Analyzing Tesco's Innovation and Commercialization: A Business Report

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Innovation and Commercialization on Tesco
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Index
Introduction..............................................................................................................................3
LO1: Explain the context for innovation and determine the difference between
invention and innovation.........................................................................................................3
P1 Explain innovation and determine its importance to organisations in comparison with
invention.................................................................................................................................3
P2 Explain how organisational vision, leadership, culture and teamwork can shape
innovation and commercialisation.........................................................................................4
LO2 Explain the different types of innovation......................................................................6
P3 Explain the 4Ps of innovation and explain the use of the innovation funnel to examine
and shape innovative ideas.....................................................................................................6
P4 Explain developments in frugal innovation and provide examples of how it is used in an
organisational context............................................................................................................7
LO3 Discuss the process required to commercialise innovation.........................................8
P5 Explain the importance of the commercial funnel and the application of new product
development (NPD) processing for commercialisation of innovation...................................8
P6 Build an innovation business case for an organisation, including ways to access
funding.................................................................................................................................10
LO4 Evaluate the range of methods for protecting ideas and understand their
advantages and disadvantages..............................................................................................11
P7 Evaluate the different tools that organisations can use to develop, retain and protect
knowledge and intellectual property....................................................................................11
Conclusion...............................................................................................................................13
References...............................................................................................................................14
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Introduction
The business report analyzes the difference between invention and innovation by focussing
on the innovative and sustainable development of products by Tesco. The largest retail
company in the UK, Tesco offers promises to offer new and innovative products to their
customers (Wood et al., 2016). The report aims to discuss the leadership and culture
embedded in Tesco. Additionally, the innovation funnel and the 4Ps are discussed in this
context that will provide a clear view of the efficient working of the innovative project
schemes. The innovation manager is being appointed by the company advices Tesco
regarding the market acceptance and funding implemented to construct new and innovative
products. Frugal innovation strategy is suggested by the innovation manager so that Tesco
can build innovative products maintain ecological sustainability. Moreover, the different
steps adopted by the innovation manager to develop a new product are also discussed in the
later part of the report.
LO1: Explain the context for innovation and determine the difference between
invention and innovation
P1 Explain innovation and determine its importance to organisations in comparison
with invention.
There are more than 300 dairy products that are launched by Tesco. The organization has
expanded their Cheese collection with a plan that it will attract more new customers. Red
Leicester Bite and Vintage Coastal Bite Cheddar are stocked along with Blueberries and
Cranberries. The new and superior quality Red Leicester Bite comes with Peppercorns and
Chipotle is perfect for those who like a piquant kick in their taste buds while enjoying cheese
bites (Deighton et al., 2016). Additionally, yogurt experts will be astonished to hear the
launch of Finest Greek Yoghurt having both the honey and espresso recipes. Complementary
to this is the fat content that is estimated to be 0%.
Tesco has made commitment to provide healthier and quality products to their customers and
they are trying hard to maintain this when reformulating sustainable products. That is why
most of the products related to Yoghurt collection contain less sugar, which will help the
company to meet the norms of Public Health England’s 2020 (Khehra et al., 2018). Tesco
includes less than 45% fat in their cheese products so that their customers see the company as
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a leader who always provides innovative and healthier products to their customers. They have
also launched an innovative product named Strawberry Quark that is specifically designed for
customers who prefer high protein food. Additionally, the organization has included
sustainability touch in their innovations as they have developed small 200g portions of
yoghurts having zero fat content so that consumers can prevent ad control food waste.
Tesco know the difference between innovation and invention and they are more inclined to
satisfy their customers by providing them with innovative products. Innovation can be
beneficial for any organization as it provides new products to the existing competitive
market, Tesco have accepted this as a challenge to outshine other retailers in terms of
‘innovative products’. The innovation manager appointed by the company to advise them
regarding their innovative projects, suggested that thorough analysis of the market needs,
rival sources and capital investment can lead to successful completion of the project.
Tesco found innovation as a new path to entrepreneurial success. They are keen to respond to
their customers’ choices and preferences and the company adopts novel techniques to
maximize global connectivity. The company has focused on business model structures to
reformulate their product that can be of immediate value to the buyers. Therefore, keeping in
line with it, Tesco had realized that change is required in the competitive market in such a
way that customers’ find it simple and hassle-free to use, such as transition to online
shopping. The innovation manger has provided the company with a detailed plan for
generating new products into the existing competitive UK market (Nguyen et al., 2017). He
outlined that products, services, markets and customers, together, act as an opportunity for
the company and therefore, to manage all these efficiently timing is very important.
P2 Explain how organisational vision, leadership, culture and teamwork can shape
innovation and commercialisation
Customers always prefer that their selected products are cost effective and thus, Tesco has a
mission to deliver it in a right manner. The company’s mission is to stand as a champion for
customers so that they can enjoy a great quality of life with Tesco’s new and existing
products (Felgate and Fearne, 2015). The organization understands their customers’ in a
better way, so they develop new products according to the customers’ need. In order to make
things better, Tesco listens to people through social media and Clubcard data and acts
accordingly to generate innovative products to satisfy their customers.
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Tesco faced severe challenges related to organizational change when CEO of the company,
Sir Terry Leahy decided to resign and retire from his post. This led to a huge confusion
among the customers and stakeholder base as they found that the leadership style possessed
by Terry cannot be adopted by others. It was because of his presence that the company gained
immense profit by generating innovative and sustainable products. His decision made the
shareholders to think about their investments in the company. The company gained
worldwide fame when Terry adopted Transformational Leadership in 1997 (Kukreja and
Gupta, 2016). When Philip Clarke took over the position of CEO in 2011, the stakeholders,
employees and customers gained their confidence back as they believed that Tesco would see
a leadership change in appositive manner.
Dave Lewis, the current CEO of Tesco on his initial day of joining the company has
announced that management would face severe changes, as changes are considered as trends
that must be carried out in an efficient manner. Tesco market share slid from 30.78% to
27.88% and it is believed that Tesco chairman took this decision of job poaching to bring
Dave Lewis from Unilever to his company. Lewis was assigned the title of ‘drastic Dave’
and it was predestined that he was going to adopt Transactional Leadership Style in Tesco
(Haddock-Millar and Rigby, 2015). He believes that correct supervision and group
performance can bring enormous profit when any innovation is launched in the existing
market. His way of action is that when managerial theories are successful, employees will
receive reward, but if they fail, they must also bear the consequences. Therefore, it is
believed that under his coaching, Tesco will develop an efficient team who will support and
trust other team members to achieve success. Lewis holds a major experience and thus,
sharing of knowledge will help the team members to realize their fault and in turn develops
themselves as skilled personnel of the company.
It is witnessed tat efficient departmentalisation and work specification has enhanced Tesco’s
business in the last years. An interrupted chain of authority that exists between the top and
low level employees helps the organization to perform better in the competitive market
(Parker et al., 2017). In Dave Lewis rule, decision making is seen to be concentrated at a
single point with no input in decision from the executive level’s side. Therefore, it can be said
that Tesco follows Centralisation decision making model.
It is recommended that in order to survive in the competitive market for the long run, open
communication must be established by Tesco management authorities among all performers’
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levels. Centralized management can be harmful for Tesco as the employees may believe that
their voices are not valued and they may resign from their job post (Markar et al., 2018).
Open innovation must be encouraged so that the workforce feel special and involved in
sharing creative ideas that can turn beneficial for the company.
LO2 Explain the different types of innovation
P3 Explain the 4Ps of innovation and explain the use of the innovation funnel to
examine and shape innovative ideas
Tesco is using the innovation funnel so that new products are delivered in the market in
correct time. The development of an innovation funnel model requires three steps (França et
al., 2017). These are:
Wide mouth of the funnel: This step denotes the collection of enormous ideas from every
level of the workforce. The more the idea the more is the creativity brought in to the
products. In order to make a fast move, Tesco has developed a clear objective that they are
going o provide new products to their customers with each passing day. The company has a
deep insight about the market acceptance of the products, customers’ preferences and
existence of competitors and this helps Tesco to build efficient innovative strategies to
achieve their goals.
Narrowing portion of the funnel: This is the screening phase of the model. The ideas
collected are thoroughly analyzed by the analyst team of the company and they relate the
most matching idea with the mission of the company. Then risk management team of Tesco
analyzes the risks associated with the implementation of the idea to the innovation project
work. Additionally, the idea chosen must serve the company in upcoming projects.
Narrow part of the funnel: Tesco’s management team gives permission to implement the
chosen idea to the innovation projects as they believe it can meet the objectives of the
organization.
As opined by Singh et al., (2015), Tesco has adopted this model as it favours safe idea over
creative ideas. Additionally, Tesco has adopted disruptive innovation strategies as they
believe their new products can significantly transform the existing market and challenge the
rival companies existing products in the same competitive market. They believe that
emphasizing on generating innovative product will revolutionize the administration and
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thereby brings enormous profit to the business. To be on the positive side, this strategy
depends on incremental innovation to identify the loopholes that are present in the existing
product. Thus, evaluating this, the organization is able to generate innovative products with
numerous additional benefits than the existing ones.
The 4Ps of innovation includes product innovation, process innovation, position innovation
and paradigm innovation.
Product innovation- this involves the products or services offered to the customers that are
built with efficient innovative strategies. It denotes the importance of the products that can
potentially serve humanitarian objectives.
Process innovation- The efficient delivery of the products comes under this category. Tesco
has also developed an online site through which customers can view and choose their
products (Hong et al., 2016). The company delivers the selected products through an efficient
courier team to the respective customers.
Position innovation- Tesco before launching any new product to the market does a market
survey to see which products are in demand in the competitive market. Additionally, they
target and segment their customer according to age and income level, who will value their
novel products. Likewise, they position their innovative brand in the market.
Paradigm innovation- This usually defines the imaginary models that play in the minds of
innovators. Tesco has the urge to serve its customers everyday in a better way and hence,
they are leading the retail market in terms of unimagined innovations.
P4 Explain developments in frugal innovation and provide examples of how it is used in
an organisational context
Frugal innovations refer to the development of a new product but extracting less from the
natural resources (Knorringa et al., 2016). Innovators or entrepreneurs develop low cost
strategies in the competitive markets to cope with the organizational complexities in order to
develop and deliver innovative products to less economic household income people who have
low buying powers.
A long term partnership have been announced between Tesco and WWF with the aim of
lowering the environmental influence of the UK shopping basket by 45%, thus, enhancing the
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sustainability of food and ensuing its cost effectiveness so that it is easily affordable
(Freidberg, 2018). WWF has launched a recent Living Planet Report in 2018 that states the
issues faced by the organization in developing quality food due to hanging environmental
conditions. Together, they focus on three areas of efficient foods delivery:
 Customers must depend on sustainable diets
 Extracting less form nature while generating new feedstuffs
 Recycling the food and packaging wastes within the organization
Additionally, Tesco and Volkswagen have collaborated to generate the largest UK retail
Electric Vehicle charging network that is powered by Pod Point (Dixon et al., 2018). This
will help the customers to charge their electric cars by using a 6kW charger for free or an
advanced 50 kW charger for a cheap rate aligning with market price.
LO3 Discuss the process required to commercialise innovation
P5 Explain the importance of the commercial funnel and the application of new product
development (NPD) processing for commercialisation of innovation.
The interpretation of commercial funnel plays an important role behind the establishment for
the process of commercialisation of innovation in Tesco (Tescoplc.com. 2019). The
implementation of commercial funnel helps to create numerous customers towards the
organization such as, Tesco. Tesco have been incorporated with the presence of commercial
funnel because it successfully creates an area for customer’s attraction, conversion of visitors,
leads to the close path way of success and delights the customers via fulfilling their
requirements. Attraction, which is part of Tesco’s commercial funnel, tries to deal with the
customers via website. Convert refers to the part of sharing the contact information of Tesco
with other customers (Destination Innovation. 2019). Close relates to the effort of bondage of
the customers and Tesco’s employees. The last part of the commercial funnel depicts the
importance of delight that is obtained with the help of fulfilling the customer’s needs
(Wipo.int. 2019).
The organization has come up with the innovation of Red Leicester Bite and Vintage Coastal
Bite Cheddar. The application of New Product Development (NDP) processing helps to
enhance the commercialization of innovation (HBS Working Knowledge. 2019). The
importance of the commercialization can be analysed with the help of societal survey,
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economic growth, industrial partnerships, recruitment and retentions and bonding of
entrepreneurship. The implementation of new product development helps to channelize the
systematic search that dwells with the new innovation of Tesco. New Product Development
process helps to balance the number of ideas that emerges in an organization towards the
proliferation in public. The implication of new product development process can be
organized with idea generation and screening (Wood et al., 2016). It helps to maintain the
authenticity and integrity of the process that centre rounds the subject of new product
development of Tesco.
Based on the type of commercialisation such as idea generation and screening theory helps
Tesco to analyse the number of loyal customers, who are attracted towards the innovation of
the organization (Fernie and Sparks, 2018). The concept of commercialisation that can be
dealt with the help of idea generation and screening can be organised in a many of cost and
risk entering into the market and helps Tesco to sustain in the global market. The process of
new product development can be generating with the help of testing upon the various
preliminary market research. It can be delved with the help of effective marketing strategy
development that would invite the scope for better process of commercialization based on the
process of new product development (Śmigielska and Oczkowska, 2017).
The application of new product development helps to highlight the significance in the form of
commercialization of innovation (Zhou, 2017). The concept of commercialization holds the
efficacy about the project and it related innovation gaining reaction, which is obtained from
the enhancement of the product, which appears in the form of concept about the product,
launch system and interaction that took place between the targeted customers. The impact of
new product development that has been incorporated by Tesco can be dealt into several other
forms that approach for to attract, convert, close and delight for the customers in order to gain
more number of customers towards the organization, Tesco (Chkanikova and Lehner, 2015).
There are certain key elements that hold the success behind the establishment of the new
product development such as operating philosophy, enhance the Tesco’s structure, the effect
gained by past experiences and the style of management put a strong impact, dine by the
process of new product development processes (Wrigley et al., 2019). These four stages plays
an important role towards the collaboration of attracted visitors, that helps Tesco to mark
effective marketing strategies that would be beneficial for the organization to put emphasis
on the commercialization of NDP of Tesco. Through the help of regular update, it becomes
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easy for the organization to look after their loyal customers and make a better relationship to
gain more number of profitable results (Hervey et al., 2017).
P6 Build an innovation business case for an organisation, including ways to access
funding.
Tesco has come up with the projection of sustainable business that depends on the sustainable
business (Marx and Hsu, 2019). The organization has reflected the growing products with an
effective cost price that tend to generate higher nutrients food items with low pricing cost.
The organization has created to help the customers with better and healthier choices that can
be enjoyed at low prices. To implement such products, Tesco had to put some of the
important values that have been proposing by valuable shareholders. The organization has to
invest £1.5 billion in order to maintain the retailing price that operates between the margin of
3.5 percent and 4.0% percent by this year (Gans et al., 2017).
To keep the economic growth at its maintain level, the organization followed the innovation
strategy of free cash flow and that helps to gain the earning in a better prospective manner.
The implementation of innovation strategy helps to generate the profitable results that are
belong to part of the affordable prices and this even affects the supply chain of the
organization (Calvo-Mora et al., 2015). Recently, Tesco have been compiled with another
group of retailing organization, which is known as Booker merger. The collaboration of
Tesco and Booker merger have gained the access to generate the better opportunities for the
growth. Both the organizations have been serving the customers with independent retailers
that have the suppliers of more than 7000. The collaboration of Booker merger and Tesco
have put various opportunities for the consumers in terms of obtaining goo d products that
throws a tough competition to other retailers (Gans et al., 2017).
Innovation strategy has been taken place on the form of collaborating with Booker merger.
The collaboration of both the retail sectors has put emphasis on the creation of expansion in
the market share. It has delve with the projection of better market opportunities that can be
gained with the help of branding and fresh ranges of products from the organization (Gans et
al., 2017). The collaborative organization have even projected the significance based on the
long term value chains that gave been created by the organization’s stakeholder. The
innovation strategies centre rounds on the projection of different or new product development
with an implementation of advancement, reduction of the operating costs which has been
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reduced by £1.5 billion. Tesco has come up with the generation of £9 billion that refers to
cash back from the operations (Baldwin and Henkel, 2015).
LO4 Evaluate the range of methods for protecting ideas and understand their
advantages and disadvantages.
P7 Evaluate the different tools that organisations can use to develop, retain and protect
knowledge and intellectual property.
Tesco’s effective tool the t helps the organization to retain the intellectual property is website
that plays a vital role behind the establishment of the organization’s new products
commercialization via website (Baldwin and Henkel, 2015).. Henceforth, it is a prior duty of
an organization to protect the various tools, which protect the intellectual property of Tesco.
The websites can be protected with the help of various means that is usually obtained by
every organization. A website generally receives protection, which is obtained by the
intellectual property (IP) rights. The following are the intellectual property rights that can be
dealt with the several other means;
The implementation of E-commerce systems, search engines or the presence of technical
internet tools helps to provide the protection with the help of patent or utility models
(Baldwin and Henkel, 2015)..
Another part of the intellectual property, which is also known as Software helps to include
prove the protection cover that are based on the HTML code. This type of tool helps the
organization to channelize the copyright or patent models and these are directly linked with
the collaboration of the national laws (Hong et al., 2016). The organization’s website can also
be protected with the help of copyright which belongs to a part of the intellectual property
rights.
Tesco’s website also get protection that can be channelized with the means of website design
and the website designs obtains the garb from the copyright of the intellectual property (Hong
et al., 2016). Copyright tends to provides protection towards the websites that are comprise
of written materials, photographs about the organization, graphical design and portals that
contain music, images and videos. the website’s database are even receives protection from
the copyright in the name of sui generis database law that restricts other from cryptography.
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It has been channelize that the website also contains the logos, product names, domain of the
higher authority and trademarks.
These days it has been analysed that the organization’s website comprises of graphical
symbols, displaying of the screen, graphic user interfaces (GUIs) that can be protected with
the industrial design law (Śmigielska and Oczkowska, 2017). The copyright helps to protect
the website from the other WebPages who tends to copy the database of another organization.
Hidden aspect of an organization helps to protect with the help of trade secret law. it has been
incorporated in the organization to deal with reasonable steps that come forward during the
protection of confidentiality about an organization that are kept in a website.
The role of intellectual property plays an important factor behind the protection of the
Tesco’s home page or website. The implementation of IP laws help the organization to
reduce the risk factors that may approach during the time of production of new innovation in
the market (Shamia et al., 2018). IP helps to maintain the authenticity and integrity of the
organization’s website with an active involvement of other tool that helps to protect the
organization’s database information. The certain states that are held by the IP laws refer to
the stages that belong to the part of “conception of an innovative idea”. An interpretation of
patent documents helps to reduce the wastage of the crucial resource and set them aside
which would be helpful for upcoming days (Shamia et al., 2018).
The websites can be protected with the help of IP laws that helps to conserve the early stages
of the organization. It can be implemented with the help of registration of the trademark. The
registration of the trademark helps to incorporate and strengthen the power of similar
products, which is present in an organization help to delve with further development in the
global market (Śmigielska and Oczkowska, 2017). Registration of the trademark helps the
organization o gain the results that would be profitable in order to maintain the authenticity of
the brand or product that are prints in Tesco.
Another strategy that help the organization, Tesco to protect their home page’s website from
other organization, which is known as IP insurance policy and this helps to maintain the
confidentiality of the organization (Shamia et al., 2018). This can even be deterring with the
help of potential infringers. The website can be protected with other tools that are also known
as trademark symbol, copyright notice and watermark and time stamp.
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