Discussion – Building an Idea Factory

Discussion – Building an Idea Factory

Whereas innovation is an important tool that can distinguish a company from its competitors by bringing forth new strategies, ideas, and change, most companies often fail to achieve their set targets due to a lack of efficient strategic control and entrepreneurship. Usually, several things can take place from the time an idea is conceived, defined, rolled out, and ultimately assessed (Pearce & Robinson, 2014). Strategic control, in particular, is integral in the implementation process because it ensures that a company creates and executes innovative ideas using efficient processes. Entrepreneurship skills also play an important role in creating a strong bond between organizational skills and innovation. However, strategic control and entrepreneurship primarily depend on the type of innovation being implemented – whether incremental or breakthrough.

This week’s reading, an article published by Hof et al. in 2004, provides perfect examples of how different types of innovations necessitate unique strategic control measures and entrepreneurship expertise – which eventually determine the success of the conceived ideas. Hof et al. (2004) offer different implementation scenarios at various companies that mirror both incremental innovation and breakthrough innovation. In this context, incremental innovation is used to refer to a sequence of minimal upgrades or improvements focused on improving the firm’s current methods, processes, services, or products (Palmer & Brookes, 2002). On the other hand, breakthrough innovation is a novel idea or strategy that, when implemented, opens the organization to new markets and opportunities or transforms completely the manner in which clients connect with the industry or market. It can include the introduction of an entirely new product, service, or process.

In Hof et al.’s article, Apple Inc. is an excellent example of a company that seems to best pursue breakthrough innovation, particularly with its introduction of infiltrating, ground-breaking, and pioneering iPod (a digital music player) and App Store (an online download store) products between 2002 and 2003. Because of this bold innovation, the company managed to sell about 3.7 million iPod units, which subsequently translated to an extra $1 billion in revenues. Other businesses that appear to implement breakthrough innovation are Procter & Gamble (with its effort to create new processes, which involved replacing more than 30 of its executives and bringing new experts to assist in new product development) and Starbucks (by providing free internet to customers).

On the other hand, Toyota Motor Corp. is a typical example of a company that tends to focus on incremental breakthrough innovation. This is illustrated by the car manufacturer juggernaut’s decision to change one process in its production line: shifting to a single brace rather than the traditional 50-to-clutch auto frames together. This change to the Global Body Line structure assisted Toyota in cutting 75 percent of its operational costs (by roughly $2.6 billion), specifically used in refitting a manufacturing line. This also allowed Toyota to produce different car models using a single line. Jeffrey P. Bezos’ Amazon, an online business-to-business retail giant, is another firm that has previously attempted to tap into incremental innovation. For example, in 1999, the firm launched its own website after eBay’s successful launch, with the intention to tap into the lucrative retail commissions. Other firms involved in breakthrough innovation are IBM, eBay, as well as P&G. According to Hof et al. (2004), no specific approach is better than the other – what determines the success of each is how the company executes the idea from inception, planning, to evaluation.

Finally, it is possible that Apple’s breakthrough innovative approach can work well at Toyota, specifically by the motor manufacturer switching to creating new cutting-edge technologies rather than relying on improving its existing production processes. Toyota can achieve this by brainstorming new ideas randomly and then testing or experimenting, similar to how Apple invented and experimented with the iPod. On the other hand, Apple can also embrace Toyota’s CCC21 program by making an effort to improve collaboration between the different departments involved in the manufacture of products, from software engineers and hardware developers to suppliers. However, as Perce & Robinson (2014) note, it all depends on how well and effectively strategic control is executed at both companies.

References

Hof, R. D., Burrows, P., Hamm, S., Brady, D., Rowley, I. (2004). Building an idea factory. (cover story). Business Week, 3903, 194-200.

Palmer, R., & Brookes, R. (2002). Incremental innovation: A case study analysis. Journal of Database Marketing, 10(1), 71-83.

Pearce, J. A., & Robinson, R. B. (2014) Strategic management: Planning for domestic & global competition (14^th ed.). McGraw-Hill Education.

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Discussion – Building an Idea Factory

Based upon the information in this unit’s readings, post answers for the following:

Which companies in these examples appear to be the best pursuers of incremental innovation? Also, of breakthrough innovation? Does one approach seem to work better than the other?
How well would Apple’s approach work at Toyota? How well would Toyota’s CCC21 approach work at Apple?