Disruptive and Value Innovation at IBM

Introduction

Management of strategy in the field that aims at enhancing the company’s initiatives that are carried by general managers on behalf of the stakeholders through involvement and utilization of resources in order to enhance a company’s performance. Through management of strategy, an organization ends up specifying its mission and long-term vision as well as objectives, which are necessary for the long success of the firm. Innovation strategies are significant to the success of firms since they help the organization develop new products and establishment of new markets and industries. This paper will examine the application of disruptive innovation strategies in IBM.

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Theories of Disruptive Innovation

Disruptive innovation was initially put forward by Christensen to describe specific innovations in an organization that aim at different objectives. The most common disruptive innovations are business model innovation and radical product innovations. The two disruptive innovations have different similarities although their objectives are different.

The business Model Innovations

This model of innovation is common among established business competitors. The innovation involves the unearthing of business models that are fundamentally different in an existing firm such as IBM. In order to qualify as innovation, the new model of business must enlarge the existing share of the market for the existing business of a firm. This could be achieved through the attraction of new customers into the market or through the encouragement of existing customers to consume more of the products of the firm. IBM is using this model as it competes with other competitors such as HP and Apple (Raynor, 2011).

The implication of market enlargement is that the type of innovation involved is more than unearthing of a new strategy that is not only radical but also disruptive for a firm like IBM. Firms that are considered business model innovators include Amazon, Schwab and Dell among other firms that introduced new business strategies that attracted new consumers for their strong brands in their respective industries and the innovation examines different factors for different sets of consumers.

The business model invades an existing market through an emphasis on different goods or services and there is a relationship that they create to the traditional business models emphasized by established competitors (Collis & Rukstad, 2008). The use of business model innovation makes the dimensions of goods offered by firms in different industries to be attractive to different sets of customers that are different from the customers that desire the original element of the goods. Therefore, the innovation examines different factors for different sets of consumers.

Radical Product Innovations

For instance, this technology could enable a well-established corporation such as Toyota to manufacture a new car model. According to Buisson and Silberzahn (2010), radical innovations like this one are disruptive to consumers since they introduce products and value propositions that alter the prevailing consumption habits of consumers hence changing their behavior in a big way. However, they originate from the supply push process that in turn originates from the responsibility to develop new technologies (Porter, 1996).

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Radical product innovations are common in markets that emerge from supply push processes and such markets have some features in common. New emerging markets are characterized by many entrants that come with many products that are new to the market as well. In addition, emerging markets are characterized by a fluid-structure since it takes time before the new markets are fully mature. The firms that create the new markets are also responsible for scaling them up until the markets mature. As noted by Zmuda (2012), the emergence of new markets is an outcome of radical product innovations. Despite the efforts and heavy technological investments that tapped into the market niche and exploitation of economies of scale made by early entrants in a market, late entrants could scale up the market and steal the market share away from the pioneers using a similar process that disruptive innovators used to develop the market. This could force pioneers to reengineer the products through extra investments in research and development. However, late entrants could further capitalize on the weaknesses of the existing firms to develop a strong brand that is cheap and therefore ends up gaining the market share.

Comparison of the theories

According to Cirjevskis, Homenko and Lacinova (2010), radical product innovation differs from business model innovations in various ways. Radical product innovations focus on the development of a new product using new technologies that thereafter are used to establish a new market and development of a new industry.

Under the innovation, the firms enter the market as pioneers that develop products that are now using new techniques and are sold to a new market. Therefore, radical product innovation aims at the establishment of a new product using new ideas and new techniques with the motive of establishing a new emerging market and industry. On the contrary, the business model innovations are different and they aim at increasing the market share of an organization. Such innovations are common among firms that enter the market when the market is already developed. Business model innovations develop differentiated products that are similar to competitors’ products and they employ rapid marketing strategies that sell the products to consumers cheaply. The marketing strategy is to develop products that are closely related to the best brand cheaply so that the consumers do not realize the difference while they purchase the cheap products (O’Toole & Vogel, 2011).

IBM’s Capacity for Strategic foresight and Opportunities

Organizations exist in a dynamic environment. This means that there is a continuous shift in the operations of business organizations to align with the demands of the environment. The environment in this case is the economy, which depends on the operations of business organizations. The survival of the economy, therefore, depends on the efforts of business organizations to evolve and continue being produced to meet the demands of the economy. Efforts made by business organizations to make the economy survive constitute innovations, creativity, and entrepreneurship. The main focus of organizations is to survive in the ever-changing environment (Gassmann, et al., 2010).

Survival in this case depends on the financial gain of the operations of the organizations, which is achieved through entrepreneurship. Entrepreneurship, therefore, is the ability of individuals to realize their inner business potentials and make use of the same. Such realizations lead to financial gain in the organizations because the organizations will be in a position to tap the available resources and convert them to financial gains that will in turn aid the survival of the organization. It should be noted that entrepreneurship entails innovation and creativity. In the first place, entrepreneurship is the realization and inner drive in an individual about the existence of given business potential. This realization calls for innovation on the ways of realizing this dream; the way a given enterprise will be achieved within the organization. Thereafter, the innovated idea has to survive based on the level of inventiveness of tackling day-to-day issues within that organization. This means there ought to be creativity in the people involved in order for the enterprise to survive (Irwin, 2003).

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Innovation and creativity are essential in entrepreneurship as it gives rise to new ways of doing things within an organization. Due to the ever-changing needs of the business environment, organizations ought to change ways of doing things in order to meet the demands of the customer. The same case should be in non-profit organizations because they serve the same mission. Innovation and creativity are essential for the longevity of business organizations. This is because entrepreneurs will be abreast with the changing needs of society, which will make the organization an all-time suitable solution to problems of the community.

Conclusion

Firms that are considered business model innovators include Amazon, Schwab, and Dell among other firms that introduced new business strategies that attracted new consumers. It should be noted that entrepreneurship entails innovation and creativity. In the first place, entrepreneurship is the realization and inner drive in an individual about the existence of given business potential. The implication of market enlargement is that the type of innovation involved is more than unearthing of a new strategy that is not only radical but also disruptive for a firm like IBM. Radical product innovations focus on the development of a new product using new technologies that thereafter are used to establish a new market and development of a new industry.

References

Buisson, B., & Silberzahn, P. (2010). Blue ocean or fast-second innovation? A four-breakthrough model to explain successful market domination. International Journal of Innovation Management, 14(3), 359–378.

Cirjevskis, A., Homenko, G., & Lacinova, V. (2010). New approaches in measuring and assessing viability of blue ocean strategy in B2B sector. Journal of Business Management, 3, 162–179.

Collis, D. J., & Rukstad, M. G. (2008). Can you say what your strategy is? Harvard Business Review, 86(4), 82–90.

Gassmann, O., Zeschky, M., Wolff, T., & Stahl, M. (2010). Crossing the industry-line: Breakthrough innovation through cross-industry alliances with non-suppliers. Long Range Planning, 43(5-6), 639–654.

Irwin, D. (2003). Strategy mapping in the public sector. Long Range Planning, 35(6), 637–647.

O’Toole, J., & Vogel, D. (2011). Two and one-half cheers for conscious capitalism. California Management Review, 53(3), 60–76.

Porter, M. E. (1996). What is strategy? Harvard Business Review, 74(6), 61–78.

Raynor, M. E. (2011). Disruption theory as a predictor of innovation success/failure. Strategy & Leadership, 39(4), 27–30.

Zmuda, N. (2012). Best Buy gets back in the game with new tagline, focus. Advertising Age, 83(26), 4–6.

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