Innovation Management Issues - Case Study Example

Innovation: Case study – Nokia N97 Executive summary The paper focuses on the launch and the failure of the Smartphone, N97 and various aspects that led to the product not being successful in the market. Also, with the launch of other smart phones in the market, the paper also focuses the phone’s incapability to launch itself as a niche product and how it wasn’t able to capitalize the market opportunity. Introduction Nokia being an age-old company manufacturing handsets for more than a decade was seen to be struggling with the introduction of N97 in the market place. The smartphone was launched with the ideal features to cater to the demand of young minds in the global arena. Also, with competition from various other handset manufacturer, forced the company to re-think its strategies for launching smart phones going forward (Smith 2009). Introduction to innovation Innovation has most often linked to growth and performance by improving efficiency, quality, productivity, competitively positioning as well as market share. Also, it is able to add value through making changes in the old organizational practices and forms. Firms who are not able to innovate can run out of business, by the ones involved in the scenario (Afuah 2003). The method of innovation that has been done by business can be achieved through changes and ways; it can be done through research and development for coming up with benchmarking innovations also by on-the-job practice which can be by exchanging ideas, experiences and others. Inspite of all the innovations, it cannot happen, if it is not a team effort. For coming up with most successful innovations, organization’s boundaries and industries where problems exists as well needs the users and technology can be linked under a collaborative and creative process (Johannessen et al. 2001; Utterback 1994). Source: Nokia website Sources of innovation Peter Drucker, who is considered to be the greatest management thinker from the previous century has defined innovation “Innovation and Entrepreneurship” and named the “sources of innovation” which were (Drucker 2007): Sources of Innovation Source: Drucker (2007) The unexpected: One of the clear examples of unexpected was the failure of N97, which was a smartphone launched by Nokia. Although, the instrument was introduced with loads of features that could have catered the needs of the younger generation, the handset was not very successful in the market place. According to some of the research found, it was because the phone was not able to sustain a lot of features included, causing the handset to tear off with low battery life (Smith 2009). Incongruities: Conflicts or Incongruities that has been seen mostly in the opposing functions, values or requirements can help start an innovation. The instance being N97, which was an previous product for the Finnish company, launched with the vision to take on the market with its added feature completely failed the market expectation. The battery life, constant restarting of the handset, followed by complains from the customer was seen conflicting with the vision with which the instrument was launched in the market. Although, in later stages, Nokia was able to take the responsibility of the failure, the customer’s experience with the product marred its image (Smith 2009). Process needs: according to a proverb, “necessity is the mother of invention”. At the time when the US had immigrants from the Europe who were unskilled, thus a lot of machines were made or joined to make sure that these labors would have understood the process very easily and did not require too much of complication. Although, Nokia was able to understand gap in the market place and launched the N97, the constant problem with the mobile failed the user experience. The hardware quality concern for the product was also responsible for its failure in the market. Also, Nokia image of being the first with outstanding technology usage also got erased with the launch of N97 (Smith 2009). Industry and market structure: It can offer opportunity for introducing new type of service by the organization. By being able to outsource activities, the companies have benefited in reducing cost. Nokia was able to open its manufacturing unit in Asia Pacific region to reduce cost and supply the handsets and other materials to Asia and Africa. Demographics: It has been considered to be a major source for conducting innovation or opportunities for newer type of services and products. Cellphones being one of the major lifestyle components in the life of the people today, customization to fulfill the needs of the global audience has been a challenge. N97 was able to customize the product to the niche level, wherein, the availability of Wi-fi included with Qwerty keypad and touch screen features was introduced ahead of times to cater to the demand of the high profiled customers. On the other hand, the smartphone was able to deliver on its quality and serviceability (Smith 2009). Changes in perception: One of the examples of the changes is perception that follows the source of innovation. The simpler the handset, it was considered to be the best by the consumer, with innovation. Nokia handsets were known to be simple to use with easy navigation. This was found to be true for its base models to the smartphones introduced in the later stages. That the introduction of N97, was also seen to be a deal breaker for Nokia. Although the features introduced was good, it was not a market hit, as the features were not completely operational (Nokia acknowledged that N97 is a failure smartphone 2010). New Knowledge: With the innovation, new products are being introduced in the markets following an up gradation of the previous ones. The new knowledge for providing a niche handset to the customer was well understood by Nokia and thus thee N97 was introduced to meet the customer’s need. The launch of the product although, started a competitive edge to Nokia with next generation features, it was able to provide basic essentials such as battery backups or technical support to solve all the issues with the handset (Nokia acknowledged that N97 is a failure smartphone 2010). Absorptive Capacity: This is a concept which was first introduced by Cohen and Levinthal in 1990. According to this, for a company to be innovative, they should be able to develop absorptive capacity. It could be studied in various levels. This could be studied with the innovation performance of the firm, its aspiration level as well as its organizational learning. With the launch of Nokia N97, the company’s vision was to create a next generation mobile looking after the needs of various fractions of the society. The multi-purpose phone was way ahead of its time and could have received great market positioning if the instrument has been successful. Further, it is also important to focus on various external and internal environments that threatens the growth or provides opportunity to a product. One of the known means of conducting strategic management is through SWOT analysis, wherein the strengths, weaknesses, opportunities and threats of the product or company could be analysed in detail. While strengths and weaknesses are considered to be internal factors, the external factors are defined as opportunities and threats. Some of the other external factors that may threaten the product include recession in the economy and political instability (Lewin et al. 2011). Innovation and organization knowledge Innovation in organization refers to newer methods that can be taken for organizing work, also accomplished in an organization for encouraging and promoting in the competitive landscape. It also encompasses how an organization is able to manage customer relationships, retention, employee performance as well as knowledge management (Sawhney et al. 2006; Brown 2002). With the core in the organizational innovation has been the need for improving or changing process, product or even service. In most cases, innovation revolves with the idea to change the former. Innovation also encourages a person to think in an independent manner as well, applying creatively the personal knowledge for challenges that can be faced in the future. Thus, innovation requires an environment that supports processes and new ideas and finding a new way to do business (McCraw 2007; Vrakking and Cozijnsen 1997). Although, N97 was launched to take up the people by storm with the new age technologies and also to give unique user experience, it wasn’t able to impress the masses too much. With too many technical glitches with the handset, it was not able to convince its consumer for the technical ability to transform the experience to the next level. With the vision, to create a niche amongst its consumer, the N97, on the hand was not able to live up to the expectation of the consumer with uncomfortable keypad size and camera too reliable (The Battle for the Smart 2008). The specification provided by them had nothing to be extraordinary. The unique selling preposition was missing in N97, and was not fully integrated with appliances as any of the mobiles available in the market. No application features were announced by the company to keep the consumers hooked in. With lots of other handsets available in the market, Nokia doesn’t remain the de-facto mobile phone for the mass. The launch of Google and Apple phones in the market have made it more competitive for Nokia to survive in the market place. Source: Gartner Research (2009) Innovation strategy The time and the cost required for creating a new product such as Nokia 97 are also a vision of a company to stand out in the market. Following the larger vision, this may even lack alignment of the organizational goal and make the entire exercise a waste. It must been seen that the innovation strategy has to be associated not only to the organization’s values and mission also with the technology that can be brought up in the future. The lack of alignment in the product with the market demand or process architectures can increase cost and subsequently increase the risk (Timmons and Spinelli 2003; Pemberton and Stonehouse 2000). The above S-curve focuses on the fact that almost all products goes through various stages to finally achieve acceptance in the market. The growth might be slow in the beginning, which would eventually gather momentum with a rush in the mass market. This would finally give way to acceptance, where the product would replace the other existing products in the market (Rogers 2003). S-Curve Source: Rogers (2003) Innovation and technology Technology innovation can be defined as a process by which technologies can be developed and used amongst the masses. Nokia was a simplest formulation of touch screen kiosks machine technology included into a cell phone with Qwerty keys provided to make messaging easier. This may have required them to research, demonstrate, develop or deploy, but it may be also clear that innovation cannot be linear process. It has various interconnections as well as feedback coming back in the stages, and these stages cannot be disaggregated. For doing an innovation it requires involvement of a range of personnel and organizations that have various institutional arrangements that undermines the deployment and development of the varied kinds of technologies (Wenger et al. 2002; Grant 1996). Technology/market matrix Source: Gessinger (2009) A company also needs to focus on which direction the product would grow in the market and should become a part of the strategy formulation process. There are various ways through which this issue could be tackled, which primarily focus on creating technology/market matrix (Gessinger 2009). While the launch of N97 was a technologically infused, with added features that would have year marked in the industry, if the operators were able support the same in various regions, the lack of understanding the parallel industry, was the main cause for its failure in the major parts of the world. Technology innovation also covers innovation which is derived from the technology developments and research which are independent of the products and services that are initiated (Dunphy et al. 2003). Symbian platform used in N97 is not considered to be the best. Most of the manufacturers are now going away from the platform and getting to either build their systems on Android or others. The user interface provided by the company was far inferior to the other phones from its portfolio. It was considered to be not user friendly and made a negative impact with regards to user experience. With lots of bugs found in the system, N97 was not able to impress the consumer. Although, the company now takes up the ownership for the failure of the product, it is trying to re-furbish the handset with newer version of the software and a better platform (The Battle for the Smart 2008). Innovation and service The launch of N97 provided the company a vast customer base for the company who were already satisfied with the product used in the past. In one of such attempts Nokia launched N97. Although, the handset did have many features but was not able to capitalize the market demand. The service quality of an organization also needs to evolve as the change in consumer’s attitude and preference has been very volatile. In order to understand this instability in attitude, company should also be able to upgrade the service quality innovation program. This program should entail some of the major lead companies to showcase their service quality initiatives taken to the broader customer base (Rogers 2003). Conclusion Lining up a company’s strategy to innovation and then understanding the innovation to drive revenues should be conducted with minute detailing, evaluating the advantages and disadvantages, understanding the numbers and running the prototype. Nokia was considered to be a lead player in handset manufacturing, as it was not able to comprehend or understand the customers’ needs completely; it was unable to support its business goal to innovation. It seemed as if Nokia in haste developed a product that matched upto other handsets but was not able to sustain as the battery and the operating system was not seen to integrate itself to the features provided in the handset. With the image of Nokia in the mind, customers’ perception about the company not only started deflecting, but market share started to decrease for Nokia, thereby increasing the risk to innovate further. Thus, each innovation, research and development and out-of-box thinking should always be supported by sufficient market data, considerable practice and experiment, significant trial runs and above all, understanding the technology that can be introduced in the future. Reference ‘Nokia acknowledged that N97 is a failure smartphone’, GSM Press, February 24, 2010. Retrieved from http://www.gsmpress.com/eng/news-nokia-acknowledged-that-n97-is-a-failure-smartphone.html. ‘The Battle for the Smart-­‐Phone's Soul,’ The Economist, November 20, 2008. Afuah, A. 2003, Innovation Management: Strategies, Implementation, and Profits, Oxford University Press, New York, Chapter 1, ‘Introduction and overview’. Brown, J. 2002, ‘Research that reinvents the corporation’, Harvard Business Review, August, vol. 80, no. 8, pp. 105–144. Drucker, P. 2007, Innovation and Entrepreneurship, Elsevier, Butterworth Heinemann, Amsterdam. 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