Industry Studies: Consumer Goods Industry

Topic: Innovation and Change in the Consumer Goods Industry

Topic Number:8

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Overview

Innovation and change play a fundamental role in an organisations ability to keep pace with a market, drive it forward and get ahead of the competition. In addition, it is important for firms operating in the CGI to innovate around process to reduce costs and become more socially conscious and effective.

In this lecture, we will learn all about how innovation and change is done in organisations operating in the CGI. We will initially look to understand what innovation is and the different kinds of innovation that firms can adopt. We will also look at emerging forms of innovation from emerging markets.

Thereafter, we will look at some of the challenges to making innovation and change happen in organisations and how we can overcome these. Finally, we will look at a number of different approaches to change management organisations can use.

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Learning Outcomes

• Determine and describe what innovation is in an organisation

• Articulate the different models of innovation used in the East and West

• Be able to discuss the challenges faced in implementing innovation and change

• Critically evaluate a number of change models to determine the optimal way to create change in organisations

InnovationMost of us understand that innovation is enormously important. It’s the only

insurance against irrelevance. It’s the only guarantee of long-term customer loyalty. It’s the

only strategy for out-performing a dismal economy.

Gary Hamel

Learning and innovation go hand in hand. The arrogance

of success is to think that what you did yesterday will be sufficient for tomorrow.

William Pollard

What is innovation?

What is innovation?

Innovation can be defined as the application of new

ideas to the products, processes, or other

aspects of the activities of a firm that lead to increased “value.”

This “value” is defined in a broad way to include

higher value added for the firm and also benefits to

consumers or other firms.

Characteristics of innovation

A key issue here is to distinguish innovation, the bringing to market of a truly novel item, from imitation, the

adoption of a new technique or design that is already in the market.

New to a firm

New to a domestic market

New to a world

market

Two types of innovation

Product Innovation Process Innovation

The introduction of a new product, or a significant qualitative change in an

existing product.

The introduction of a new process for making or delivering goods and

services.

Incremental Radical

• Extension of existing product

• Developed in response to a specific market need

• Customer pull

• New tech creates new market

• Market creating• Technology push

Radical vs Incremental Innovation

Substantial

Stages of Innovation

Where does this sit on the spectrum?

https://www.youtube.com/watch?v=dG0vLFFtZDs

https://www.youtube.com/watch?v=qDrMAzCHFUU#t=188

What is disruptive/radical innovation?

What is disruptive/radical innovation?

Lets consider some examples

But why is it important to innovate

“Our resilient brands will strengthen

their market positions and performance as they

comprehensively satisfy the preferences of our customers”.

“We are not changing directionwe will continue to move full-

steam ahead with our core business,

which is stores“

Chairman HMV, 2007 CEO Blockbuster, 2001

But why is it important to innovate?

How do Western firms innovate?

For example, Unilever’s R&D center network

R&D at the heart of a business

However, emerging markets are developing their own way of innovating

https://www.youtube.com/watch?v=hvMQKx-uBi0Watch from 1:50

At the heart of Jugaad

So picture this scenario

What is it?

Jugaad is a colloquial Hindi word that roughly translates as ‘‘an inno- vative fix; an improvised solution born from ingenuity and cleverness.’’ Jugaad is, quite simply, a unique way of thinking and acting in response to challenges; it is the gutsy art of spotting opportunities in the most adverse circumstances and resourcefully improvising solutions using simple means. Jugaad is about doing more with less.

The word jugaad is also applied to any use of an ingenious way to ‘‘game the system.’’ A missed

call here and there…

Jugaad Innovation

What is it?

https://www.youtube.com/watch?v=mrFyPaie3pQ

Jugaad Innovation

Seek opportunity in Adversity

Do More with Less

Think and Act Flexibly

Keep it simple

Include the margins

Follow your heart

The 6 key principles of Jugaad

Thinking Outside the (Ice) Box

WHAT IF your fridge can operate without electricity?

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The Innovator’s Dilemma

The Innovator’s Dilemma

https://www.youtube.com/watch?v=qDrMAzCHFUU

A vacation with Kodak Focused on women

Made it social Introduced the brownie

The case of Kodak

The incumbent

s curse

Core rigidities

Leadership and

culture

Strategic flux

Diversify into what exactly?

Cannibalisation

But along came digital; why couldn't they innovate?

High failure rates

…Think again…

How can you minimise failure? Market research…

Product and customer lifecycle

Change Management Approaches

S-Curve Paradox

Source: Handy (1994)

Change Management Approaches

Kotter’s Eight Steps

Source: http://www.kotterinternational.com/our-principles/changesteps)

Change Management Approaches

Congruence Model

Source: Nadler and Tushman (1988)

End of presentation

© Pearson College 2013