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Posted on September 11th, 2012, by

The aspects of innovation for a mobile hardware company (“Generic Mobile”¯) are regarded. The importance of innovation is explained and the details of suggested innovation ”“ opening a web portal for selling multimedia content and software ”“ are discussed. The role of leadership in the innovative chain is considered and key leaders required for implementing the suggested innovation are defined.

Innovative plan for “Generic Mobile”¯ is developed and measures of evaluating the efficiency of innovation are listed. The value of above-mentioned innovation for “Generic Mobile”¯ and benefits which it may bring to the company are considered. Finally, research possibilities related to the chosen innovation are discussed and research questions on the subject are formulated.

Introduction

“Innovation”¯ is probably one of the most frequently used words in the sphere of business strategy and development. However, the tendency to popularizing the understanding of innovation and its meaning leads to the fact that any new proposition and thought can be called innovation and almost every business player states that the company is innovating. However, very few companies can estimate the extent of their innovative ability and estimate the benefits reached due to innovation. One of the aims of this essay is to analyze what decisions and strategies deserve to be called innovative and how the success or failure of an innovation can be measured.

Also, the objective of the essay is to develop an implementation plan for introducing an innovation (web portal with multimedia content) for a company with main business activities related to producing mobile devices and corresponding software. As elements of this analysis, leadership role in implementing the innovation is discussed and risks assessment estimation is performed. Ā In addition to that, the possibilities of conducting research in the area of innovative ideas for hardware and software mobile industry are regarded.

1. Description of the innovation

There are several reasons why all companies need to innovate and the main of them are the following (Prahalad 2008):

Ć¼Ā Ā Ā  Technologies and environment are quickly changing (especially in the telecommunications sphere)

Ć¼Ā Ā Ā  Customers’ views and demands are also changing

Ć¼Ā Ā Ā  Competitors are constantly improving products and services

Ć¼Ā Ā Ā  Innovations create positive image of the company both internally and externally

Ć¼Ā Ā Ā  Since new ideas quickly emerge and are realized, the need for inventing and introducing new solutions increases

These are only some of the reasons why it is so necessary to innovate; especially, this statement is true for the companies dealing in the sphere of information technologies, mobile and telecommunications. “Generic Mobile”¯ is not an exception: its current market situation and possible threats have been discussed in the previous part of the work.

One of the biggest threats for “Generic Mobile”¯ is the fact that their revenue and development relies strongly on manufacturing and selling new mobile devices such as communicators, smartphones and simple mobile phones. Software sales constitute only about 38% of all sales for “Generic Mobile”¯; it is worth to consider that these sales are indirectly linked with hardware sales, which means that if people stop buying new devices the company’s business activity will be paralyzed. In order to explore new market opportunities it is worth to invest into introducing a technology which is not directly related to hardware sales but at the same time can be a logical continuation of the company’s activity. Such idea is the opening of a global web portal where users can buy and/or download multimedia and digital content such as software, songs, video clips, audio books, online video training courses and other material. Also, the company is planning to develop a web-based interactive gaming system for users of mobile devices and create a social network with facebook-like structure in order to enable users to share and spread information.

The core idea of this innovation is that likely services have only been offered by local mobile operators and their costs have stayed rather high while the availability and quality of the content left much to be desired. “Generic Mobile”¯ offers to all customers worldwide the same services; moreover, the company is going to integrate software client for the web portal into the new devices produced by “Generic Mobile”¯. Therefore, revenues are to be increased at the expense of two factors: web content sales and better demand for mobile devices.

2. Leadership role

Introducing an innovation is a complicated process and in order to make it successful the company needs to elaborate an innovation value chain. However, such chains require a lot of effort and finance and, what is most important, can sometimes face opposition among the staff. Though usually innovation is accepted as positive tendency, “the restructuring and additional work load that it may cause may result in negative attitude of the employees or latent opposition”¯ (Brooks & Brooks 2006). In such situations, one or more leaders are needed to inspire the collective and to promote the need for innovation as well as the idea itself.

We can single out two different types of innovation: innovating the working process in order to increase efficiency and introducing new innovation-based products and services. In the previous part of the essay two kinds of innovative leaders have been discussed: “planners”¯ and “architects”¯. There is a connection between innovation types and leadership types: for innovating the working process “planners”¯ are mostly needed, and for introducing new products and services “architects”¯ should lead and inspire the company. In the case of “Generic Telecoms”¯ several “architects”¯ are in need and at least one “planner”¯ in order to maintain an innovation value chain.

3. Implementation plan

The unique selling point of the innovation is the fact that services similar to the suggested web portal have only been introduced by local mobile operators and their quality was rather doubtful. Therefore, the starting point for implementing the innovation should be signing agreements with local operators and establishing the ratio of their profit concerning web portal sales. Actually, the more territories covered by this agreement the better. Also, preparative works concerning the content of the portal should be done long before the portal is launched; the content should differ from similar products on the web and offer some interesting bonuses. The above-mentioned social networks, content sharing and interactive online games are core ideas to attract customers.

There are some stumbling blocks for the idea that should be foreseen and treated properly. First of all, there should be proper marketing campaign and mass media support preceding the launch of the portal. Secondly, the website and its technical base should be prepared to serve a large number of customers; i.e. the system should be planned on the assumption that the flow of clients will be constant and large.

Thirdly, the antimonopoly issues should be regarded ”“ though “Generic Mobile”¯ does not operate a monopolist market share, there exists a possibility that other manufacturers of mobile devices and software developers as well as local content providers can claim against the company (due to its integration of web portal software into the devices).

Also, alternative plan should be elaborated ”“ in case if the customers choose to download the content on their devices with the help of their PCs for free rather than buy it at the web portal. Additional means of attracting customers such as discounts, contest and quests, and cooperation with major entertainment providers might be an efficient solution in such case.

4. Measuring innovative success

One of the most interesting problems is how to measure whether innovation is successful or no. On one hand, the research shows that “around 30% of revenues (figures are related to engineering companies) are gained due to products less than 3 years old, in other words, to innovative products”¯ (Holloway 2008). On the other hand, the effect of innovation cannot be seen at once: “often innovative issues provide a positive effect for the whole company and it is hard to notice and measure its results”¯ (Holloway 2008) ”“ though innovative benefits can be easily felt. The main areas for measuring innovative success are performance, quality, timing, finances (revenues) and development costs. The metrics that most companies use for estimating innovation are (Davila & Epstein & Shelton 2005):

Ć¼Ā Ā Ā  Profitability

Ć¼Ā Ā Ā  Time to market

Ć¼Ā Ā Ā  Idea generation and selection

Ć¼Ā Ā Ā  Overall health of the innovation portfolio

Ć¼Ā Ā Ā  Research and development effectiveness and efficiency

Ć¼Ā Ā Ā  Personnel turnover

Ć¼Ā Ā Ā  Life cycle performance

Ć¼Ā Ā Ā  Time to volume

5. Risk assessment

Benefits and risks of the idea may both be quite significant. The benefits have been described in the previous essay and in Section 1 of this essay. Risks are closely interlinked with the nature of the innovation: the primary risk issue is that people might not be interested in web portal enough to pay their money for multimedia content and will simply continue downloading music and video from their computers.

“Generic Mobile”¯ can only overcome this risk offering new and unique content at very democratic prices.

Also, the company will experience serious troubles in the beginning because the project needs substantial investments, but it is not clear whether these investments will result in high revenues or not. Even if the revenues cover the investments and give high profits, the time gap is going to constitute at least half a year even in the most optimistic forecast, and 1,5 years in more pessimistic forecasts. Therefore, “Generic Mobile”¯ needs to accumulate enough finance before starting the innovative process.

One more potential risk is that the services of “Generic Mobile”¯ will appear to be less popular than local providers’ services. Since the company is going to make an agreement with local operators, this risk is diminished; but marketing managers should take into account the necessity of diversifying content and services and paying attention to the needs of foreign customers. In addition to that, marketing campaign should be elaborated separately for each country where “Generic Mobile”¯ is planning to operate ”“ with respect to values, culture and traditions of this company.

6. Value of innovation

Creativity and innovation are the cornerstones of economical development (Drucker 2006). For “Generic Mobile”¯ the suggested idea of opening a web portal is likely to produce a lot of benefits. The main of them are presented below:

Ć¼Ā Ā Ā  The scope of activity of “Generic Mobile”¯ will broaden and therefore the economical future of the company will be improved

Ć¼Ā Ā Ā  Web portal launching will lead to increase of revenues

Ć¼Ā Ā Ā  The company’s public image will improve as well

Ć¼Ā Ā Ā  Demand for “Generic Mobile”¯ hardware devices will be stimulated

Ć¼Ā Ā Ā  Software sales of the company can also be increased due to web portal

Ć¼Ā Ā Ā  Possibilities for online marketing and advertising the company will appear

Ć¼Ā Ā Ā  The company may take part in ad-exchange programs and increase overall revenues

Ć¼Ā Ā Ā  “Generic mobile”¯ is going to get a significant advantage over competitors

Ć¼Ā Ā Ā  The market of online sales and online advertising has not been saturated yet and it offers large possibilities for development

7. Research possibilities

Innovative ideas and their implications usually can serve as a source for research questions and, moreover, whole areas of study. Also, innovative ideas can “give birth to further innovations and finally result in a totally new sphere of activity for the company”¯ (Linq & Pedersen 2005). For example, the innovation suggested for “Generic Mobile”¯ may be developed further in the direction of studying tastes, interests and views of different target groups of customers varying by age, gender, race, country of living, income level and profession.

Successful realization of such idea may give ground for creating a multiplatform system which offers context search and appropriate links for all categories of customers and may be tuned up to the tastes of a particular customer. The initial idea to create a social network for distributing and sharing multimedia content and software can also add new features to the development of the innovation: estimating the tastes of potential customer on the basis of his friends’ searches and preferences may appear to be a basis for successful market strategy.

8. Research question

Basing on the analysis of research possibilities, it is possible to formulate research questions for the selected innovation area. For the case of “Generic Mobile”¯, there are several research questions which can be divided into two classes. One class of research questions relates to making the suggested web portal popular among clients and the methods used to create this popularity. The other class relates to introducing context advertising at the portal and improving the accuracy algorithms of context matching.

First group of questions:

What are the main factors that attract people in online portals? What social and networking possibilities may be added in order to increase popularity? How can the results of new methods be properly measured?

Second group of questions:

What means of context advertising may be integrated into the portal? How can the company measure efficiency of context advertising? Which partnership programs in advertising can give best revenue for the company without loading the web portal with excessive ads? How can the algorithms of context search and matching be perfected in order to increase accuracy of advertising?

Conclusion

“Innovation is the prime strategy of the first part of the twenty-first century”¯ (Skarzynski & Gibson 2008). Technology and environment are changing so fast that the companies which do not introduce innovations can be quickly ousted from the market. But the existence of creative ideas is not enough to make the company a leader in its branch: the innovative idea should be properly estimated and implemented; leadership roles should be properly chosen and innovation value chain needs to be built. Also, initial innovation may serve as the basis for further creative ideas and may be continued with research studies in corresponding area. Investments in the research take a lot of time to be returned, but they represent a significant potential source of competitive advantage.

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