Enterprise Lacking Innovation - Annotated Bibliography Example

Enterprise Lacking Innovation Dells Lack of Innovation Disappoints Tuttle Kris URL: http seekingalpha.com/article/174856-dells-lack-of-innovation-disappoints Summary The company managed to show the personal computer industry a new way of conducting business. Its business model was successful at the time since it managed to create a large and profitable computing franchise. Michael Dell returned in 2007 to run the company offering a new opportunity for the company’s innovation. Since then, the company has made two large industrial acquisitions: Dell bought Perot in recognizing the importance of professional services in the enterprise market. IBM global services had always been a leader in this sector. On the other hand, Dell professional services had been so poor at service delivery that customers opted not to use them even when offered free of charge. This acquisition helped address this weakness in the company’s structure but was no different from what the direct competition already had. The company also bought Equal Logic in early 2008.The company was very competitive in storage area networking. But this acquisition did not bring any significant capabilities in addition to what Dell already had. The best scenario that was available to Dell after these acquisitions was that it will be at par with its competitors in the market such as HP and IBM. The company however still maintains a very solid position with its customer who has come to appreciate its technology due to its performance /price and execution. This has been the company’s strong point for a long period. Apple, ASUS as well as ACER are faring much better than Dell on the consumer side of the computing business. Its advantages such as online configuration, fair prices as well as fast delivery can be enough to ensure that it stays afloat but will not be enough to drive the company in gaining more market share. The availability of proper alternative online computer channels such as Amazon and Newegg have diminished the online advantages Dell used to enjoy. Dell has been trying to catch up as the market has been fast moving towards mobile computing as the new frontier of innovation. As is stands, Apple has been the only major company that foresaw this new development and came up with the iPhone. Dell has not yet come up with its smart phone brand. The recent trend towards cloud computing also appears to be leaving the company behind and condemning it to a purely support role whereby it supplies servers for the core service providers. This might not support the required high margins due to the buyers’ power versus the suppliers’ powers. The company is bound to suffer if it relegates itself to be simply a channel as opposed to being a developer of cutting edge innovations and solutions. This is because channel technologies are often copied and made to be quite commonplace. Dell cannot be accused of not being innovative. The company was innovative but not at the level of its direct competitors. All its changes were mainly at the margin level and not at a corporate position and identity level. The company is need of doing something extraordinary to spark the excitement that its competitors like apple manage to do before the launch of their products. Title: How Tesla is Driving Electric Car Innovation Author: Bullis Kevin URL: http://www.technologyreview.com/news/516961/how-tesla-is-driving-electric-car-innovation/ Summary The modern day electric vehicles promise some many advantages over their gas powered counterparts. The most obvious is the elimination of the need to make constant trips to the petrol station. All one needs is an outlet either at work or at home. The full battery charge will also only cost a couple of dollars of electricity. They have also managed to show that electrical motors can be just as responsive and powerful with a single gear as gas-powered vehicles. They are also clean and environmentally friendly since they do not use fossil fuel hence minimal emissions. The overall carbon dioxide and ozone gases produced by all the processes that go into production of electric vehicle and their components is about 40% less than that produced by conventional gas powered vehicles. These vehicles are however still plagued by two main disadvantages; high production costs as well as less than optimal batteries. These are the areas that Tesla motors hopes to make a difference in the electric vehicle industry. The company is coming up with new innovative power packs as well as charging technology that have given it an edge due to faster recharging times as well as cheaper batteries which is helping lowering the prices relative to its main competitors. Even in the face of all these advances, the issue of range and cost still remains a challenge for the electric cars. In the U.S alone, there were only 16 superchargers. This means that if a person forgot to charge the vehicle overnight, or there is no power due to a storm, it will almost be impossible to use the car the following day. The car might get stuck in an area with no place to plug in the vehicle. This lack of infrastructure is the key draw back in owning an electric vehicle. The prohibitive cost of the battery also adds to the overall price of the vehicles. This high cost is what makes the Tesla Model S to expensive to be produced for the mass market since most people cannot afford the vehicle. The company is testing a variety of Lithium-ion battery cells. They are developing new small cylindrical sized cells that are almost similar to conventional AA sized batteries. The company’s choice of using these new batteries is one of its most significant strategic gambles. This is because even though the bigger cells contain much more energy, they are also more dangerous. Most companies opt to use less energy-dense batteries that are not as susceptible to catching fire. These companies try to offset the issue of low energy density by using flat cells which pack densely together. The main disadvantage is that they cost much more to develop and manufacture. Tesla chose these cylindrical cells to save on its manufacturing costs. This is because these are the same batteries used by laptops and their large manufactured numbers tend to drive down the economies of scale. Title: How the tech parade passed Sony By Author: Tabuchi Hiroko URL: http://www.nytimes.com/2012/04/15/technology/how-sony-fell-behind-in-the-tech-parade.html?pagewanted=all&_r=0 Summary When the new Sony C.E.O took over in 2012, he stated that it was time for the Japanese corporation to change. This is due to the fact that Sony used to the ultimate symbol of Japanese technological prowess. The company ruled the technology market with the Trinitron TV and the Walkman and even acquired Colombia pictures in a bid to venture into the film industry. The company is now however not as successful as it used to be until the 1990’s.. Its decline has also mirrored the long term decline of the Japanese industrialized economy. During the recent years, Sony Corporation and several other Japanese companies have been facing various problems e.g rising Asian rivals, a prohibitively strong domestic currency the Japanese yen, and almost uniquely afflicting Sony is the sudden lack of innovative ideas. The company has failed to generate a profit since 2008. Sony experienced losses in 2012 that were far more than it had earlier on anticipated. The main reason for these negative developments can be attributed to the lack of a hit product over the years. Compared to its competitor Samsung Electronics, Sony’s market share is now only one-ninth of Samsung’s. Former company executive, Yoshiaki Sakito is of the opinion that it is already game over for the Japanese company since he does not see any means through which the company can bounce back. A combination of lost opportunities and company infighting contributed to this sorry state of affairs. The company was also not willing to adapt to the changing realities in the global electronics marketplace. Sony did not effectively ride some of its biggest technological successes over the past decades like digitization, importance of the internet and a shift towards more software based appliances. Disruptive new technology developed by the company’s unforeseen rivals upstaged most of Sony’s new products from software to hardware. The company had a music catalog and coupled with its electronics foundation, it already had the tools needed to come up with their own version of the iPod way before Apple did it in 2001. Akio Morita, who was the company’s co-founder, had the idea of combining media content with digital technology as early as the 80s. The idea never materialized due to the rivalry that existed between the media division and the company’s engineers. The company opted to make use of music players that used proprietary files which were not compatible with the then widely popular MP3 format. The company’s iTunes’ rival, Connect online store was shelved after three years in service without ever coming up with a viable alternative. Manufacturing costs in China and South Korea were also much lower than those in Japan making Sony’s competitors much cheaper. This made it difficult for the company to charge a premium price for its products since the brand name was losing its appeal and luster due to the fact there were better options out there like apple and Samsung. Title: Nokia’s failure to Innovate Author: Adhikari Supratim URL: http://www.businessspectator.com.au/news/2012/7/20/technology/nokias-failure-innovate Summary This report points out the current gradual slide of the company’s fortunes over the past several years since the onset of stiff competition from the many available smart phone brands. The little optimism that may still linger in the company is shrouded by a cloud of regret due to that fact that many are of the opinion that the company’s current predicament may have been easily avoided. The company managed to post net loss of US$1.68 billion in 2012 which was almost four times the loss posted in the previous financial year and two times the amount that analysts had predicted. The only silver lining to this story is the fact that the company is not sliding down the road to destruction as quickly as many may have anticipated earlier on. It has been confirmed by Frank Nuovo, a former designer for the company, that it had a tablet and a smartphone almost ten years before Apple, one of its fiercest competitor, bust into the mobile phone scene. This fact means that the company had seen the futures but chose not to act in time to streamline and modernize its operations. This ultimately made the company’s products obsolete and not competitive when compared with the other mobile phone and tablet manufacturers. The former chief designer’s comments mean that the company’s research team had managed to come up with a modern and futuristic touch screen phone before the IPhone was released. Most of the Nokia shareholders are not so pleased with how things have turned out. The main question is why these did not find their way into the market early enough. This failure by the company executives to convert futuristic research technology into tangible products normally comes about when they tend to get lazy and shift their focus mainly to ensuring that their following set of financial results are much better that the previous ones. This attitude tends to set in when the corporation is the dominant player in the industry. Innovation is needed so as to come up with the next big thing ahead of one’s competitors in order for one to remain dominant. This requires more than just investing a large amount of money in research. It is reported that Nokia used about US$ 40billion to do research over the past ten years but the efforts were curtailed by there being a disconnect between the strategy and research teams in the company as well as internal rivalries. These lessons are very applicable to the business environment today and continue to take place in many nig dominant corporations in the world today. The Canadian Company Research in Motion has managed to find itself in an almost similar situation as Nokia by failing to translate its dominance and experience in the security sector into long term success in its mobile division. Its flagship model, Black berry has a lost a huge chunk of its market share to new comers in the smart phone market like Samsung and Huawei technologies. Title: Real Lessons of Innovation from Kodak Author: D. Jim URL: http://www.recipeforit.com/2012/02/03/real-lessons-of-innovation-from-kodak/ Summary The issue of innovation was a key topic during the 2012 Davos conference. It was promoted as a key necessity for businesses and a solution for the ills of the economy. The previous demise of Kodak company among others has led to some business leaders trying their best to out-innovate their competitors in a bid to emerge the final winners in the business market place. Kodak as a company has been an innovator since its inception in 1888. The company has a patent portfolio that is estimated to stand at US$2.5 billion. The company’s failure was due to several causes. The company failed to monetize its innovations which were its most important assets. ( John Bussey) Kodak is rightly credited with inventing digital photography but was faulted for not taking a forceful position with its product in the market place. The successful film business paralyzed the company thus forcing it to get into the printing market which was fiercely competitive. Kodak therefore offers a very important business lesson that it is good for a company to constantly be innovative but if it fails to monetize these innovations that have distracted the company from its core business, it risks running the company to the ground. His also led us to conclude that there are mainly four ways that companies can innovate successfully;- Placing the Big Bet at the top: This means that either the company’s owner or CEO decides the company’s direction jumps “all-in”. This strategy has previously been employed by Intel in the 1980’s by shifting from memory chips to microprocessors. This led to widespread layoffs in the company’s California operations. It was however a good decision since the microprocessor market was much more lucrative. Carrying out innovation by acquisition: Success using this method is higher for those companies that make several small acquisitions. A good example is CISCO that managed to extend its networking lead using this approach. Compaq’s acquisition of Digital as well as America Online’s acquisition of Time Warner comes to mind. Having a separate team: This approach is based on the theory that a company performs well by focusing on ensuring predictable and quality service delivery to its customers. A separate team can be set up that is tasked with ensuring precisely this like in the case with IBM. This will ensure there is little or no interference with the other teams that are tasked with innovation which always tend to be unpredictable Having a culture of tinkering: This heavily relies on the team’s ingenuity that is able to promote an environment whereby there is a constant and reliable delivery in the company’s competence area. An example is when FedEx introduced package tracking in 1994 that managed to expose its clients to its back end system. Kodak only needed to make use of the tinkering formula. The company had the earlier innovations but it was not able to assess its failures and tinker with their strategy in order to refine their strategy to ensure market success. Title: The Netflix Way: Learning from Failure, Constantly Innovating Author: Castillo Jose URL: http://www.streamingmedia.com/Articles/Editorial/Featured-Articles/The-Netflix-Way-Learning-from-Failure-Constantly-Innovating-93680.aspx Summary In 1997, Netflix launched over 900 titles available on DVD rentals through mail with late fees being applicable. The company added a monthly subscription service almost two years later and withdrew the late fees. By the turn of the new millennium, Netflix stopped the single DVD rental option. The company launched its initial public offering (IPO) in 2002 and recorded its first profits in 2003 raking in revenues of up toUS$272 million dollars. The company was shipping about 1 million DVDs per day by 2005. Initially the company had found a means of transforming a conventional mail-order business and tries and predicts what its customers would want in future. The company experienced its first major setback in 2008 when its database collapse led to closure in shipments for almost 72 hours. This failure led to the company’s adoption of Amazon cloud computing. The company flourished in this new adoption and has about 20,000 servers that process its data at any one given time. Adrian Cockcroft even went on further to allege that the company was making use of Amazon much more effectively than even Amazon’s retail is. In 2011, the company planned to stream the streaming businesses and DVD into Netflix and Qwikster. The problems arose mainly due to irate customers and pricing concerns making Netflix to abandon the idea and retain its single brand. This ensuing chaos made the company to learn from it and continued to focus mainly on its customers. The company has over the last two years been doing well after its shifted its focus on original programming in the media industry. Its most popular hits have been House of Cards, Arrested development (4th Season) as well as Orange is the New Black. These have proved that the company can come up with high quality content that can rival those on TV as well as from Hollywood. The company has recently introduced a $40 fee on late movie rentals. Netflix’s constant focusing on incorporating new ideas, sometimes falling big and consequently learning from this experience is story of constant innovation and resilience. Title: Why innovation could be the key to Apple’s growth Author: Nair Smita URL: http://marketrealist.com/2014/01/apple/ Summary Apple Inc. is based in Cupertino, California. It mainly designs, manufactures and markets personal computers, portable digital music, mobile communication and media device. The company also sells a variety of applications, networking solutions as well as software. The company surpassed Coca Cola in September 2013 to become the globe’s most valuable brand. The company’s business strategy centers on its ability to design its own operating systems, applications, and hardware in order to provide the company’s customers with cutting edge products that have superior ease of use, innovative design and seamless integration. The company is renowned for its innovation and has a good reputation in the industry with a loyal clientele base due to its philosophy of quality design as well as its highly unusual advertising campaigns. The company emphasizes that a high quality buying experience greatly enhances the company’s ability to attract new customers as well as retain the existing clients. The company’s strategy therefore includes expanding and enhancing its online and retail stores as well as distribution network so as to reach more customers and offer them high-quality sales and after-sales support experience. The company’s products include the iPod, Macintosh computers, iPad and the iPhone. The company unveiled it’s the iPad Air and iPad Mini that had a retina display in October 2013 at a premium price. During the first quarter of 2014, the company managed to sell 26million iPads compared to about 23 million during the fisrt quarter of 2013. The I Ipad commands a 78% share of the U.S tablet market. The company’s strategy does not focus on the low end market. Its main objectives are to sell a great device while at the same time offering a customer a memorable customer experience. The strategy’s pillars are;- Offer a small number of products Maintain focus on the high – end market. Generating profits is give priority over market share Generate a halo effect that makes the market crave for the company’s latest products The company uses differentiation in its efforts to increase its product’s market demand. This involves making its products attractive and unique to its customers. This is achieved by designing the products to be ahead of the curve when compared with its main competitors. The company has also managed to construct an artificial entry barrier to its competitors by continually focusing on customers that are willing to pay higher prices thus maintaining the product’s premium reputation. The company’s vertical integration has given it a competitive advantage since it owns various chip manufacturers, allowing it to control the manufacturing and imposing strict software standards allowing it to operate in closed ecosystems of proprietary retail stores. This allows the company to have more control of its value chain as well as component costs thus ensuring a higher profit margin for its products. Read More