McDonalds as Example of a Successful Innovation - Assignment Example

Question 1: Discuss an example of a successful innovation Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service.” If one were to give an example of a successful innovation strategy from the contemporary world, there would be none better than McDonalds would The chain is now among the biggest fast food chains spread all over the world, it is a cult by itself. All McDonalds has done however is that it has taken the idea from burger joints that were present in the US since the 19th century and ensured branding and innovations. McDonalds is on of the front-runners of the management and the innovations boom that the US witnessed in the 1950s, only the chain and its organizational management take the concept of innovation to different level. There is nothing extraordinary about the food served at McDonalds, nothing exceptional about the service. The company uses the simplest of menus, but that would appeal to the universal palette. They have changed menus according to local tastes wherever required. Therefore, in India, there is no bacon despite the very bacon friendly nature of the burger. They instead serve potato and chicken burgers, these are again hugely successful. The happy meals, the toys, the goody bags, the innovative management of the staff; the entire McDonalds success story is about the usage of innovation that can turn something so ordinary into something extraordinary. Question 2: What; how; example - an innovation opportunity and the chance of success Opportunities for success through innovations can be understood in the context of Drucker’s seven sources to innovation opportunities. These sources can be both internal and external. One of the internal sources is The Unexpected, this denotes unexpected success, an unexpected failure or an unexpected outside event can be a symptom of a unique opportunity. An example of the unexpected source of innovation that came from within the organization to translate into success is the story of ASX-listed manufacturer Smorgon Steel Group Ltd. (SSX), one of Australia’s leading steel producers. Since the company built Australia’s first electric arc furnace “mini mill” in 1980, it has followed a program of carefully chosen strategic acquisitions to become Australia’s most vertically integrated company. With recycling, manufacturing and distribution divisions, Smorgon Steel employs over 5,000 people in 160 locations across Australia. The lesson that is to be learnt from the success that Smorgon Steel enjoys is that success is not be wasted away but should be the stepping stone to better success through better innovations. Existing reporting systems tend to focus on shortfalls – not meeting targets – and ignore exceeding targets. Therefore, more often. . The unexpected success is simply not seen at all. The unexpected success is not just an opportunity for innovation; it demands innovation. There is a reason why Drucker has placed unexpected success at the top of his list of the sources successful innovations. Question 3: One at the principle at innovation is to “start small”, why; give an example One at the principle at innovation is to “aim at leadership”, why; give an example It has been stated by Drucker that effective innovations start small electric trams. Most innovations that are successful are not grandiose in their nature. They try to do one specific thing. An innovation that tries to do too much would fail in all probabilities. The example is that of the streetcar or electric trams. The idea was never to create something larger than life. It was a case of simple innovation where the idea was to enable a moving vehicle to draw electric power while it ran along the rails. Grandiose ideas, plans that aim at revolutionizing an industry do not work more often than not. Innovations that start small need little money, few people and at first at least a limited market. A successful innovation aims at leadership or else opportunity created for competitor. The underlying ideas in most successful businesses is not to become big business necessarily, there can be no sure shot prediction about what will work and what will not. However if an innovation does not keep its aim at the leadership from the very beginning of its inception, there are chances that it would just not be innovative enough and therefore unlikely to be capable enough of establishing itself. What this means it that the attempt should be at domination of a small niche. Question 4: Innovation and Entrepreneurship in a New Venture Entrepreneurial management in a new venture has four basic requirements: a focus on the market, financial foresight, building of a top management team and a decision in the founding entrepreneur that there will be a respect to his role, area of work and relationships. A new venture when being formulated, as an innovation strategy within an existing venture still needs to be treated like a different entity. This means also that there has to be a special locus for the new venture within the organization, and it has to be high up. The greatest advantage is the sense of novelty that a new business can bring and the scope for innovation and experimentation and hence for growth that it means. On the other side, a new venture will not serve profits right away nor will it give returns on the resources invested, it requires patience and an immense amount of strategic planning before the shift from the red to the black happens. It should be kept away from burdens that it cannot carry, there needs to be the design of a clear control strategy. A personal or control group that is clearly accountable needs to be identified. An be DDT designed to protect American soldiers it finds greatest application today in the agriculture industry thereby showing the evolution that an innovation can go through given proper time and space. Question 5: Entrepreneurship in an Existing Business Entrepreneurship in an existing business requires policies and innovations in four major areas; first, the organization must be made receptive to innovation and willing to perceive change as an opportunity rather than a threat; second, the organizational management should ensure that a systematic measurement or at least appraisal of a company’s performance as entrepreneur and innovator capacity is being done. In fact, this should be made mandatory as the report card of growth and innovation management within an organization; third, the it is required that the entrepreneurial management clarifies the ways and methods that are to be adopted while achieving the set organizational targets and last, there are some ‘don’ts’ that need to be followed. The most important tenet that is to be followed is that there should never be a mixing of managerial units and entrepreneurial ones. Innovative methods need to keep in mind that the idea underlying all innovation is to take the business on top of its field and not out of it. Innovative efforts that take the existing business out its own field are rarely successful. Finally, buying in or acquiring new businesses in order to make an existing business more entrepreneurial are mostly useless and do not yield results that were expected. Question 6: Give an example and definition at each of Drucker’s 7 sources on innovation.  1. The Unexpected - An unexpected success, an unexpected failure or an unexpected outside event can be a symptom of a unique opportunity. Innovations made by the Smorgon steel group. 2. The Incongruity - A discrepancy between reality and what everyone assumes it to be, or between what is and what ought to be, can create an in­novative opportunity. The difference in the workings of the paper industry as opposed to the steel industry is an example. 3. Innovation based on process need - When a weak link is evident in a particular process, but people work around it instead of doing something about it, an opportunity is present to the person or company willing to supply the “missing link”. An example would be the working of the Mergenthaler’s Linotype Machine. 4. Changes in industry or market structure: The opportunity for an innovative product, service or business approach occurs when the underlying foundation of the industry or market shifts. The changes that came about in the automobile industry with giants like GM and Fiat heading the change. 5. Demographics - Changes in the population’s size, age structure, composition, employment, level of education and income can create innovative op­portunities. Innovations in the food and culture industries due to the massive Chinese migrations are an example. 6. Changes in perception, mood and meaning- Innovative opportunities can develop when a society’s general assumptions, attitudes and beliefs change. Example: Citibank’s perceptual change. 7. New Knowledge - Advances in scientific and nonscientific knowledge can create new products and new markets. Example, the Airplane by the Wright brothers. Langley could not find it despite the right technology. Question 7: What is entrepreneurship and entrepreneur? Give an example of each. To be entrepreneurial, an enterprise has to have special characteristics over and above being new and small. Entrepreneurs create something new, something different; they change or transmute values. An entrepreneur is a person with very high aptitude who pioneers change and possesses characteristics that are found in a small percentage of the population. An entrepreneur is one that applies the principles of entrepreneurship in order to conduct business on a day-to-day basis, comes up with innovations and is constantly looking to update and better his business. Entrepreneurship on the other hand would be innovations applied in business. These according to Schumpeter can take the shape of new products, new production methods, new markets and new forms of organizations among other things. It is the entrepreneur who through an application of entrepreneurial strategies contributes to the creation of wealth, both for himself and for the people holding a stake in his company. An example that would explain the two concepts better would be that of David Rockefeller, an entrepreneur who utilized the methods of entrepreneurship in order to create an empire based on innovative strategies of doing business Read More