Improving the innovation capability of Blackberry - Assignment Example

? Improving the innovation capability of Blackberry BY YOU YOUR SCHOOL INFO HERE HERE Improving the innovation capability of Blackberry Introduction Blackberry, previously called Research in Motion (RIM), is a struggling technology company that manufactures and markets the famous Blackberry smartphone device. This Canadian company decided to change its name to Blackberry as consumers were having a difficult time correlating the Blackberry name with Research in Motion. This trading name gives the Blackberry device a solid brand image associated with the company and its core values, which was a positive marketing decision made by the organisation. Between 2000 and 2007, Research in Motion had been the foremost pioneer in smartphone technology, being a pioneer in the technology industry. The market, at the time, did not provide consumers with a variety of options when it came to evolving mobile phone technology and, upon the launch of the Blackberry Pearl 8100, it was the only company that had a comparable offering, thus setting the product category for the industry. It was not until today’s leaders in smartphone technologies, such as Apple and Samsung, launched their first smartphone versions in the retail market that Blackberry began to quickly lose market share and also their reputation for being an untouchable innovator in the industry. This essay describes how innovation is managed at Blackberry, how innovation projects are managed and carried out along the existing business model, and how culture supports or hinders innovation production at the firm. Findings are supported by both secondary and primary data, including an Internet chat interview with a representative from Blackberry, Christophe Lefort, general manager of Blackberry in France who agreed to participate in a 20 minute online interview. Strategy Unfortunately, Blackberry does not publicise its internal operational strategies and innovation efforts as this would deplete its publicized competitive advantages for a struggling organisation. In 2002, at the height of the business’ pinnacle as an innovator, the company experienced explosive sales volumes of its earliest Blackberry devices. By 2008, the company had become a cost leader, having launched multiple versions of the widely-accepted Blackberry device whilst reducing operating expenses, boasting a stock price of over $144 (Yahoo! Finance 2013). However, it quickly became apparent that Apple and Samsung, in 2008, had produced much more innovative smartphone devices, thus both companies seizing market share from Research in Motion and quickly gaining brand loyalty. By 2012, stock valuation in Research in Motion was less than $8 per share as the company struggled enormously to regain its footing as a pioneering leader. With a highly leveraged business model coupled with consumers that were quickly becoming entranced with the innovative technologies offered by Apple, Blackberry nearly approached bankruptcy. Therefore, the new business, Blackberry, would find considerable competitive danger by publicizing its internal efforts at innovation and strategy. It was just recently, in 2013, that Blackberry launched its latest Blackberry smartphone model which did find success in its target markets, thus providing the capital required for Blackberry to continue operating, to persevere as a publicly traded company, and determine the next innovation to save the company’s future. Having identified these limitations in available research, the current strategy for innovation as a survival methodology and to regain positive brand reputation can be explored, with assistance from the interview respondent. Prior to 2008, no representatives at then Research and Motion believed that they would lose their innovative competitive edge. Even industry experts believed that RIM would maintain its leadership position in the smartphone industry indefinitely which continued to push its stock prices ever higher with each news release about impending product developments. Essentially, Research in Motion believed that its near monopoly in this industry would sustain its very powerful first mover advantages that the business had been able to sustain for nearly a decade. King (2007) refers to this type of managerial oversight as inter-firm causal ambiguity, or better defined, as a lack of appropriate knowledge of the inter-dependent relationship between company inputs and outputs. Whereas many companies, today, examine the competitive environment regularly in order to determine what is working specifically for competitors and then attempt to outperform or replicate known competitive innovations, RIM did not maintain an understanding of the social influences of brand strategy and the fluctuating attitudes of consumers that provided the Apple iPhone with explosive loyalty and revenue growth. Laforte, the general manager of the French division, agreed that inferior previous leadership at the executive level in understanding the linkage between input and quality outputs contributed strongly to the brand problems with Blackberry between 2006 and 2010. Today, the renamed Blackberry maintains an innovation strategy that considers more than simply the operational components necessary to launch relevant products, but assesses the importance of the short life cycle of modern smartphones, the relationship between brand and the social condition of target consumers, and recurring environmental scanning to understand competitor and market characteristics that pose regular threats to the business model. All of these considerations, according to the interview participant, requires alignment with available capital and strategic marketing in order to ensure that launch of innovative products occurs in a way that provides relevant financial value to the business. Blackberry is a highly centralized business model, in which decision-making is made top-down and there is little opportunity for consultation with a horizontal focus moving from the bottom-up along the hierarchy. Findings from the data are analysed by senior executives and research and development which is then communicated downward to the staff in order to express the new intention for the business to create innovative product features in the next release of the Blackberry device. However, Christophe Lefort acknowledges that this approach toward innovation production does not capture opportunities for innovation production and the business is considering utilising its subordinate staff, those with tacit knowledge in specialised fields, to assist in making decisions aligned with production, marketing, operational strategy and launch strategy in certain markets. Borghoff and Pareschi (1997) indicate that knowledge management is necessary to be added to the balance sheet of businesses in order to build their knowledge capital. Stover (2004) supports this notion, suggesting that competitive advantage and the ability to create innovations effectively and as aligned with consumer needs must involve interaction between subordinate, expert and management staff. DeBruin, Parker and Fischoff (2007) describe a participative leadership model in which the competencies of human capital advantages can better be utilised instead of attempting to have executives make decisions. As such, human resources has become much more relevant and considerate in the Blackberry business model, in which a soft approach to managing people has superseded the long-standing centralised model of top-down authority. Armstrong (2007) describes the advantages of providing opportunities for employees to be more interactive in the decision-making of the business as gaining more motivation, commitment, and dedication from employees by making them feel like valued contributors to the business model. The interview participant indicated that Blackberry had, traditionally, been a risk averse culture, one that avoids uncertainty which has limited the scope of innovation production with the business. Jung, Bass and Sosik (1995) indicates that high uncertainty cultures often impede innovation creation as there is too much emphasis on statistical data, finance and operational strategy to justify decision-making. The recent changes from a quantitative business model to one that considers the complexity of consumer behaviour has given Blackberry a much new contemporary focus on strategy development for innovation development that is allowing the business to better connect with consumers. Projects Currently, according to the participant, Blackberry is actively involved in creating a new smartphone technology that will outperform Apple and Samsung, the business’ two largest competitors. Market research uncovered that consumers are very unhappy with the recent developments and upgrades to the Apple iPhone, including screen size and functionality. This is supported by Epstein (2011) and Clare (2011) who indicate that 47 percent of current iPhone 4 owners wanted a better design, a larger screen, and a thinner casing for the smartphone product provided by Apple. Additionally, Diaz (2011) wanted a cheaper model based on the small-scale changes made to this iPhone version upgrade. Because of this information, the newest version of the Blackberry device which was released earlier in 2013, the Blackberry Q10, now contains the ability to charge the device using a home computer or laptop and a full-size touch interface (Burns 2013). When asked about the newest Q10 release, Laforte implied that all innovations associated with the new Blackberry innovation were aligned with consumer sentiment that was emphasized with a renewed focus on the importance of competitive marketing and promotion. Though the dynamics of the financial capacity of the firm to change operations to produce a different model with enhanced features is unknown (this was considered privy information in the interview), it illustrates that the business is properly aligning its strategic operations with marketing in a way that has not been conducted effectively in previous years. Though the Q10 Blackberry smartphone has only recently been released, the business is currently waiting on consumer sentiment in a variety of social media forums and is recruiting a focus group to be conducted by a private market research organization to measure the opinion and sentiment of product value with consumer segments so that the next version can be developed aligned with consumer needs. One of the problems that Blackberry acknowledged in the interview was that Apple seems to have a halo effect occurring which influences consumption behaviour and their loyalty toward the Apple brand. Schiffman and Kanuk (2010) reinforce that the halo affect is an enduring value of consumers that strongly influences their opinion of brands and their willingness to purchase other branded products. Therefore, since there is not enough research data available (as well as competitive advantage concerns illustrated by the participant), it should be recognized that Blackberry understands fully the dangers of creating innovation strategy without taking into consideration the sentiment and attitudes of the consuming public and its most profitable and desired target markets. It is through this knowledge collection process (market research) that the business aligns operations and processes to ensure that a relevant and competitive product is released that can compete with Samsung and Apple. Culture As previously discussed, the culture is one where there is considerable power distance between senior level members of the organisation and subordinates. This is the level to which a culture will tolerate disparity in authority and deem it acceptable (Leng and Botelho 2010). At Blackberry, long-standing employees are not accustomed to working interactively in a decentralised business model which often creates change resistance problems, according to the participant. For instance, employees in support divisions are now being invited to senior-level meetings to discuss their roles and knowledge associated with such dimensions of the business as information technology, productions, receiving and inventories, and procurement. Furthermore, the business is not in a capital position at the moment that can create a radically unique product as this requires more asset procurement, cash and credit, and investor confidence for economic growth that comes from stock market valuation increases. In essence, with all aforesaid taken into consideration, Blackberry has a very hesitant culture as it relates to interaction and communication systems which is something that the new CEO is working on in order to salvage the brand damage and profit damage caused by other competitive pioneers in the smartphone industry. Recommendations for improvement Strategy Tidd and Bessant (2009) describe an innovation model that includes searching for opportunities that can benefit the business, determining specific benefits and product features that can be advantageous to the consumer and the profit expectations, how to successfully implement that innovation, and how to capture the revenue benefits of this approach. The interview respondent did not indicate that the company considers market research, something that had been over-looked during the last five years. Quantitative research should be conducted via online venues and through paid research representatives that approach consumers in a variety of technology retail centres to gain their point of view about competing products, Blackberry, and their impressions of the corporate brand. In certain markets Blackberry should also utilise qualitative research in the form of focus groups in which users comment on their experiences and knowledge of the Blackberry device which is then reported to Blackberry executives illustrating correlations to consumer sentiment. The tangible needs of consumers are considered and then the business looks to its financial position and credit capacity to determine whether operational processes require adjustment and whether the business is capable of producing a relevant product to meet these needs. The company should follow the Tidd and Bessant (2009) model of innovation to identify opportunities (research) and select an implementation strategy to remain innovative. Figure 1: Tidd and Bessant’s (2009) model of innovation Source: Tidd, J. and Bessant, J. (2009). Managing Innovation, 4th ed. John Wiley & Sons. Project All innovative projects should be coordinated by the Vice President of the company as well as the influencing opinion of research and development management at Blackberry, with supplemental approvals from the chief financial officer. When a simple modification such as a screen size or improved computer chips requires adjustment to the production process, it is a very costly venture that impacts procurement, line management, subordinate labour, and accounting. There should be feasibility reports created that indicate the expected return on investment for the new innovation as well as expected sales revenues from the launch of the project that are directed to corporate governance teams who either reject or approve the innovation development and operational strategy associated. The business is still too focused on the brand-related strengths of Blackberry which are clearly waning in the current competitive environment. More senior-level involvement in innovation and feasibility should be conducted to improve competitive positioning and determine which products would be viable for the next Blackberry model release. Culture Laforte did not indicate that cultural interaction was producing outcomes and productivity that was expected, thus human resources should be relied upon to change the cultural characteristics and behaviours of the business to assist in creating new innovative strategies. There had been, prior to the new CEO being advanced to his position as senior leader, very little knowledge of the relationship between support systems (e.g. technology, production process and procurement) which strongly impacted the prevalence of poor decision-making on product launches and product production. It had been the previous CEO’s intention to always try to create disruptive innovations that would be designed to displace an already established market. According to Christensen and Raynor (2003) this type of innovation often has the ability to completely end an industry as business knows it (such as the Walkman replaced with compact discs). However, this is a flawed strategy and it has not given Blackberry the type of competitive edge and branding personality that is necessary to gain attention from a variety of diverse consumer market segments. Blackberry must promote more socio-professional interaction in a decentralised model that facilitates engagement between tacit knowledge holders and those with only explicit knowledge to create a better knowledge management model. This inspires innovation and also improves cultural cohesiveness necessary to build rapid and relevant innovation launches. Conclusion As indicated by the project, the business is aware that it must be innovative in order to gain revenue improvements and capture the attention of multiple markets that are brand loyal to Apple, Samsung and other emerging competitors that offer similar products. Projects involving more actors within the organisation seem to be enhancing the ability to create innovative projects which involves decentralising the business model to change attitudes and organisational culture so that opportunities for gaining market share can be achieved practically and within the financial boundaries of current business budget. 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