Innovation: A Crucial Part of Global Business in Recent Years - Essay Sample

Introduction

In recent years, innovation has become one of the most discussed terms in global business. The term can be described in various ways. Some businesses describe it as the process of developing fresh, original, and never thought of before products. Others see it as the process of challenging the conventional ways of doing things or borrowing ideas from other industries and places to improve operations as well as meet the needs of the customers better (Greenwald, 2014). Regardless of the definition, innovation stands out as one of the most important elements of a business today. More and more businesses are turning to innovation as a way of creating a competitive advantage. As the business environment becomes more unpredictable and as competition increases within markets and industries, innovation is bound to be a more important determinant of organizational success in the future. Through innovation management, businesses are employing various measures to promote as well as use innovation to build new products, business models, and processes, as well as improve the existing ones. For instance, a business must provide all the required resources including, technological, human, and financial to achieve this goal. However, though technology is an important aspect of innovation, the blue ocean strategy has shown that value innovation is more important than technological innovation. Zipcar is one of the most innovative organizations in the world today. This paper seeks to discuss innovation at the company. Various theories and models will be used to discuss the past and future of the business regarding innovation.

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Innovation at Zipcar

Zipcar is an American organization that specializes in car-sharing. Members get automobile reservations billable either by the minute, hour, or day. The members are required to pay either a monthly or an annual membership fee, which is not inclusive of the reservation charges. The company was founded by Robin Chase and Antje Danielson in 2000, as they sought to borrow the European car-sharing idea. To increase its national operations, the company merged with Flexcar in 2007 (Gates, 2007). The company was purchased by Avis Budget Group in 2013 (Greenfield, 2013). In 2016, the company had more than one million members spread across 500 cities in nine countries around the world. Members can make their reservations online, through a mobile app, or using the phone. The members' access cards give them automatic access to cars. The company's mission is to simplify urban living and make it more comfortable. To achieve this mission, the company seeks to deliver on-demand and environmentally-friendly vehicles that help the members save money and time. It also seeks to address the challenge of congestion by addressing the transportation needs in residential, urban, and commercial areas.

Zipcar was among the very first ride-sharing services. Almost singlehandedly, the business established and developed the sharing economy, hence paving the way for other players in the industry such as Uber and Airbnb. However, regardless of the solid foundation and huge experience that the organization possesses, by the virtue of being the inventor of the business model, it has been forced to constantly respond and adjust to a rapidly changing world. For the two decades that the company has been in operation, it has undergone several changes that have placed it as one of the leading car-sharing networks in the world. The company has also been at the forefront of finding sustainable solutions. For instance, the organization's customer service was entirely designed as a desktop-and-laptop experience. Resultantly, the organization did not offer a way of signing up or helping the users manage their memberships using their phones.

However, to keep up with the changing world, the organization had to change. Innovation played a huge role in championing these changes. To achieve this, big shifts in the behavior and mindsets of its employees was necessary. The great involvement of the employees would become the new symbol of the company's new mobile-first mindset, which has since been ingrained into the company's innovation culture. For instance, there was the sledgehammer experience where the employees literally smashed the old computers to signify the death of the past and the dawn of the new. This was an intentional way of changing the culture of the company.

The company also greatly involved customers in the process. A direct line of sight was created for the company's target population, which was called the mobile-first Millennial. The company's roundtable meetings, which occur every Saturday, consists of customers who share their experiences, needs, feedback, and wishes with the company. The face-to-face conversations are critical in shifting the mindset of the employees and spurring innovation to better meet the needs of the customers. The process also makes the fruits of innovation to all the stakeholders. Moreover, the company also developed a more effective reward system to enhance the innovation culture. Other than just rewarding those who make direct contributions to product or technology innovation, the company also recognizes all those who contribute in any way to the innovations. The move helps spread out the value and culture of innovation throughout the organization. The sense of contribution and appreciation acquired from such recognition is more effective than even financial incentives. Investment in the personal growth and development of employees is one of the most effective ways of giving them a sense of recognition. Through the use of such interventions, Zipcar has managed to innovate and remain relevant, even in the face of stiff competition from new entrants (Kaplan, 2017).

Blue Ocean Strategy

Blue ocean strategy refers to the simultaneous pursuit of low cost and differentiation by organizations to create new demand and hence opening up new market spaces. The strategy involves the creation and capturing of uncontested market space in a way that makes competition irrelevant. The term 'blue ocean' was coined by Chan Kim and Renee Mauborgne in their book, Blue Ocean Strategy (Kim & Mauborgne, 2014). They also described 'red oceans' in their quest to describe and discuss the market universe. The red oceans represent all the industries that are already in existence. In red oceans, the competition rules are known and the industry boundaries are well defined and accepted. In this environment, companies seek to outdo each other and get a bigger share of the existing demand (Kim & Mauborgne, 2014). As more players get into the market space, it gets crowded and both profits and growth slump.

In contrast, blue oceans represent the industries that are not in existence. They are the unknown market space, which is untainted by competition. In this environment, demand is created rather than fought for as seen in the red oceans. There is a great opportunity for growth and hence profits are high. Since there exist no rules in blue oceans, competition is irrelevant. The analogy of the blue ocean also points to the fact that there exists deeper and wider unexplored potential (Bhargava, 2017). Since the red ocean is different from the blue ocean, the strategies to be employed in the two environments are different. For instance, strategies employed in the red ocean involve competing in the existing market space and exploiting the existing demand. The organizations are also forced to align all their systems to enhance differentiation and lower cost (Rahman & Choudhury, 2019). On the other hand, blue ocean strategy involves creating an uncontested market space, capturing new demand, and making the competition irrelevant (Blue Ocean, 2011). The organizations in this environment strive to align their systems to pursue differentiation and lower costs.

Though there exist, several strategic planning models, the blue ocean strategy is arguably the pacifist of them all. According to the authors, the cutthroat competition that characterizes the red ocean only leads to a decline in profits. As such, organizations are encouraged to seek ways of reinventing the industry to create new market space. The authors simply mean that organizations should keep off head-to-head competition and instead focus on innovation. The goal of the strategy, therefore, is to help organizations avoid red oceans and develop blue oceans. In such an environment, the organization will experience fewer risks, more success, and higher profits (Burke, et al., 2016). These conditions, in turn, render the competition irrelevant. The strategy also holds that consumers do not have to choose between affordability and value. Therefore, if an organization identifies what consumers value, it can offer that value and still achieve low cost and differentiation at the same time. This aspect is widely known as value innovation (Saputri & Mulyaningsih, 2016). When the strategy was introduced, it triggered a revolution in business strategy since all organizations sought to operate in an uncontested market space where competition was irrelevant (Denning, 2017). While most other strategic planning models are overly theoretical, and hence difficult to implement, the blue ocean strategy was developed following more than ten years of research that analyzed the successes and failures of organizations spread across more than 30 industries. The strategy has also been employed in different companies successfully (Denning, 2017).

While the strategy sounds pretty straightforward, caution must be exercised when implementing. Differentiating the red and blue oceans is the first step that organizations must take. This move should be preceded by an analysis of the target market to determine what the consumers need but is not provided. The organization should then look at what the other players in the industry are doing, and how well they do it. With this information, the organization can then decide on how to differentiate, either by the audience or price point. The authors also recommend that an organization must seek the right team for the strategy right from the start (Denning, 2017). This way, the organization pushes the existing boundaries in the industry and offers the consumers products that are both unique and value (Agnihotri, 2016).

Innovation is a critical element of the strategy. Through innovation, organizations manage to move out of the shark-infested red oceans to the blue ocean. The authors mentioned mindset, tools, and humanness as the key components in the shift from red oceans to the blue oceans. Fundamentally, the strategy calls for a shift in mindset to expand the organization's mental horizons and enhance its understanding of the existing opportunities (Denning, 2017). Various tools are used to ensure a successful implementation of the strategy. Finally, the strategy should be implemented in a humanistic way that inspires people to own and champion the process. Organizations must also be cognizant of the fact that the process may time to show results. They must also overcome the trap of just improving the products since the strategy encompasses much more than the products. Market-creating innovations have also been shown to lead to the elimination of features and even self-cannibalization. As such, the organization should not be fixed on only improving the products. Rather, the focus should be on organizational transformation (Denning, 2017).

The Theory of Disruptive Innovation

Other than the blue ocean strategy, Zipcar has also used disruptive innovation to claim its position at the top of the industry. Since its introduction in the 1990s, the theory of disruptive innovation has become an integral part of innovation-driven growth in organizati...