helped the bank to gain more customers of cryptocurrency sectors.
 All the financial companies in the market were charging huge fees of the services they
are providing to the customers, Revolut Ltd introduce new policy for their customers in
this the bank charges no fees for the most of the services they provide to the customers.
This policy of Revolut Ltd help the company to gain customers very quickly.
 The Revolut Ltd charge almost zero amount for exchange rate between the banks for its
exchange of currencies on weekdays moreover they charged a markup percentage from
0.5 percentage to 1.5 percentage on weekends. The charges of the Revolut Ltd on
weekend is even lower that the charges of other companies form the week days(Cantero,
Gonzalez, and Diaz, 2017) .
Blue ocean strategy : Blue ocean strategy is a business strategy that is concerned with a
company entering into a non-competitive market and creating new demand for its product. This
strategy uses innovation and creativity to create demand for itself. The main objective of this
strategy is to kick competition out of the market. This marketing strategy is new but quite
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popular, especially among the young entrepreneurs who wish to create unique products and
services with almost no substitute in the market. These are the following characteristics that The
Revolut Ltd had used.
 New market creation : The banks in United Kingdom were not at all interested to deal
in cryptocurrency such as Bitcoin, Ethereum and many more After seeing this as
opportunities for entering into new market, Revolut Ltd started exchanging
cryptocurrency this attracted a lot of potestal customers moreover after some time the
company stated to provide 25 fiat currencies in exchange to cryptocurrencies. The
company also launch a mobile app from which the customer can get access to
cryptocurrencies directly. This was the USP of Revolut Ltd which help the company to
increase their brand awareness. This was they way how Revolut Ltd used blue ocean
strategy expand their business into new sector with almost zero competitors(Cohendet,
Parmentier and Simon, 2017) .
 Make competition irrelevant : All the financial companies in United Kingdom were
charging hand full of commission rate on exchanging foreign currencies to Pounds, this
was problem which were faced the tourists and business which operates in foreign
currencies on regular bases. Revolut Ltd introduce currencies exchange services in very
less commission rate, introducing this service gain huge attention of business and tourists
moreover all the banks in the country were charging good amount on services they were
providing to the people. Revolut Ltd again introduce some new scheme of the customers
that the customer have to pay almost zero or very less to Revolut Ltd for taking their
banking services. This scheme help Revolut Ltd to gain huge customer very quickly.
These were the strategies which were used by the company to step out of competition and
increase their market share.
 Create and Capture new demand : Creating and Capturing new demand means when a
business introduce new product or services in the market it creates new demand for the
product and by maintaining the innovation level in business helps to maintain or capture
the new demand. The Revolut Ltd was introducing new services with very much cheaper
cost then the other banks in the market. The extra ordinary service of the bank help itself
to create new demand in the market moreover the bank was also bringing innovation in
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the business and they maintain their quality of services this helped the bank to capture
new demand after creating it(Frow, and et.al, 2015) .
 Breaks the cost value of trade off : When new company enter into the market with
innovation that solves the problems faced by the consumers or the company it increases
the quality of the product or services or it decreases the cost of thee product. Those
companies who uses blue ocean strategy to enter into new market aims to achieve
differentiation with low cost. The Revolut enter into banking sector introducing cheaper
banking services and with many services which weren't provided by financial institution
earlier, this attracted a lot of customers towards the bank but on the other it breaks the
value of services which were provided by other banks in the market.
CONCLUSION
From the above report it has been summaries that Innovation plays very important role in the
growth of the company as well as to keep the customers sanctified, the company has to build
some new and different ideas that can solve the problem which are faced by the company or by
the consumers. The main reason of customers switching products is when they don't find the
product useful or unique from other products. This is the main reason why company need to
bring some innovation by developing of introducing new product and the company need to keep
searching for more and more new ideas for attracting customer. Revolut Ltd is a fast growing
financial company from United Kingdom. The reason behind their huge success is the
innovative ideas to solve customers problem and is using two different theories to develop their
products in near future. These theories helped the company to make their customers loyal
towards there services. These two theories helped company to make their customer loyal and
increase their satisfaction level. As a result study based on Disruptive Innovation theory and blue
ocean theory they had launched various policies and offers for the customers. These types of
technologies and services are motivating the potential customers to stay loyal for the Revolut Ltd
as they have build trust between the consumer and company. Revolut Ltd are always working on
innovative strategies to increase the growth of the company by using various theories.
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REFERENCES
Books and Journals
Alderman, N. and et.al., 2015. Managing Hidden Innovation.
Azis, Y. and et.al., 2017. A model of managing innovation of smes in Indonesian creative
industries. International Journal of Business and Society.18(S2).pp.391-408.
Biemans, W., 2018. Managing innovation within networks. Routledge.
Cantero, J., Gonzalez, N.L. and Diaz, D., 2017. Managing innovation in the Argentinian nuclear
sector: The case of Atucha II nuclear power plant (NPP). Academia Revista
Latinoamericana de Administración, 30(4). pp.565-580.
Cohendet, P., Parmentier, G. and Simon, L., 2017. 13. Managing knowledge, creativity and
innovation. The Elgar companion to innovation and knowledge creation, 197.
Frow, P., Nenonen, S., Payne, A. and Storbacka, K., 2015. Managing co‐creation design: A
strategic approach to innovation. British Journal of Management.26(3). pp.463-483.
Garza-Reyes, J.A. and et.al., 2017. Managing Innovation and Operations in the 21st Century.
Productivity Press.
Kerzner, H., 2019. Innovation Project Management: Methods, Case Studies, and Tools for
Managing Innovation Projects. John Wiley & Sons.
Mendi, P. and Costamagna, R., 2017. Managing innovation under competitive pressure from
informal producers. Technological Forecasting and Social Change.114. pp.192-202.
Möller, K. and Halinen, A., 2017. Managing business and innovation networks—From strategic
nets to business fields and ecosystems. Industrial Marketing Management. 67. pp.5-22.
Prange, C. and Schlegelmilch, B.B., 2018. Managing innovation dilemmas: The cube solution.
Business Horizons.61(2). pp.309-322.
Tidd, J. and Bessant, J.R., 2018. Managing innovation: integrating technological, market and
organizational change. John Wiley & Sons.
Wu, L.W., Lii, Y.S. and Wang, C.Y., 2015. Managing innovation through co-production in
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Online
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