Innovation Strategy Report: Volvo's Automation and Design Thinking

This report provides an in-depth analysis of Volvo's innovation strategy, focusing on its implementation of automation in production and its utilization of the Design Thinking model. The executive summary highlights Volvo's adoption of automation, driven by the need to adapt to market changes and improve efficiency, as demonstrated by a 25% production efficiency increase in 2018. The report delves into key concepts such as strategic alignment, emphasizing the importance of aligning innovation activities with organizational goals. It explores the five-step Design Thinking model employed by Volvo, detailing how the company empathized with customer needs, defined problems, ideated solutions, prototyped new approaches, and rigorously tested its innovations. A SWOT analysis evaluates Volvo's strengths, weaknesses, opportunities, and threats, providing a comprehensive overview of its market position and potential challenges. The report concludes with recommendations for Volvo to enhance its innovation activities, emphasizing the importance of external R&D professionals and enhanced internal research and development. The report underscores the significance of innovation for businesses to sustain and thrive in the competitive global market.

Name of the university
Innovation and Sustainable Business Development

Executive Summary
Volvo is a Swedish MNC known for its specialization in electric vehicles, based in Gothenburg.
This article provides the vision of the company about the new innovation trend, that is,
Automation of work, which provide ease to the humans in executing the business, with the help
of computer software and robotics. Volvo’s working with the “Design Thinking model” in
Automation in Production, showed a great success, as it was able to improve its production
efficiency by 25% in 2018 (Acuitymag, 2018).
In order to survive in the market it is mendatory for a company to adopt the changes (innovative
approach & new technology), the best way to get this done is strategic alignment.
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Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
Concepts and Relationships.............................................................................................................3
Strategic Alignment.........................................................................................................................4
Design Thinkin in Automation in Production In Volvo..................................................................5
Organization’s Innovation Strategy.................................................................................................6
SWOT Analysis...............................................................................................................................7
Recommendation.............................................................................................................................8
Conclusion.......................................................................................................................................8
References......................................................................................................................................10
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Introduction
The Volvo Groups of manufacturer Trucks & heavy vehicles, is one of the world’s leading
manufacturers of trucks, buses, construction equipment and industrial engines.
Design Thinking in Artificial intelligence provides ease to the execution of business process by
integrating the computer softwares with human interaction. It help in performing multiple task at
a time with accuracy and it is economical than the employees, it construct responses and interact
with other operating systems to perform repetitive tasks.
Concepts and Relationships
An organizational environment consist of various factors, which affects the Performance of the
business, utilization of resource and its operations. These factor such as competitors, customers,
government policies, have the power to affect the organization.
In order to be successful Volvo had implemented the “Design Thinking model” in Automation in
Production. It was done to provide the customer a quality product at competitive price (Hcltech,
2017). Volvo followed the five step model, with complete evaluation of each step to ensurer
successful implementation of innovative trend that is “Automation in Production”. The five steps
of the model are: (Interaction-design, n.d.), (Engineering, 2016), (Volvogroups, n.d),
(Volvogroups, n.d).
Empathise:- In this Volvo has tried to figure out why the operations were not running smoothely
and why the customers are not getting desired satisfaction from the product.
Define (the Problem):- In this they did a proper analysis of the information gathered in
empathy phase, through which they got the actual problem which were higher cost of
production & Wastage after which lean manufacturing was introduced in Volvo.
Ideate:- After the complete analysis in the above two stages the designers come up with an
idea of automation in production to reduce wastage and cost of production.
Prototype:- In this the designing team come up with the innovative idea which is extension
of the idea in Ideate stage, after this the development team tested it by there own to check the
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flaws. The concept on which the team work were Automated driving, electromobility and
connected vehicles.
Test:- After the rigorous testing of the idea in Prototype stage, the designing team tested the
final output in this stage to check the requirement of redefining the problem if any &
understanding the requirement of the customer from there perspective.
Nowadays, the competition is at its zenith, innovation is the only way to have an edge over the
competitors. In order to ensure its existence in market, it is mendatory for a company to come up
with a new product or service, which require proper knowledge & experience. Structure of the
organization entirely depends on the innovation it makes in the process, hierarchy or matrices.
Innovation must be made by keeping in mind the internal and external factore that affect
business operations. It must be communicated properly, so that the employess can easily adapt
the change and it could be implemented to various activities (Hbr, 2018).
When a new idea comes to the mind, it must be evaluated by the value capture strategy to ensure
customer gain along with appreciation in profits (Hcltech, 2017). Innovation is a two way
process, as the change in one factor requires a change in other factors
Every organization has its USP that makes it competitive and allow it to sustain in market, such
as human resources, invisible assets, core competences, organizational capability, technological
etc., so that they can fill the market gaps with worthwhile offerings. Technology development
and transaction capabilities are equal weights of a scale, which are required to make innovation
effective, these factors help in figuring out the new insights or knowledge that can provide
solution to the existing problem. In order to maximize the profit the firm must strategically
implement innovation with its operations (Farooq,S, Cheng,Y, Matthiesen, R, V, Johansen, J, &
Brien, C, 2017).
Strategic Alignment
To achieve the mission, it is significant for all the organizations to come up with new strategies
or revise the existing ones overtimes. In order have the maximum output from the strategy the
organisations align them with the senior leaders of the hierarchy. The alignment helps the top
officials in effective implementation of new strategies, as they have the knowledge of how to
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bring the strategy into action. It help the organization in enhancing its operations, so that no
opportunity is missed out. Strategic alignment handover desired results as required.
(Valuebasedmanagement, n.d.).
R&D professionals act as a boon in the strategic alignment, as they share their vision, how the
strategy should be implemented to get the best possible output. R&D professionals look over all
the challenge that a strategic alignment will have to face. This pro active approvch allow them to
implement the change with with pisotive impact (Rodgers,P ,A, Innella, G, & Bremner, C, 2017).
Organisations start working on the opportunities as soon as the R&D professional makes the
comparison between traditional approach and the change. Organisation stay one step ahead
thought designing process, that allows the professionals to frame certain programs that makes
technology user friendly. An effective alignment ensure systematic and smooth operation of the
company. This provide ease of switching from one strategy to another to stay ahead of change
rather than lacking behind and wasting time trying to catch-up with it (Waste360, 2015).
Design Thinkin in Automation in Production In Volvo
According to a report, “Design Thinking” in Automation in Production has proved to be a boon
for Volvo (Hbr, 2018). Automation is being used by the company over labour efficiency, this has
minimised the wastage and increased the accuracy in production (Waste360, 2015). The
innovative thinking and competitive advantage of the organization are the reasons that have kept
on increasing the company scale. The process of automation is very risky and complex, but still
the company has maintained it in a appreciable manner. Volvo is working with a large number of
ABB robots, which work in each department such as stamping, paint, and welding (ABB
Robotics, 2014). The use of robots has minimized the level of defects and improved the quality
of output (Acuitymag, 2018).
In case of Volvo according to the statstics, the cost of automation has shown positive correlation
With the quality of the output. This shows that the process of automation was implemented with
the integration of strategy, which has allowed Volvo to attain the desired outcome. It has been
seen in past few years that a lot of companies had to accept failure who have tried automation in
there work & only a few succceded. Volvo being one of the successors in automation has put
itself a step ahead of its competitors (Engineering, 2016).
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Organization’s Innovation Strategy
Alignment of Innovative Activities:
In order to achieve the organizational goal the company must align the resources in an
appropriate manner. Volvo has kept on changing its organisational structure over time to ensure
the smooth flow of activities and also the change was easily adaptable. Innovation in the
activities has allowed Volvo to respond quickly to the market changes. Innovation activities of
all the departments have been carried out in a responsible manner because of which Volvo has
managed to be at the top in its industry (Volvogroups, n.d.).
Capabilities to Innovate:
An enterprenure is the one who thinks and brings the change, whereas the organization is the one
that makes this change possible by delivering the final product as per the estimated change by
using these additional capabilities. The elements of innovation capabilities of the organization
are operational, transactional, developmental and management (Volvogroups, n.d.).
Development capabilities of the organization involve the development of new solutions that are
to be executed at the market. Operational capability of the company allows it to attain a good
commercial scale of operation, so that the end result of the technology become effective. This
has allowed the firm to provide a quality product at a competitive price. (Opendocs, n.d.).
Transactions capability is the ability, knowledge, and routine which help in the reduction of
marketing ot transactional cost of the organization. These are the significant capabilities because
of which Volvo was able to capture its market, as it links the external environment to the internal
environment by analyzing the market condition and need of the customers (Businesswire, 2015)
Value Creation through Innovation:
The basic objective of this is to provide product which value the needs of the customer. This Is
what Volvo has used for its survival and flowering its business. There is a very small difference
between benefits and sacrifice. In order to create value in market a product availed by the
customer must fulfill all the promises that it makes (Hcltech, 2017).
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SWOT Analysis
SWOT Analysis is used by the organisations to analyse, that whether the innovation trend will
have a positive imact on the organization or not. As it help in determining various benefits that
an organization can acquire, Such as flexibility and simplicity, enhanced cycle time, employee
empowerment, better control, analytics and insights, accurate and quality work and cost saving
etc (Gurel, E., Tat, M., 2017)
SWOT analysis of Volovo:
Strength (marketing91, 2018).
Diversed Product Portfolio: Volvo works through 6 diverse business portions, which gives
equalization to its incomes and gives start to finish solutions, it was possible because of
innovation.
Solid market positions in different segments: Volvo has a main position in a significant
number of its fragments universally, particularly in the commercial vehicle truck portion where it
has a high piece of the pie (over 20%) in most developed countries, it was possible because of
innovation.
Solid Research and Development: Volvo has concentrated firmly on its Research and
Development and is putting vigorously in it. Solid R&D enables the organization to keep up a
focused edge over the contenders and to remain in front of the business patterns.
Weakness (marketing91, 2018).
Product recall affected the brand image: Volvo has needed to review numerous items in the
recent years which makes an imprint on the brand picture of Volvo.
Opportunity (marketing91, 2018).
Developing worldwide street cargo segment: The worldwide street cargo division has
appeared in an incentive just as volume in the ongoing years because of technological
innovation. The part is required to develop over a CAGR 6% in the following 5 years
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Developing Global Construction Industry: The construction industry has shown a significant
growth in recent years. Especially in growing countries, where excessive expenditure on
infrastructure is anticipated and subsequently Volvo is anticipated to benefit
Threat (marketing91, 2018).
Extreme competition forces pricing wars: Volvo faces stiff opposition in all of its segments
which places strain on the companies to decorate product overall performance, constantly
innovate and moreover set off pricing pressures.
Forex fluctuations affect business: Volvo operates globally in many nations and consequently
it's far vulnerable to forex fluctuations.
Recommendation
Volvo Design Thinking can respond more effectively to the innovation trend by following the
below mentioned recommendations:
Volvo should look over the following while performing its innovation activities to have enhance
the existing output -
External R&D profrssionals must be provided authority to make decisions, as this will allow
them to have the authority to try something innovative from there end.
Internal research and development should be enhanced, as it is the core team that frame the final
model as per the information provided by the external R&D teams.
Other significant activities (software development and testing) should be regularly looked over.
b. Volvo should also move towards the additional innovation capabilities in automation of
product. As the customer needs keeps on changing frequently.
c. In order to maintain the top ranking, Volvo should go for some additional work on concepts
and models framework for innovation and research to identify difference and similarities among
the nations.
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Conclusion
Strategic alignment provide ample amount of opportunities to the business organization, as it
allowed Volvo to go beyond its boundaries. The automation in production has helped Volvo in
reducing the wastage and allowed it to provide fully automated products to the customers, which
was not possible with manual force. This has resulted in Customer retention, customer
satisfaction, gaining competitive advantage. In order to have long term result, an organization
must have a long term vision which should be integrated with a strategy. The strategic blend of
traditional and modern approach helped the organization to understand the problems and helped
them to come up with new impactful solution that is automation in production. This has helped
in the growth of the company.
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