Technology and innovation. How does the strategic planning process impact the management of technology and innovation and what consideration is given to the impact of disruptive technologies in particular?


Essay, 2012

10 Pages


Excerpt

Table of contents

Introduction

Corporate Strategy – Strategic Planning

Business & Successful Innovation

Strategic planning – Technology and disruptive technologies

Successful innovations
KORRES S.A.
EASY JET

Unsuccessful innovation – Xerox and PARC

Conclusion

Reference List

Introduction

International experience shows constantly, through studies and practical applications, that fostering innovation relies more on strategic planning, research and search for specific data. The development of business strategy would have never been more challenging or more important than in today's competitive environment through which corporate strategies must transcend past limits.

The paper analyzes three case studies. All of them are innovative companies however technology was used as part of their innovation for Easy Jet and Korres, whereas in PARC it was its core business. In the case of the two successful innovators Korres S.A. and Easy Jet, technology dealt with the development of the company’s R&D (Korres), it was used as a facilitator of processes which were the key factor for lowering production costs (Easy Jet) and finally in the case of PARC – Xerox technology was not focused on customer needs.

Corporate Strategy – Strategic Planning

Corporate Strategy is the result of strategic thinking, which is a design process that implements innovation, strategic planning and operational planning. Strategic thinking is a mindset that focuses on finding and exploiting unique opportunities to create attractive returns on invested capital and added value to shareholders. Innovation is a way to find unique opportunities; however, it should be part of a company’s strategic thinking and culture (Pashmore, 1994). The companies that will be analyzed below, Korres and Easy Jet have this mindset and innovation is a basic part of their strategy whereas the other company PARC, although, it innovated, the lack of strategic thinking on customer focus led it to failure.

More and more managers now find that the experiences of the past are not always the best basis for developing future strategies but they need to innovate to keep ahead of competition (Chan & Mauborgne, 2000).

Strategic planning is a process of determining long-term goals and selecting implementation policies and is based on scientific analysis, international experience and participatory processes Innovation and technological innovation are a major strategic decision of a company, thus strategic planning is an integral part of the strategy implementation process (Bower & Christensen, 1995).

Business & Successful Innovation

There are several characteristics of successful innovators. As it happens with all successful businesses, they understand the importance of financial liquidity. Their major way of generating profits is not by setting high prices but at keeping low their production costs. They improve their internal processes aiming at improving manufacturing capabilities. A number of them decides to outsource certain activities. In case, they do not have technological capabilities, they may decide to form strategic alliances with companies that are technologically better (Stringer, 2000:81).

In case, product costs are high and product price cannot be decreased, successful innovators find other ways to reach their target group such as leasing the product.

According to Page (1993) successful innovators should do up-front homework i.e. they should not move from the creation of the idea to its implementation but they should prepare an appropriate plan of it. Successful innovators are customer centered and offer superior value to their customers. They plan carefully product launches and they have dedicated, well organized functional teams. They also have strong leaders and international orientation.

Strategic planning – Technology and disruptive technologies

In many cases, technological innovation exceeds market requirements. It is true that companies compete for technological advancement however, they miss the element of speed i.e. they over satisfy customers’ needs thus leaving space for disruptive technologies to enter since lower price points exist. This is the point where Korres S.A. and Easy Jet entered. For example, other cosmetic companies were focused on the classic competition i.e. adding new products to their existing product lines that were using chemical substances. Even, the Body Shop that has a nature friendly profile, did not focus on specific herbs thus there was enough space for Korres S.A. to enter the particular market in Greece first and later worldwide.

According to Utterback (1996), unsuccessful firms defend excessively their technologies, which have reached high levels of design, when their business death is predictable.

Managers, unfortunately, can realize the value of disruptive technology only in retrospect. They can notice that disruptive technologies are usually developed by either new companies or by large ones that want to enter a new market segment. The best thing the managers can do is to watch carefully the new products launched. A disruptive technology requires a new management approach that has nothing to do with preconceived strategies but is involved with continuous learning and has adequate plans for learning. Tracking technological discontinuities is difficult; however, a company should always watch carefully its environment. Companies need to search not only for existing sources of competition but also for sources that are not conventional (Bower & Christensen, 1995).

According to Christensen (1997) managers should approach this disruptive business by having in mind that they do not know this new area therefore they will be able to recognize useful information and not invest massively in capital and time. In other words, a different way of thinking is required when a business wants to implement a radical innovation. Successful innovations quite often are not something particularly new in technology or science as it is seen with the examples of successful information mentioned below. What successful innovators are interested in is the search for segments that will be satisfied with the present performance levels. They are characterized by marketing orientation and satisfaction of market segments that were neglected by competition. They create teams of people that focus on new technologies and make improvements in accordance with customer feedback. If the company is too big to change its culture then a separate company can be created to perform these changes and produce innovative products at small volumes. As Stringer suggested (2000:72)“ the attacking and defending ought to be done in separate organizations.”

Utterback (1996) suggested a specific pattern of innovations. He noticed that discontinuous innovations in assembled products come from outside the specific sector whereas the discontinuous innovations in non assembled products may come either from inside or outside the sector. Regarding changes, he observed that discontinuous changes that concern processes in homogeneous products derive usually form established companies. It is understood that when discontinuities expand a market then newcomers will enter but when they do not broaden it then companies that already exist will get a better place.

It is also remarked that innovations that augment a company’s core competencies usually come from inside the industry whereas the opposite happens when core competencies are destroyed. This is particularly in the case of Korres S.A. that will be analyzed below.

Successful innovations

Two companies of Greek businessmen, Korres S.A. and Easy Jet will be presented as examples of successful innovation.

KORRES S.A.

Korres SA is a Greek natural cosmetics company. The company initially produced one product but now produces more than five hundred different products, including specific categories. In Greece, Korres products are present in more than six thousand pharmacies whereas abroad they have a significant presence in branded chains of thirty countries and they also have twenty-seven stores in major cities worldwide (Koutra,2009). The company has invested in research and development for new formulations and new ingredients as well as in new technologies that help create new innovative products based on Greek nature. The composition of the company's products is based on four major groups of natural ingredients (Dimitriou, 2008): a) the Greek flora herbs b) herbs with medicinal properties, c) food ingredients, d) natural raw material. Thus, by using these natural ingredients innovative formulas are created, non-natural substances are avoided and replaced with natural oils and more compatible raw material. The company also cooperates with the University of Athens by participating in development projects of industrial research aiming at finding properties of the medicinal plants of the Greek flora. It also works with the Chios Gum Mastic Growers Association to develop products with mastic and it also works with the Saffron producers Cooperative of Kozani, for distributing exclusively Kozani organic safforn through pharmacies and exporting it overseas (Koutra, 2009).

Korres is really competitive and its marketing is very active this is why it has a leading position in the Greek cosmetics market and gains ground abroad

Korres is a successful innovator and this is due to two basic reasons: a strategy that focuses on innovation (Govindarajan, 2011) and the whole organization is fully aligned to this strategy (well organized functional teams, non authoritative corporate culture, motivated employees) and senior management i.e. Korres is personally involved (he is the head of the R&D department whereas his wife is the head of Marketing department, both of them are pharmacists). According to Govindarajan (2011) when the person who is responsible for the investment and expenses is actively involved in the innovation process then more freedom is provided to the research team and thus big innovative ideas are created.

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Details

Title
Technology and innovation. How does the strategic planning process impact the management of technology and innovation and what consideration is given to the impact of disruptive technologies in particular?
Course
Strategic Management
Author
Year
2012
Pages
10
Catalog Number
V351392
ISBN (eBook)
9783668381353
ISBN (Book)
9783668381360
File size
496 KB
Language
English
Tags
new technologies, competition, international experience, innovative company, easy jet, Korres SA
Quote paper
Fotini Mastroianni (Author), 2012, Technology and innovation. How does the strategic planning process impact the management of technology and innovation and what consideration is given to the impact of disruptive technologies in particular?, Munich, GRIN Verlag, https://www.grin.com/document/351392

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